Markets in Asia, particularly Hong Kong, rallied today, off what exactly?
I still don’t know. Fair, Hong Kong was about missing out the trail trade off New York Tuesday given the Wednesday public holiday, but Nikkei225 up nearly 2% off speculation that Europe will prop up its banks? Whoa… this is gonna take some time, which is a precious commodity the eurochiefs has been all too willing to squander, and does not have much left of.
Right now the picture is rather tricky to call in the immediate term, the bounce off the bottom has been so incredibly strong (HSI 1000 points off its 2 day low, DJIA futures similarly trading in the middle of the month-range after just making a bottom this week, futures at above 11 000) that it’s rather tempting to call long. The HSI still has a huge wick from last Friday to beat, needing to close at nearly 17600 for it to really be disspelled, but the big marubozu formed today with a bullish pattern is a sight to behold and strongly indicative of further gains. However, it did not manage to cross the 17200 level at which it opened on Monday, but the rest of world markets are looking cheery at the moment.
The eurozone crisis hasn’t gotten any better, just even messier with Dexia being wound apart, Germany being the angry kid in class demanding order, and Greece still looking like a basketcase. The US? Well, everyone probably still remembers Bernanke saying he could do something, just not what. Volatility traders are not backing down substantially, and keeping the VStoxx 50 at 44 and the VIX at 37+.
What would really be needed at the moment would be to get clearer volume data out of Asia, but recent public holidays have kept them closed unnaturally, essentially throwing in an extra Friday of position closes into the week, and a typhoon even shut HK last Thursday making Friday rather insane. China is closed for Golden Week on top of that… volume data here can’t really tell if there are net inflows of cash, and particularly whether there seems to be currency inflows to bet on the markets, even with these rather high volumes.
I would rather wait slightly until more clear data can escape the Asian markets and see clear signs of capital inflows before calling long, everything else seems to show that this was just a relief rally off unnaturally quick (but fundamentally substantiated) market losses.
Off-the-cuff, written when it arrived: ECB Decision
Ok, things are looking down again. Germany is firmly in control of Europe and the ECB let the interest rate be. How’s that for giving the markets and world politicians a deaf ear? Inflation is seriously a worry at the moment? Credibility? ECB, what does it matter who believes you after you’ve been dismantled? Thanks for another 0.5% immediately off world markets… The euro itself is as appropriately trading slightly down on the decision showing that everyone believes Europe to not realize its house is on fire, rather than termite-bitten (read: speculator-bitten). That the market would see a failure to decrease rates as increasing risks so much as to have to revise future earnings so much as to make the currency weaker when the cashflows in it are at least 20% greater momentarily is rather remarkable. Europe, please, can’t you just take the f’ing cue?
But thanks for giving me another chance to trade off the 38.2% fib in gold at 1642 and short your currency 🙂