A week of significantly increased volatility with potentially a break of a key tactical supports for US (SPX 2380) and European equity indexes. Conversely a strong breakout for the euro with Aud, gold, oil and copper seeing decent bounces. The euro potentially resuming her cyclical uptrend vs the gbp.
Lets cut to the analysis from the Swiss team:
Lets pick up on the break of the support on the spx, 2380. Wednesday’s session saw a step change in volatility after the breakout attempt failed due to poor breadth on the move. Its fair to say that the level was well known and a good target for a tactical retrace and clearly a lucrative area for stop hunting algos. In one session we blew the support over all the way down to 2350 or so, cash. Consolidation or something more meaningful. Given the prior week’s excellent breadth and new breakouts by Asia, also strong US$ adjusted breakouts, inc great breadth by Europe, i remain firmly in the consolidation not breakdown camp. The transports non confirmation remains an opportunity therefore for my book. Commodity producers and miners have seen much relative strength and some strong price moves. For my book ive increased exposure in the last week to Copper miners (copx) and specifically Anto within the group. (GLEN remains a target un-allocated at present).
And here Fitzpatrick:
Fitz clearly gunning for the eurusd pair with a big target for the Euro, downward. (Note, the two reports still play into each other here in terms of looking for commodity strength regardless of the US$ index). Given the break of the 1.10 area eurusd the door is open to 1.16 and in my view even 1.23. Ie a weakening of the USD$ index, bullish commodities. Likely however to be a tactical move than a new cyclical trend euro.
Here Meisels:
And here a couple of key charts from CS &
Louis on the spx:
And lastly on the timeliness of the report publications. I do try and meet my own sla of 48hrs of publication. Occasionally i miss this but quite rarely given the report is usually published Tuesday mid evening, European time. I would also argue that if you are basing your tactical moves upon what the guys say in their report your practice needs to be amended. You should be looking at the same charts and sentiment and correlations as the guys look and more. Therefore 90% of the time their words come as no surprise. Its a rare event nowadays that i take the other side of a major asset class. Or at least on at a key strategic moment. Tactically of course we can differ. Anyway ill try and stay on track with the 48hr sla so apologies for this weeks tardiness.
For now, tactical moves aside, we remain inside this huge wave five risk move, is my and the guy’s view.
All the best
Rich