Market Overview

European Closing Thoughts: Black friday


From Wikipedia: Black Friday is the day following Thanksgiving day in US, traditionally the beginning of the Christmas shopping season. On this day, most major retailers open extremely early and offer promotional sales to kick off the holiday shopping season. Black Friday is not an official holiday, but many non-retail employers also observe this day as a holiday along with Thanksgiving, giving their employees the day off, thereby increasing the number of potential shoppers. It has routinely been the busiest shopping day of the year since 2005.

Shopping means optimism, the same optimism we saw in the market today:  the DJIA rose 0.72%, the S&P500 traded 0.63% higher to 1,399.73, the tech Nasdaq  led gainers rising 0.80% to 2,949.92.

In Europe equities were following their path to north, with the broader Stoxx50 up 0.72% to 2,553.34, supported by a rising Euro which last changed hands at 1.2946$ or 0.56% higher nearing three week high. In the regional benchmark space, the German Dax rose 0.79% to 7,302.44, the Italian Ftsemib rose 0.45% to 15,623.16 and the Spanish Ibex traded 0.41% higher to 7,907.60.

Why all this?

Because EU leaders' budget talks ended without a deal according to the WSJ.

The market can stay irrational more than you can stay solvent, this is what I'm repeating my self for all the week.

I could have easily destroyed my trading account if I was not in control of my self. I did not see any fundamental reason for the move, for all the week I was looking for places to open shorts… you know what… if I had been shorting at each level i wanted to, I would have been wiped out. That's why although we follow fundamentals we always need to remind to ourselves that “price is king”.

And prices were saying: short if you wanna get burned.

If you were thinking about risk on trades, have a look at the gold, futures for December delivery rose 1.05% to $1,746.40 an ounce at their highest level in a week, is the move just due to a falling dollar?

Absolutely not although a weaker dollar is beneficial to gold and other dollar-denominated commodities as it makes them less expensive to holders of other currencies, it's also due to the Christmas season now at the door. In a risk on environment you would expect a falling gold rising oil rising equities and rising Euro versus safe haven assets such as the dollar and US treasuries.

Talking about oil,  crude oil futures for January delivery traded 1.17% higher to $88.38 a barrel on the Nymex, supported by the weaker dollar although traders were really taking positions ahead of the next big stimulus that will push oil prices in one clear direction although it looks like they are not going to get it until next week.

We are closing the books with a lot of un-answered question, but I'm not asking to myself why have I not taken long positions….

Have a great weekend.




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Posted-In: Markets Trading Ideas


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