European Closing Thoughts: Short if you wanna get burned

I think this is title is today's trading day best summary.

It has been a choppy day up to the US open with the $FESX_F trading in 17 points, minutes after the opening bell European markets broke daily high to trade near our resistance level as per our daily Game Plan.

The good news came from US housing starts, which rose in October to a four-year high. Housing starts rose 3.6% last month to a seasonally adjusted annual rate of 894,000, the highest rate since July 2008, the U.S. Department of Commerce reported. Starts are up 42% from last year, though the rate remains far below a bubble peak of almost 2.3 million in 2006. Economists had expected a decline in housing starts to a rate of 825,000 from an original estimate of 872,000 in September, due in part to disruptions from Hurricane Sandy.

The strong report led analysts to start rethinking about their estimate for economic growth in fourth quarter although our question remain un-answered: Will alone the housing market sustain World's biggest economy?

For what it may concern Europe, and Greece in particular, Luxembourg Prime Minister Jean-Claude Juncker, who will oversee the finance-chief meeting, said he sees “good chances” of a deal being struck tonight.

European picture ahead of the closing auction saw the broader Stoxx50 rising 0.54% to 2,508.59, in the regional benchmark space the German Dax rose 0.69% to 7,173.25,  the Spanish Ibex rose 0.08% to 7,770.30 while the Italian Ftsemib slid 0.32% to 15,259.50.

Currency wise the Euro traded flat versus the greenback at 1.2811$, while the dollar extended gains versus the yen after U.S. housing, the dollar last traded at 81.74Y, up 0.39% on the day.

The move in the dollar weighted on the yellow metal which fell 0.20% to 1,730.90$ an ounce, the muted action follows yesterday's rally of 1.2%, when optimism over progress to avert the U.S.'s looming spending cuts and tax hikes sent the dollar lower and helped lift demand for dollar-denominated commodities.

In the Oil market, crude for January delivery fell 1.97% to 87.54$ on the NYMEX as ample crude supplies outweighed worries about  fighting between Israel and Palestinians.

With the S&P500 trading along the flat line, the DJIA down 0.14% to 12,778.60 and the Nasdaq down 0.08% to 2,913.74 we could easily say that the news was fully discounted, such as its impact on the overall Crisis framework.  This hypothesis is confirmed by the move in the German Bund futures which fell 0.43% to 142.38.

My problem now is: are the fundamentals supporting these market levels?

Have a great evening.

Originally posted at www.77sigmatrading.com