Markets

Asia recovered her composure overnight, didn’t quite provide a complete reversal of the prior day but on many markets, shanghi inc, price got close. (as the shanghi in a down trend this reversal isn’t too significant. Hangseng less impressive, 50% retrace).

We said yesterday the price action was ‘in control’ and that the longs were still owning this market. Asia provided another test yesterday but price did not break and we have the longs firmly in control still at present across dm equity markets. We have summer volume levels and ‘trapping season’ as BM calls it. Price can move around without too much contest within a 200 or so tick range here now. I maintain a 70% sort of hedge ratio at these levels.

The sp500 stocks above their 50dma is rising here and showing a breakout of the 10 month downtrend. She has done this before but if this breakout maintains this is a useful indicator that we have another leg up for stocks.. as hugely paradoxical as this all seems.

Other asset markets.. FX.. the dollar is a key one of course.. the dx (dollar basket) having broken out of the three month range to the upside yesterday has rejected and broken back into the range. Near term more weakness dx is likely therefore.. from failed moves come.. its not quite a failed move yet but its very likely to prove to be in which case the prior highs for equity are in line of sight.. Eurusd.. im expecting more euro weakness before strength.. we have a decent trend down in the short term and although a bounce (dx as above).. the chart shows weakness for the next few weeks. Imo. GBPUSD pair.. a little bounce if she can muster it.. and then downward.. imo. The technical chart is showing the roll over.. this is inflationary for the uk economy.

As i say i read this merely that the forward raiding party are settled in. They have a position from which they want to add weight and attract others to the trade.. if the data worsens, dx strengthens etc.. the gbp is toast.. Clearly it may not occur.. it is early in this trend.. lets see.. im in the trade from the level marked.. we see.. a be is just fine.. ill come back if im knocked out.. i like the risk reward on this trade..

Oil markets.. stores and saudi’s pumping a total of 2m bpd over the may production.. and the net effect nymex still stubbornly high, in spite of the weakening data.. We have a big problem in energy, price is also confirming this. Technically wise.. short term, trading, (volume based) chart here:

She looks like she wants to test that 98 level again.. if she fails at this she may well be a nice trade looking for that 88 level.. i may take this.. keep you posted.. i want a nice high prob trade and a decent tested failure.. i won’t be quick off the trigger so the trade may pass me by.. that’s fine..Patience and capital preservation the key to making money imo.

Precious Metals – im watching, im liking.. gold breaking out to new all time highs even as the usd strengthened a little and in a seasonal black spot for gold. Its strong stuff. The only instrument making new all time highs in the market. Silver lagging stuck in her range but showing signs of life.. PMs remain the strongest charts in the markets for good reason of course that we all understand by now.. Lets see if this gold break out can continue and then how rapidly silver rejoins the party.. is silver and industrial or a monetary asset? Lets see..

Ill leave the rest for the forums.. that’s my quick run through.. Summer ‘trapping season’ or silly season.. so caution out there. All the best Rich