Pre US Market Update as the MIB reverses earlier losses
Markets have managed to bounce back some from the levels seen earlier today. The MIB was down close to -3%, and is now trading around flat levels. Both the ES and Stoxx 50 futures are still within the short term negative trend, despite the fact that the ECB was seen buying bonds earlier today. Let’s see what the US session brings. Charts below.
Chart Index Update
With the Markets trading in low volume fashion, we present chart levels of the SPX, Stoxx 50 and the MIB Indices.
Check below for all charts.
Futures Chart Update
Both the SPX and the Stoxx 50 have been rather “boring” for the past sessions. Yes we have had a couple of big up and down moves, but the indices are trading at same levels as the 1st of November. Charts are getting compressed and dynamics are building up within the “trapped” formation. Expect some more dull trading, until we start breaching one of the trend levels. With markets once again dominated by specific politicians and whether they will keep their jobs or hand over the resignation, many will be tempted to trade the short term moves. This will make both the bulls and the bears tired, and we will get that big break out . Stay tuned.
News That Matters
Ft.com
William Dudley, president of the New York Federal Reserve Bank, said the Fed could potentially do more to drive down mortgage rates to support the sector, says Reuters. Mr Dudley said another round of quantitative easing, http://ftalphaville.ft.com/thecut/2011/10/25/710786/another-fed-official-suggests-housing-support/
David Cameron’s attempts to assert his authority over his party backfired on Monday, writes the FT, when more than 80 Conservative backbenchers defied their leader over membership of the European Union http://ftalphaville.ft.com/thecut/2011/10/25/710771/conservative-backbenchers-defy-cameron/
Swiss banks are likely to settle a US probe of offshore tax evasion by paying billions of dollars and handing over names of 5,000 to 10,000 Americans who have secret accounts, Bloomberg reports, citing two people familiar with the matter. http://ftalphaville.ft.com/thecut/2011/10/25/710746/swiss-banks-may-reveal-names-in-us-probe/t
Market Update as futures close on Highs
So markets finished sharply higher, closing on the highs. Impressive action, while the bears are licking their wounds. After breaking through the 1220 level, ES futures rallied and closed at 1234. The Trend Channel we outlined 10 days ago, is still intact, and is giving us guidance going forward.
Below Trend Channel in Stoxx 50, also very much intact. “Slowly” but surely up, perfect action to make the bears sweat. Let’s see next week’s action in this mean reversion heaven.
News That Matters
Ft.com
Saab Automobile’s chances of avoiding bankruptcy dwindled after the two Chinese companies that had agreed to invest in the company instead offered to buy it for a token sum. Citing people familiar with the discussions, http://ftalphaville.ft.com/thecut/2011/10/21/708181/saab-investment-plan-in-trouble/
The Cabinet of Japanese Prime Minister Yoshihiko Noda signed off on steps to deal with the soaring yen on Friday, the WSJ reports. Fleshing out proposals made last month, Tokyo’s plan aims to curb further http://ftalphaville.ft.com/thecut/2011/10/21/708101/japan-moves-closer-to-52bn-yen/
Dexia, the stricken Franco-Belgian lender that has been at the centre of recent market turmoil, loaned €1.5bn of fresh capital to its two largest institutional shareholders which then used the cash to buy Dexia shares before 2008, http://ftalphaville.ft.com/thecut/2011/10/21/708106/e1-5bn-dexia-loans-used-to-buy-shares-in-dexia/
ZZZZ Market Update
Trend Channel still Intact on this extremely dull day. No trend, no volumes, as Greece is boiling. Markets are not worth trading until we start breaking out of the Channel. Meanwhile, Apple is falling after last evening’s dissapointment.
European Indices reach Resistance Levels (time to short DAX, STOXX50 etc)
After the brutal price falls we saw in August, markets managed to put on some nice gains during the past weeks. Many Indices have reached rather extended moves, while hitting some resistance levels. Many markets have actually just been trading in a range, if you look back two months. We see both DAX and the Stoxx 50 hitting resistance levels. With the action this morning, taking out new shorts, markets reversed, and the DAX is once again underperforming the other markets. As many shorts have covered, and too many are scared of shorting this, we could see some good dynamics to the downside. Below DAX and Stoxx 50 charts, and yes, Athens is down 3.6%, and counting….
News That Matters
Ft.com
Aluminium company Alcoa opened the US corporate earnings season with disappointing results for the third quarter, reporting profits below consensus expectations, the FT reports. Earnings per share were 15 cents for the third quarter, http://ftalphaville.ft.com/thecut/2011/10/12/699756/alcoas-3q-earnings-disappointment/
European authorities plan to set a higher than expected capital threshold for the region’s banks and give them six to nine months to achieve that level or face government recapitalisations under the auspices of the eurozone’s €440bn rescue fund, http://ftalphaville.ft.com/thecut/2011/10/12/699716/eu-banks-face-higher-capital-thresholds-2/
A bill that aims to punish Beijing for holding down its currency passed the Senate on Tuesday despite a warning from China that the legislation could plunge the global economy into a 1930s-like depression, http://ftalphaville.ft.com/thecut/2011/10/12/699626/currency-bill-passes-us-senate/
Slovakia’s government became the first in the eurozone to fall over opposition to expanding the European financial stability fund when just 55 of the parliament’s 150 MPs voted in favour of the measure,http://ftalphaville.ft.com/thecut/2011/10/12/699636/slovakia-votes-against-expanded-efsf-2/
Market Update
Markets are once again moving on news out ofEurope. Trichet’s speech, closely monitored by the HFT Community, have accomplished moves of more than 1%, both up and down, on no volume. After we reached major resistance levels in yesterday’s Columbus squeeze, on very light volume, the rally will lose steam. As the markets trade in flip flop fashion, the great squeeze might turn into another flash move to the downside. Note how the Stoxx 50 is underperforming the DAX compared to yesterday’s US opening. Remember, it’s the Stoxx 50 that has all the banks…
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