Nothing really new or exciting has occurred since the last post. Still watching and waiting for a reversal and don't see it yet. Stocks only "paused" at 61% fibonacci and are attempting to launch an attack on the 78% fibonacci retracement level at 1276. Deep retracements are not uncommon for second waves. The key is that 1292.66 remains intact. And as long as it does remain intact, I view the market as very very very vulnerable to a serious decline. The risk/reward favors the bears big time here. I can always be wrong, so I'm not betting every cent I have on the move, it's just that probabilities and the risk/reward strongly favor the short side here with a stop just above 1292.66 - in my opinion.
The current rally still looks corrective. It continues to be choppy and uninspiring internally as volume continues to decline as prices rise. And the euro is having trouble getting off the mat, suggesting the appettite for risk is muted as people are still trusting the US dollar versus the euro currency at this time. That to me is a subtle sign of the real internal risk appetite of the fiinancial markets with all this Europe mess going on. Risk taking is muted, yet hope is strong; a combination for nice selloff soon.
Earnings: Stock Market's Brightest False Beacon
Here's what I mean about the euro not being able to get up off the mat. It is having trouble getting through even the 38% fibonacci level, despite US stocks rallying towards their 78% fibonacci level. To me, this divergence between the two markets suggests that the stock rally represents the "hope" that everything is okay and anticipation of a strong market in the coming months, while the weakness in the euro shows the true underlying feelings of the global financial markets which is one of fear and restraint. That's bearish.
Risk is wide here on the euro since it can rally to almost 1.4250 before topping, so I have decent short position on now and will add shorts on rallies, or on signs of a reversal.
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PLEASE NOTE: THIS IS JUST AN ANALYSIS BLOG AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. THE DATA HERE IS MERELY AN EXPRESSED OPINION. TRADE AT YOUR OWN RISK.