European Closing Thoughts: Lack of fundamentals

The cash closing auction here in Europe is about to close while futures are pointing south. DJ Eurostoxx50 Dec future is trading 0.48% lower to 2497, Dax future down 0.21% to 7260, S&P500 future down 0.46% to 1400.50 while the tech driven Nasdaq future is falling 0.92% to 2635.25.

As we said in today's Morning Meeting the trading driver was the US opening action and with markets in positive territory traders world wide found the excuse to adjust their exposures. Remember they are humans they prefer to sell on the green rather than in negative territory.

In the beginning earnings and the construction sector supported the US market :

General Motors saw third-quarter earnings per share of 93 cents, excluding one-time items. Analysts had expected GM to earn 60 cents a share, according to the consensus compiled in a survey by FactSet Research, shares of the company rose 7.1%; Ford Motor Co. advanced 6.2 percent to $10.95, the second- largest U.S. automaker reported yesterday third-quarter profit that exceeded analysts' estimates. Home Depot, Owens Corning, Lowe's Cos all gained based on the rebuilding that will follow in the Northeast after Hurricane Sandy.

On the commodity side lumber futures rose by the daily trading limit of $10 per thousand board feet and remained locked at those levels as traders anticipated demand to rise. Crude oil gained, with Brent crude rising above $109 a barrel. Brent for December delivery was up 24 cents at $109.32. U.S. light sweet crude oil rose $1.00 to $86.68 a barrel. Gold rose 0.73% to 1,724.60$ an ounce as Fed is not seen to take its hands off from the market any time soon.

In the currency space the euro gave up early gains versus the greenback trading below the 1.30$ mark at 1.2962$ or 0.03% lower, as the German Finance Minister Schaeuble said the timely payment of Greece's next tranche of aid was “ambitious.” Although, after leading a two and half hour conference call with the finance chiefs in an e-mailed statement Luxembourg Prime Minister Jean-Claude Juncker said: “We called on the Greek authorities to solve remaining issues so as to swiftly finalize the negotiations”.. “to conclude on the program” at a scheduled Nov. 12 meeting of the ministers in Brussels. Bloomberg reported.

As we said in our Game Plan today the underlying reason of our short stance was in the lack of fundamentals able to support the Line of Least Resistance. We need to prize ourselves for the short-call made this morning on the $FESX and on the $GBP/YEN.  Again you had the proof that to trade as a pro you need to control your emotion by following your plan religiously.

Have a great Halloween night, by the way have a beer for us too.

Originally posted at www.77sigmatrading.com