Thursday, November 06, 2008

"Sell the news"

We're all happy for America, and yesterday's retracement doesn't do that extraordinary day any justice. Markets dynamics were widely anticipated, so no surprise whatsoever. Now let's see what charts tell us today:

EURUSD: taking a breather, but 1.27 is a strong short term support for now. We don't have any significant forces taking €/$ either way in the short term, but this drifting should continue for now.

ER: Volatility is certainly still around and retracement was stronger than anticipated. It is now in oversold zone, so not clear whether the 500 level will actually be hit. There is no reason to believe ER would actually go lower, and if one goes back to previous reports, one may actually be in the predictable situation of the 500 area being the actual start of a better looking recovery.

ES: Same scenario here, where 937 being so anticipate that it could bounce anytime. Obviously, if the bounce does not happen, things could get very wrong (bearish outlook to the low 700s already mentioned a couple of weeks ago). Probability is however low.
We're now back to a more normal trading environment with price segments in place (32 points wide). Recovery can therefore bring ES back to the high 960s, to then in the medium term attack 1000 again...

... to be continued ...