18 March 2014 ~ German ZEW ~ Putin eases fears

Due to a rare holiday break, I was unable to give my usual level of attention to the markets this week. But here’s what I managed to pick up on:

10am London Time, Germany releases ZEW score, coming in at 46.6 as against expectation of 52.0
Harry Hindsight Impact Rating of 3/10 – and that’s being generous.

11:38am London Time saw equities gradually rallying, seemingly in response to a concurrent Putin speech in which he sounded less aggressive than perhaps the market had feared.
There was no specific line in his speech to pin the modest moves on.
Perhaps a 2.5/10 on the Harry Hindsight Impact Meter.

12:30am London time US CPI came out in line with expectations – the markets barely shrugged at all.
1/10 on the Harry Hindsight Impact Meter.

18 March 2014 ~ What’s so special about Tuesday?

I won’t be in a position to update the Harry Hindsight Highlight Reel this week, although will continue to record my screen and hopefully catch up over the weekend.

Suffice it to say, from what I’ve seen Russian President Putin did provide some flurry of excitement on the markets today.

In the meantime, I’ve been taking a closer look at the S&P 500. As Zero Hedge blog discussed in the past, there is a peculiar tendency for the S&P to rally on Tuesday. I’ve crunched through some of the numbers today – it is a very interesting phenomenon and I wonder whether it has something to do with human nature, or simply pure random chance?

I will be fascinated to investigate further, whether such phenomenon exists on the 30 minute charts.

Broken down by day

Broken down by day

17 March 2014 ~ Just another quiet Monday

Sadly, I found nothing to justify a video update today. A few bits and pieces released during the session regarding Russia (of little or no consequence) and a handful of lower tier data releases was about as exciting as it got. Check back tomorrow.

In the meantime, I’ll take the opportunity to review a few charts for my own amusement…

I periodically like to remind myself of the apparent madness of Retail (bedroom) traders:

Retailers have it wrong again!

Retailers have it wrong again!

Is now a good time to buy FTSE 100 futures?

Is now a good time to pull the trigger?

Is now a good time to pull the trigger?

Or are the equity markets starting to run out of steam at long last?

Are we nearing the end of this incredible bull market?

Are we nearing the end of this incredible bull market?

WEEKEND REVIEW ~ 15 March 2014 ~ Harry Hingsight Play Of The Week

I think the award of “Best Play” has to go to Mario Draghi, whose statement on Thurdsay, 13 March, provided a potentially lucrative sell on EUR/USD (6E Futures).
Let’s take another look:

In an age of Machine-readable news, sometimes you have to be prepared to hit the trade button the very instant you see the market jerking in to life, and the Squawk Box microphone clicking on. Waiting to hear the full headline often means you are too late already.

14 March 2014 ~ Russia has “no plans to invade Eastern Ukraine”

The first few hours of the EU session had a “Risk Off” feel to it, albeit with some strength seen on the gold market too.
Both ES and FESX came under consistent selling pressure, as mirrored by gains on FGBL and ZN – with some news media placing the blame on tension over Crimea.

As far as the Harry Hindsight Highlight Reel goes, just one or two talking points:

* At 12:30 London time we saw the release of US PPI, all elements of which came in under expectations. The market response was fairly muted.

* At 13:55 London time we saw the release of US Prelim UoM Consumer Sentiment, again, considerably lower than expected, but again, limited market response.

* 15:42 London time. Arguably the biggest talking point of the session was a statement from Russia’s Foreign Minister Lavrov: “Russia has no plans to invade Eastern Ukraine.”
The market seemed to breath a sigh of relief with both ES and FESX rallying at the expense of Gold and Treasuries.

13 March 2014 ~ A quiet morning but an exciting afternoon

There was very little news to excite the EU session traders this morning, with not even the publication of a Think-Tank Report to generate interest!
But things certainly started to heat up as we approached the US opening bell:

* The key pieces of scheduled data for the day, US Advance Retail Sales & US Initial Jobless Claims came in close to expectations – although I did notice a serious exchange of contracts on the US Treasuries, with sellers seeming the slightly more urgent.

* Around 13:30 London time, Goldmans and Barclays reduce their US Q1 GDP expectations, and the US Treasury market started to churn higher and higher alongside FGBL, while ES and FESX conversely started to melt. Was this a reaction to Goldmans analysis? I doubt it was and without any specific news item to pinpoint as the driver, I’m chalking these impressive moves up to general market sentiment on the day.

* Perhaps most worthy of a spot on the Harry Hindsight Highlight Reel, was a statement released from ECB’s Draghi, saying real interest rate spreads between the Eurozone and rest of the world would probably fall, putting downward pressure on exchange rates. While FGBL remained very calm in light of release, 6E jerked lower repeatedly – although the move was far from clean and I expect money was lost by some Shorters too!

* By the time the results of a $13bn US 30Year bond auction came out (at 17:00 London time), the Treasury market had already moved far enough for one afternoon session and neither the Longs nor the Shorts had enough reason to shift price.

All in all an interesting afternoon session and a good opportunity to snatch some ticks on Draghi’s words.


13 MARCH 2014 ~ GBP:USD ~ Retail Positioning in Forex

I have to admit, I was surprised by the failed rally on GBP:USD over the last several hours. In earlier blog posts this week I revealed my interest in the temporary “cross-over” of retail long & short positions – in other words, the temporary cross-over from green to red highlighted in the screenshot below.
I’ve seen this pattern occur on several major currency pairs, on a number of occasions, and it has preceded a continuation of the prevailing trend.
This market has been experiencing a gradual upwards trend and, having already found support at 1.66000, the green/red cross-over flagged up a possible attack of the 1.68 highs. It wasn’t to be (yet?).

I was surprised by the lack of upward follow through

I was surprised by the lack of upward follow through

12 MARCH 2014 ~ GBP:USD ~ Retail Positioning in Forex

As part of a running series, I’m interested to see whether there is any value in closely watching the positions of retail traders, in Forex Markets.

Taken from http://www.myfxbook.com/community/outlook/GBPUSD in this instance, this evening I’m openly wondering if we might have a good pull-back and buy opportunity arising on GBP:USD?
Time and again I’ve noticed Retail traders position themselves against the prevailing trend. I don’t know why they do it – my guess is they are determined to catch the tops/bottoms (which I’d argue is a fools game). But further to that, does it mean anything at all when they collectively switch from net Short to net Long (i.e. the green crosses above the red area, or vice-versa)?

Open to ideas…

Retail positioning in Forex. Does the long/short cross-over signal a buy opportunity?

Retail positioning in Forex. Does the long/short cross-over signal a buy opportunity?

12 MARCH 2014 ~ A Quiet Day

It was a disappointingly quiet day. It didn’t warrant any video highlights – not even any “gimmie’s” available from important scheduled data releases, of which there were none.
Was there any news? Sure, and it included immaterial comments from Central Bankers, stirrings from Crimea, trouble in Gaza, and perhaps most unusually, an exploding building in New York (non-terror related).
I have no doubt plenty of market players took positions on the back of some of these news items – but on the Hindsight-Impact scale, I’m calling the lot of them 0/10. When something grips the market, there’s no doubt about it: the price ladders really start to move, the Squawk Box boys & girls start to shout down the microphone, and you can be sure Prop Traders across London are sprinting back to their keyboards.

It seems like a fair opportunity to post my Technical Analysis Chart Of The Day. I like to keep it simple – trending markets, 50% retracements, 200-day Moving Averages – just the obvious stuff.
AUD/USD (6A) caught my eye, and here’s why…

6A is hitting possible resistance at the SMA200

6A is hitting possible resistance at the SMA200

11 March 2014 ~ 09:45 London Time ~ ECB Constancio makes a statement

Gods. It has been a nightmare trying to produce a reasonably sized (in MB) 3 minute video, but finally I’m more or less content. Note: A time delay of several seconds exists at the start of the video before Youtube finally kicks in with HD, which is necessary if you actually want to see clearly the numbers!

There wasn’t a great amount of key news to review today, and no scheduled data to get excited about either. Some markets did nevertheless put in considerable moves, namely the energy markets, and after the US opening bell, the S&P 500 too, but there was only one small item worthy of a slot on the highlight show tonight I feel (see below). I’d call it a 2/10 on the Hindsight-Impact scale…

ECB Constancio says a few words, suggesting that markets did not fully digest the ECB’s most recent statement, and that further central bank action is not off the table entirely.
I was somewhat surprised by the lack of follow-through on the downside on 6E. After several minutes the market settles and drifts back to a more central trading range.
No doubt some of the slower (human) traders lost a few ticks as they fully expected the market to drop a good bit further.