Friday, November 5, 2010

Two week Performance Update: November 5, 2010

Morning Update:

Guy Hands ... LOL. Poor guy. Talk about an ego who couldn't learn to cut his losses, and then over-leveraging on a reverse pyramid strategy, by risking his whole EMI deal + a hefty legal bill, which ended up backfiring.

On the UK open, strong financial earnings starts of the day but with overall stale price movements going into US NFP.

NFP Preview

Even with beat expectations today, it will be near impossible to makeup the past 4 negative NFP reports in one go. If NFP manages a 9% improvement from 9.7%, that is still a huge 9%!. Fundamentally that may mean nothing, but short term moves will see volatile price action either way.

NFP on Forex:

Strong US Jobs data can wipe out the weekly gains the majors made this week bringing them back to recently minted new support levels. If so, maintaining at key support levels will be necessary for continued dollar bearishness.

GBP/USD: Yesterday's Asian trading lead to very light volume and price consolidation leaving the perfect time to exit positions for the weekend. And exiting is what we saw on the EURO/ASIAN overlap. Pounds trading roughly 100 pips down from yesterdays highs. Noise Noise I say going into NFP. We are possibly seeing discounting of NFP results, just as we saw with the BOE rate decision. Currently levels bouncing off possible short term support of 1.618.

AUD and EUR: Divergence of the AUD and EURO! Yesterday, EUR/USD sold off in late US trading and slightly continued down through Asian hours.

After a big one off sell off during US late trading the AUD continued to trade up throughout Asian trading. BIG price squeeze forming,the AUD will see a big pop with NFP. Being on the right side of this trade will be very profitable.


Yesterday closed at 1221... I'm not ready to cry uncle just yet! SPX DEC10 Globex futures closed
at 1215 yesterday only reaching a high of 1218. Currently trading lower in London hours. Post NFP will definitely tell me if I've been plain wrong on my SPX thesis or if I am correct(I'm looking to see a strong move back below 1200). More focused on the futures vs the spot.


TERRIBLE. Wrong on dollar strength (Though I've a somewhat adjusted view HERE)... so far wrong on SPX. The positive side to this is we made strong postive P&L for the first week of November despite being wrong :)

Expectations for today:

Sector wise what has been driving the SPX in 2010? Industrials, Utilities, and to an extent Consumer staples. Strong expected private Sector growth... 60K, I say neigh!

From a contrarian perspective I will have to say there is not enough confluence among all the SPX sectors and job growth cannot be supported by such a scenario. I expect inline to missed expectations. Which would mean continued dollar weakness here on out... and most likely would mean I am wrong on the SPX.

Watch the BIG noise today a.k.a financial gymnastics, shooting video games, or riding or drowning in the price tsunami.

May the lords of trading be with you today.


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