Aren’t you glad someone is on your side? On Thursday I wrote this:
OK, so its Thursday. There are some important figures out today, and more tomorrow. Then a long weekend in the US. So plenty of time for some more up … BUT … how many of the trading longs are going to take their positions in across the 3-day weekend? The potential for some headline bombs out of Europe, potentially destructive comments from returning US Congressmen, another hurricane gathering off the East Coast of the US … I am going to remain unconvinced by these upmoves.
Well, Monday morning (still Sunday night in Europe and the US) & we’re getting some headline bombs out of Europe (the Euro is duly getting smacked). ES off a little, after a big drop late in last week. The 50-odd point drop in the ES that started after the ISM figures on Thursday and continued through Friday was the market unwinding some longs ahead of the 3-day weekend. The bigger risk was always to the downside. Some will say “Well, d’uh … its a downtrend” … & its hard to argue with winners. But its always nice (for me at least) to have something else to lean on too.
Moving forward (which I’ll do tomorrow, with the stock markets closed in the US today I’m having a day off too), have to have a think about what the bad news is going imply for the actions expected from the FOMC. Some form of ‘QE3’ is going to increase further in probability. ‘Operation Twist’ is the new focus. That’s going to provide some bids to the ES (barring further disasters out of Europe, which is the new disclaimer to any and all positive comment, LOL).