Sir Pipsalot's Daily Market Update 12-15-2009

Sir Pipsalot · (#1 (**permalink**))

Hey guys,

I'm still in the process of waiting out for a EUR/USD recovery before pushing in short. The trend obviously turned down, and I've been looking for an entry for awhile but haven't gotten enough of a bounce to feel safe getting in yet. With the good possibility of a EUR/USD recovery this week, I think the short to medium term outlook has turned neutral or even slightly bullish for the latter half of this week, especially considering the FOMC decision coming up on Wednesday. I think a rally up to the 1.4750 to 1.4800 region is very possible, and a rally to around 1.4860 has good enough odds that I've placed my limit sells just ahead of there. For shorter term plays, buying dips into support have a decent chance of working, as long as you don't overdo it and are mindful of the possibility of the EUR/USD over-extending even lower as it did in response to last week's US Retail Sales.

In stocks, things are looking a bit confusing technically with some short term upside potentially into the low 1120's, but some major headwinds set to limit any serious advances. My best guess is we get a bit of a pullback followed by a rally above today's highs. Keep in mind though that lately FOMC Decision days are usually fairly bullish for the stock market, so look for some anticipation of that maybe with a late rally on Tuesday. The key level to watch on the downside is 1084, a break of which would signal much further downside. On the upside, I'd be willing to short aggresively in the 1120's, but I'd prefer to wait until late Wednesday (after the FOMC) to enter in case the meeting sparks it's usual risk appetite.

In news Tuesday:

0430 UK CPI y/y (1.8% expected) - Look for agreement from the monthly number (0.2% expected) to stick with the trade, otherwise a whipsaw is likely. Agreement from the Core number is not always necessary, but a nice bonus. Typically this one's good for 40 pips or so, but then price levels out and goes its own way.
If it comes out at 2.0% or higher, GBP/USD should rally 40 pips.
If it comes out at 1.6% or lower, GBP/USD should fall 40 pips.

0500 German ZEW Economic Sentiment - This number has not traded well recently, and there are often whipsaws after the release due to commentary from the ZEW. I am personally skipping it.

1930 AU GDP q/q (0.4% expected) - The move on this release tends to scale up and down with the size of the surprise. A smaller 0.2% surprise should move the AUD/USD 30-40 pips, while a bigger 0.5% surprise should move it 50+ pips.
If it comes out at 0.9% or higher, AUD/USD should rally 50+ pips.
If it comes out from 0.6% to 0.8%, AUD/USD should rally 30-50 pips.
If it comes out from 0.0% to 0.2%, AUD/USD should fall 30-50 pips.
If it comes out at -0.1% or below, AUD/USD should fall 50+ pips.

That's all for today's update. If you'd like to learn more about trading or trade along with myself and my collegues, come join us at Profit Mongers. Our subscription is very reasonable at $179 per month, and right now you can sign up for a 2 week trial to get started for only $29. This offer is for new customers only.

To our success!
Sir Pipsalot

mechtech63 · (#2 (**permalink**))

Good call on the German ZEW, I'm skipping it too.

Good advice as usual.

Sir Pipsalot · (#3 (**permalink**))

The EUR/USD hit another bout of selling on news that Austria's 4th largest bank may fail, so that forced the EUR/USD into another extension lower for now.

REWilliams · (#4 (**permalink**))

EU just doesnt want to correct and let us get a nice entry.

Sir Pipsalot · (#5 (**permalink**))

Quote:

Originally Posted by REWilliams

EU just doesnt want to correct and let us get a nice entry.

heh, tell me about it. I'm trying to be patient though. When you get impatient and sell anyways, you usually end up selling at the bottom or close to it.