Its been a very tough market to trade lately especially as a
day trader, as volatility has dried up to some of the lowest levels on record,
as well as the absence of any sellers which has pushed the Equity markets
massively higher in the past 6 weeks. Despite weak data out of the EU, mixed
data from the US and recession in Japan, it seems the only thing that is
required to keep the markets going is cheap money and QE. The SPX is up
14% since October 16th, Nasdaq is up 14% and the Dax is up 20% of
which 10% of the move has happened in the past week.
The main
explanation for this is the fact that most fund managers are underperforming
relative to the benchmark, which has lead them to push this market up and snap
up stocks in order to become vested and show performance. There is a lot of
cash on the sidelines and this is all coming to work right now, despite very
high valuations and a very stretched market.
On the Bond
front, Bunds have hit new all time highs today at 152.85, as QE talk from the
ECB and lower inflation figures has pushed Yields down. Looking at the
chart below we see the uptrend that has developed of late, with the next target
in the Bund being 153.40, with near term support at 152.47, then
151.54.
With rollover
approaching, we could see some volatility in the roll, but the trend is likely
to remain intact.
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