Wednesday, January 14, 2009

Tactical note: Now from short back to Neutral





We have enjoyed a nice run from 935-00 to 835-00 (short the S&P) and hence we have taking almost all our positions of today except short EURUSD……we took off: Short gold, short eurchf, long bunds, short S&P and Stoxx50.. .


It is as much “money management” as a believe in that the market could bounce from here – but clearly the market is now closer aligned to us on the present themes:

  1. China growth an issue – export/import numbers have now confirmed our view…•

  2. Europe in trouble on credit (Portugal, Greece and Spain --- downgrades and potential downgrades)

  3. Obama premium should not exist --- (our new catch line on this being: The Obama plan is like jump starting a car UP a hill!)……

  4. January effect is a concept, and nothing more than a concept..


Upcoming events which we need to gauge before recomminting…


  1. TARP – 2nd installment – by asking President Bush to ask for the money, Obama initiated a 15 days period inside which Congress needs to approve. Right now it looks there is Sunday vote(coming Sunday) but he is already facing rebellion from leading Democrats! (Click on Rebellion for link) http://tinyurl.com/a6ntaq

  2. ECB announcement – despite ECB should go 50-75 bps tomorrow and at next meeting – they will go 25-50 bps, Pause, cut, Pause, cut, Pause… Trichet loves to hear himself talk, but the game is changing and fast.

  3. Redemptions – January 15th widely rumoured to be “magic date” •

  4. My friend and S&P guru Drew Baptiste of Morgan Stanley tells me 810/820 and 835 ish…. First tactical target(From Drew’s email) S&P Micro to Near Term (871.79 CASH 862.50 SPH9) Off the 942.00 rebound high (January 6th = current 2009 high), SPH9 is declining in an “impulsive fashion” to date (a still unfolding five-wave sequence). Yesterday and again today in the Globex session, SPH9 traded up to proposed micro term resistance at 875+-2 before turning down. The next level to further expose the downside is 855+-2 (5 week low), a break of which exposes a minor cluster at 838.50 / 836.00, ahead of what T.A.G. views as a near term ACTION / REACTION area at 820 / 810. T.A.G. will reassess the current Near Term Bear Mode above 877 / 880.

Having a nice profit in January drives this move, but post-analysis as seen above seems to support taking one or two days for thoughts.

Positions:

Cash @ 95% - short EURUSD

Safe trading,
Steen