Thursday, October 23, 2008

This market is for the brave-hearted only...

Oh well, another pullback... at least direction should not have surprised any of us. We're still in "hangover mode" and this situation is severe enough to keep markets tumultuous for a while.

To the critical ones who will say i've been too shy or conservative, i will reply that again volatility is a form of time compression and as such there is so much one can publish on a daily report. For intraday updates, market commentaries are also available (restricted access).

EURUSD: yesterday, i gave a warning that stops should be tightened as as we now hitting a target. We have no indication of a recovery today either. Over the longer term, the US$ could strengthen further because of continued deleveraging of many many funds.

ER: I thought the drop would stop short of 500, but it somehow had to be penetrated, without breaking though. ER should remain in low levels, yet with the assistance of this sky-high volatility, a bounce to 530 is also possible. Intraday play is recommended, so is staying on the sideline for longer term investors.

ES: similar situation with 875 being the defense line, equivalent to the 500 level on ER. Good bounce potential for the exact same reasons i.e. volatility. A bounce to almost 920 in normal times could reach 935, or even 950 these days...

Despite difficulties in capturing volatility, we still believe we need at least a few more weeks to dissipate negative pressure, and we are still waiting for the "1000" battle on ES to unleash some substantial buying. There is a LOT of cash on the sideline right now... A LOT !!!