Roller Coaster Rider- Will the ride stop at 11:30 EDT?
Bullish: Long dollars (For 30 minutes at least) Bearish: S&P (Unless 1005 acts as support) Straddle: No Read
The global market got its daily shot of adrenaline on Tuesday, in two moves that lasted 30 minutes each. The first turbo charged play came at 02:00 EDT when the German Dax (5400) futures market gapped lower, and kept going for half an hour, in the daily automated short squeeze that tested the middle of the August trading channel at 5375.
The second feed on momentum that hit the markets' main artery, and created a second automated buzz was at 10:00 EDT in response to the U.S. ISM manufacturing numbers hitting hard at 65.00, a ten basis point increase in the previous month's read, and with Pending Home Sales matching the previous month 3%+ print when a drop was expected.
The cocktail of short selling from Europe, and long buying from Wall Street has created a net sum gain on the day. The roller coaster ride has done nothing other than create a feeling of slight nausea as bearings are found, and sea legs are stabilized.
Just as the effects of the ride start to wear off, the European close is trying to filter one last drop of momentum from a market that has charts that would do well on the drawing board of the new Disney theme park. Marvel Comics meeting Mickey Mouse has nothing on the rush that these markets are giving in the daily battle to set fair value on risk.
The moves have left Tuesday the same as any other day over the last three months; erratic, low volume, 30 minute, automated, contingency, rocket rides that quickly run out of fuel. When September volume hits, there may be many who want to get off the ride, just at the time that they should be getting on.
This week's fundamental reports and calendar releases really will go a long way to setting fair value on the Usd. Don't give up, and a couple more twists and turns to go, and the trends will set, and targets can be for more than 30 minute adrenaline rides. As the European markets finish they leave the Usd at the high of the day, oil and gold in no-man's land, and the S&P futures market going for a test of 1005.
If 1005 on the S&P breaks the 1.4200 Short Eur/Usd equity portfolio hedge may come into a world of its own in regard to value for money, low margin insurance against a September month that has a dubious history in regard to equity performance. History says that the first week is the best in regard to September returns, and therefore a visit to sub 1000 reads will not be what is required without getting that hedge in place.