Good Morning Traders
Its a lovely sunny day here in Dublin this morning, and the weather is beginning to heat up coming into June just like the markets. Yesterday we saw another down day for most of the global equity markets lead by the overnight decline in the Nikkei 225, this selling pressure continued throughout the European session and into the US session. We did see a slight rally after the European close however we are back trading in the red again this morning.
It looks like the market has run out of steam, it has come a long way in a very short period of time off the back of poor fundamentals. Let's not forget this market has been driven by central bank intervention and promises, not strong core fundamentals. The market is unsure what direction it wants to go, and it will inevitably come down to Bernanke and when he might taper his current easing policy. Its a funny predicament because surely a reduction in the level of QE would signal that the economy is improving and making a step in the right direction, however as soon as those words come out of his mouth expect to see traders, investors, mutual funds, pension funds and other large institutions close equity positions.
However that is all down the line and in more relevant terms, the market looks tired to me, I think we will find it hard to make new highs unless we have some really good data today or the US jobless claims are really poor tomorrow. If the jobs number comes in worse than expected it will be seen that QE will be around for longer than a better than expected number so bear that in mind.
In terms of today I expect to see markets quiet as everyone will be keeping an eye out for tomorrows number, I will be adopting the 'Sell any rally' approach as I don't believe that this market can go higher without a new catalyst, and the longer that the market remains up here without making new highs it signals to me that this could be a market top.
Happy Trading
@lowkeycapital
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