Breakfast Blog

Top of the Risk Management Morning Traders,
Yesterday was one of the most incredibly volatile days you can ever experience in the Stock Market. It had just about everything. The morning started with a massive Euro, Equity and risk rally from early indications that Bersani was going to be able to form a government. By the time the American market had opened we had the Dow Jones at 14,079, The S&P at 1426 and the DAX at 7861 and the EUR/USD at 1.332. Six and a half hours later a very different story was becoming evident when the Euro crashed through 1.31, S&P had lost 400 points and EUR/JPY lost 200 pips in 6 minutes when a large hedgefund started unwinding Yen short positions. The trigger for all this uncertainty was Silvio Burlesconi's apparent rise from the Dead as exit polls started to indicate during the afternoon that he was infact in the lead. The equity bourses declined steadily along with the Euro until 8 o'clock when they went into sell off mode. This combined with the Yen strength we saw into the close provided one of the most exciting Monday evenings we have ever seen and showed how in less then a week all complaincy has been drained from the market, With the VIX breaking 17 on the Topside.
This morning has seen a small bounce in risk with the S&P back at 1495, Dax up and EUR/USD retesting 1.31. The Market will be very much clued into Ben Bernanke's speech at 15 00 GMT, Where we will be looking to see whether he gives any indications of exit strategies for the Quantitative easing program or tapering bond buying. New home sales data is also at 15 00 GMT.
Some good bid levels for the EUR/USD are seen just above the 1.30 handle and orders can be seen starting at 1.31 topside.
A good technical indicator we have noticed in the last few weeks is the 200 Day moving average on the 4 hour chart of the S&P 500. Everytime it has been hit it has bounced a few points. It did break through it last night but we can guarantee if the market come to test it again today the first touch will with out doubt be sold. It comes in at around 1501 on our charts.
Good luck in the Markets
Lowkey