The collision of global markets and social mood

Friday, March 8, 2013

Something To Keep An Eye On

Last night China released better than expected trade numbers with a surprise surplus on the export side. So that means that consumers are spending again. This was enough to turn the futures around last night after a rather hesitant day and send them on a higher trajectory.

Curiously, it didn't do much for China. The Shanghai Composite was slightly down, while the Nikkei added over 2% as soon as I took profits yesterday. Damn glad I kept 1/3 of the position.

This morning's NFP numbers are meaningless to me. It's the reaction I care about. And while I saw a beautiful spike on the release, it was immediately taken back. I had mentioned yesterday on Twitter that the market was set up for a classic gap & crap, and this sort of action is what I'd expect to see in the pre-market if it was to occur in the regular session.

Nothing is ever a done deal or 100%, but the ball may be rolling down the hill.

What could cause such weird behavior on good news? The dollar. It's stronger today than perhaps was expected. It's making new daily highs. On a weekly basis, it looks like it's gunning for 84. The markets aren't prepared for a strong dollar. Ben's entire plan runs on a weak dollar.

1550 is a strong Fibonacci target as well as a harmonic geometry target. 1567 is a confluence of two different Fibonacci separate extensions. I could see 1550 getting hit or exceeded today before a reversal. Perhaps after several days of backing and filling 1567 gets hit. This is my gut feeling here, nothing more.

The problem lies with 1530.94. If for any reason price closes below this level, the recent rally may be viewed as a false breakout which could cause a cascade of trapped momentum players. Something to keep an eye on.

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