European Closing Thoughts: THE RED PICTURE

The US opening bell was unable to offer any support to equity markets world wide. This is the picture at European Cash close:

• DJIA: -2.35% at 12,934
• S&P500: -2.65% at 1,390.56
• Nasdaq: -2.39% at 2,940.08
• Stoxx50: -2.24% to 2,479.05
• Dax: -1.96% to 7,232.83
• FtseMib: -2.50% to 15,291.78
• Ibex: -2.26% to 7,660.70

Let's make few points clear: once the election has been decided traders turned their attention to the $607 billion of tax increases and federal spending cuts set to kick in automatically in January, the so- called fiscal cliff., and recalling Former Federal Reserve Chairman Alan Greenspan: “I'm concerned that the election per se has really not changed the balance very much of what's going on”. Concerns rose on the base of whether the President of the United States could reach a timely deal with Republican lawmakers to avert the so called “fiscal cliff”.

The “fiscal cliff” was not the only concern today  as Greece's solvency is on the table. If the new austerity package will not pass through the parliament vote then the fresh injection of  Eu/IMF funds needed to keep the country afloat  will be frozen and we all know what it could mean.

The Eur/dollar pair though did not move much during the US session: the common currency fell 0.41% to 1.2768$, it looks like at this point traders are at the window waiting for headlines coming from Greece.

Commodity wise what surprised me was the move in Gold, in the afternoon session the yellow metal fell 0.12% to 1,713$ an ounce giving up its early gains, but this is not exactly a signal for risk-off mode. Oil (WTI) nosedived 4.10% to 85.07$ a barrel.

At this point we need to clarify few things: what's going on in Gold?

For now the only reason we are able to point out is in the US dollar's climb which has put pressure in dollar denominated  assets. Other major metals on Comex traded sharply lower, with silver for December delivery dropping 77 cents, or 2.4%, to $31.27 an ounce. January platinum shed $21.80, or 1.4%, to around $1,535.70 an ounce, while December palladium fell $16.55, or 2.7%, to $603.60 an ounce. December copper was down 7 cents, or 2.1%, at $3.43 a pound.

For what it may concern our daily game plan on $FESX_F we were fading the morning move near the 50 mark as per our plan, the previous resistance/support at 30 was broken as knife in the butter and our lighthouse the Eur/$ supported the short side of the market. Our first target is the 2450 mark but we are well aware that the market can do anything and tomorrow could be a completely different day but for today we had “one good trade”.

Our aim as traders is to have a series of “one good trade” as someone whom I respect said in his book, but remember a losing trade can be a “good trade” too.

Originally posted at www.77sigmatrading.com