This market only does one thing: it drives you bonkers - there is presently classic war between the signals for this being intermediate top:
- Divergence in S&P again (new price high - lower RSI high)
- Break down in Crude prices confirming "priced-in hike in demand"
- Falling freight rates.....
- GBP - cyclical currency under attack....
- Fixed Income - our favorite play still bid.... despite S&P now 50 figures higher (reflection of loose short-term rates and nowhere to place them...)
- Lot of the buy-and-be-happy programs running out of either money or political will to be renewed...
....and that this could be for "real"... i.e S&P towards 1050-00 then 1125-00:
- US index having hard time confirming strength
- AUD - the Asian sentiment indicator refusing to go down - for now...
- S&P hanging in there by end of day - every single night...
- VIX still low (although note how ATR (Average True Range) is going higher...!!
- Incoming data has been good, will remain good...
For now we remain with very small positions (except in FI):
Foreign exchange:
Short GBP.USD since 1.65ish on lowest STIR rates around , a MPC which is very bearish......
Long US index --- from just below here... Do not trade EURUSD no more - waste of time....
Note how US index could confirm strength today on close:
Equity:
Still short small S&P - close below 1020-00 would confirm top in place - a close above today should theoretically confirm UPTREND... so decisive day today...
Fixed income:
Long Danish Govies - budget deficit to expand, but low rates is part of equation - Denmark remains one of the most leveraged economies around and we will have low rates well in to 2011 if not 2012.......
Commodities:
Short Crude for the past week - sold small gold this p.m.....
Overall - not really exciting- some signs of cyclical top in place, but rest assure the "plunge-teams" will be in tomorrow should we go down.
The main scenario remains one of: Some downside in September, then Q4 should be ok ...
Safe trading,
Steen
