Friday, September 2, 2011

Tense Moment in the Markets

We are now approaching a point in the markets we're we face some hard decisions. Markets had the up rally that was to be expected, now the markets can continue it's bear trend down over the coming week, or be propped up again for one final hurrah.

This morning I saw some sharp selling programs come into the market and take out some key levels to the downside on aud/ euro/ sp500 / asx200.. The euro has remained stubbornly weak despite the fact that the sp500 has been bid quite decently.
This is a worrying sign.
Oil, usually the first to be moving fast, has been somewhat dulled to the price action.

The chinese equity markets have been also in sell mode looking at this article http://www.datadiary.com.au/2011/09/01/chinese-equities-and-the-commodity-conundrum/

We are reaching a some upside resistence across the board, and only some strong news fundamentally can drive this market higher - payrolls tonight and Fed meeting next week may lead the markets.
However, tonight could be one of those classic asymetric bets - a good number will actually lead to flat or slightly negative price action (as people close positions for weekend) and a bad number may actually see price action to the upside as people factor in the possibility of QE3 as a greater likelihood.

I've reduced most of my margined long positions, and now proceeding to to into pair trading mode - all new positions will be paired with short positions to hedge out market risk for the time being.