MidSession Review 03/07/12

What a choppy day!! in Europe markets are rising on expectations that major central banks will take more action to support the world economy.

DjEurostoxx50 Sept future up 0.79% to 2300, German Dax future up 0.75% to 6537.5, italian Ftsemib rises 0.92% to 14.450. The Eur/$ cross is still flirting with the 1.2600$ level, now it's trading at 1.2586$.

The ECB is widely expected to cut its main refinancing rate by 25 bps to 0.75%, with some banks saying it might have to go further and take more non-standard measures.

Commodities are reacting as a new QE is on the road, Gold up 1.03% to 1614.2, Crude up 2.27% to 85.600, this is what is going around. But I have to say that part of the move in my opinion is due to the rise in activity in China's service sector, which expanded at its fastest pace in three month, according to an official purchasing  manager survey.

It's important to observe that futures today in Europe are showing holiday type volume as for now. Yesterday NYSE composite volume registered  the sixth slowest trading day of the year, according to WSJ Market Data Group; and per our yesterday hypothesis:

“Therefore the solutions are:

  • Investors are on the sideline
  • Investors are already short the market therefore there are no natural sellers, but just investors who are re-balancing their portfolios.”

Has been confirmed by the statistics: Short interest in stocks listed in NYSE  sits at the highest level of the year. NYSE short interest rose to 14.7 billion shares as of June15, the highest level since Sept.30, and up 17% from the end of the first quarter.

Therefore, be careful.

One of the rule we follow here is: do not trade in days with holiday type volume.

 

Originally posted at www.77sigmatrading.com

Posted In: GlobalMarketsTrading Ideas
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