A very interesting report this week from the Swiss boys. This is all entirely consistent with low volume summer trading is my own view. How many times have we been here before? Too many is the answer. I wouldn’t chase any trends right now. The technical and fundamental emphasis remains to the downside unless meaningful monetary action is forthcoming, which it is not at present. (Bernake’s chat a little later today aside).
Technically the low volume Friday move was nonetheless indicative of sufficient strength to question the whole end of July weakness scenario that the Swiss team had been predicting. They have therefore ammended their view. They suggest now that if the 1325 level can hold that this corrective move could last longer than anticipated up to a retest of the 1375 level sp500.
The longer term technical perspective is pretty bleak which they run through. They very much stick to their guns, given the Shanghai, DX etc, that a retest of the 1200 level sp500 in Q3 Q4 of this year is the most likely event, which i would concur with subject to massive monetization news if when.
I wouldnt get too carried away by any instrument at present, softs included. Keep bargain sizes small, scalp ranges and keep it tight. Thats my two pennies. Without more waffle – here the report:
All the best Rich
P.S. What we already know in essence.. The fund flows remain toward risk off with the short end going negative and capital inflows to the US bond market.. Couple of reports.. first from Lipper published June 19th and secondly WF published today on the international aspect of the flows.Capital inflows toward fixed income does the same job of qe lowering fixed income returns whilst providing liquidity to US corporate debt etc. These fund flows do not provide a short term great environment for risk assets as they reduce the need for Ben’s helicopter. We shouldnt be too surprised by his comments today.
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