Daily Archives: May 12, 2010

If this were a baseball game that I was referring to then the first two batters of the inning that would be ‘out’. That is the first two batters failed to develop any offense and they were quickly taken care of by the defending team. What I am actually referencing here is the first two trading days of this week and the volatility that developed as compared to the volatility that ensued during the last two trading days of last week. Some are referring to last Thursday as ‘Black Thursday’ while others would like to forget it all together. It still seems that we have not discovered why there was such incredible volatility that day. Options expiries are the latest excuse but I get the feeling that we’ll be talking about this day for a long time to come.

Still in the bigger picture not much has changed sentiment wise. Volume in the equity market on those down days last week was still much heavier than the volume that equities have able to muster on the first two days of trade of this week. Bears will point to that lack of volume as one of their worries when the markets were rallying earlier this spring.

The good news for traders is that you can almost feel comfortable enough now to go back to your preferred charts. My preferred intra-day chart is the 5 minute chart but at the end of last week the 5 minute chart looked more like a weekly chart. It’s not too often that a 5 minute chart of EURJPY will span from 110 to 120. I say you can almost feel comfortable as one does not know if another round of selling may be near. The way that US equities turned over Tuesday afternoon had to be disappointing for investors.

All one has to do to remain defensive is to look at the foreign exchange market. There has been a divergence for some time between the Euro and major equity indices. Normally there should be a close correlation. Even after the $750b Greek bailout was announced this past weekend the Euro has displayed a limited rebound. Compare that to the S&P 500 which rose over 4% on Monday alone. Traders on Currensee remain mixed on the outlook for EURUSD with a slim majority being Short.

One of the beauties about Currensee is that these positions are with real money. No demo accounts here. The traders are taking a view and in many cases placing a large position. That is not always the case with some of the so-called experts that love to discuss the markets but do not place trades alongside their views.

In baseball the defending team only needs to get 3 batters ‘out’. In the markets there are 5 if not 6 days of trade and with 3 more days to go in the trading week there promises to be many interesting developments and trading opportunities ahead.

This report is for your information only and does not constitute investment or business advice or an offer to buy or sell securities.


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