Friday, May 6, 2011

Outlook for the Day

We saw a good recovery in the sp500 based on the employment numbers, however euro tanks further on greece rumours.
AUD held up well on hawkish comments about inflation.
It is now becoming clearer that the emerging markets inflation numbers are impossible to hide (unlike US inflation) and they will depict lower real returns in the equity markets in the next few years; (Mauldin's book on bullseye investing covers this in a great deal).

Trade setups
The AUD will likely have some support in the coming week and the the budget talks tommorrow may play a cue for the USD for the rest of the week. If I had to take a trade in this session, I'd be shorting gold/ long oil and shorting AUD as it nears it's 50% tech levels, however as short term momentum is still up for AUD and gold, I'll wait to let the market show it's hand before taking any positions.