Volatility is the only thing grimm reaper assured for 2011. My expectations for a positive november is in jeopardy due to the shock given by greek PM, ahead of the G20 summit. I dont know if it is just a political ploy ahead of an important meeting, to influence world leaders. Or it could be a political ploy ahead of the confidence vote on Mr. Papandreou due on thursday. Early news bits on wednesday was already dire, in my opinion, and was not given enough importance in wednesday headlines; because ADP employment data came out positive and Mr. Bernanke has assured that fed stands ready to act fast with further help, if needed at any time. So, market was able to hold the green channel on my chart, for wednesday. The situation just turned even more serious tonight, with Sarkozy saying greece will not get the aid it needs in november (because the greek PM wants the people to vote on it, and it is currently scheduled for December 1st week). Keep in mind all this could change in next couple of days, if the G20 pressure greece PM and the opposition. I expect some serious pressure on greece during G20, to settle down things fast. Italian bond yields are already soaring, as the next target, and G20 needs to stabilize the markets and investor confidence. Will china step upto the plate as the top economy of coming decade ?
On a seperate note, marketwatch pushlished an article which shows that when 1st day of november is down 2%, the rest of november corrected an additional 1.5% or more. I am not giving up my bullish view target of 1350 for Q1 2012 yet, since additional news and developments out of G20 meeting in next couple of days would be crucial for market direction. If the referendum indeed will happen, and only in december, then it would be risk off mode, until that time. With a new development out of europe almost every single week, this is an ideal futures/currencies trader's market, because only they can take advantage of the 24hr markets and news releases.
Technical Analysis:
The previous blog chart, with its buy ideas were successful for Nov. 1st and 2nd. ES came within 1 point of that bottom green line support, which was ideal buy. I viewed the action of Nov. 1st as consolidation, and i was expecting a push upto the yellow line on tuesday. Tuesday didnt see any serious buyers step in, and i saw more of consolidation rather than serious buying following the consolidation of 1st. So, given the news, i expect more selling to happen, atleast to the cyan support line as first target for thursday/friday. If that line breaks, technicals would be damaged, for next week. I will reaccess news breakouts, once the cyan support line is reached. When i started writing this note, and completed tonight's analysis ES was at 1224, and it is working towards the short term support at green base now, around 1211, which was support on November 1st.
All other markets are highly correlated these days, and can be expected to react to this news. US treasuries have already made a sharp move down over past 3 days.
2 comments:
This is funny indeed. The world was falling apart before i went to sleep, and when i wake up all is well, with a new government in formation in greece, and ES had made a 30 point move, while i was sleep, wihin a few hours. No need of that cyan line anymore ?
Once more, i post an expectation, and its trumphed by news break out of europe. Within 4 hrs that i was sleeping, ES tanked. The break of 1260 was where my stop was, while i slept. I have not yet caught upto all the news, but as of now, the top green line has been tested and held premarket at 1237, and it would be safe to take a short into the bottom green, if top green line was breeched again at 1236 for wednesday. 1250 and 1260 areas are my resistance areas for rest of the week. I do not have bullish bias for the remainder of the week.
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