Geneva, S&P & USD

BarroMetrics Views: Geneva, S&P & USD

What does Geneva have to do with the S&P and USD?

Absolutely nothing! Just happens that I am writing this in Geneva. I must say I prefer the trading hours to those in HK. Awaking at 6:00 or 7:00 am means I have missed the Asian time zone’s trading ( or at least most of it – Geneva being 7 hrs behind HK). It also means that the US time zone ends at 11:00 PM rather than 5:00 am! Very civilized trading hours.¬†

And speaking of trading…..

The S&P continues its QE grind. Last night, the S&P made a 1.50 point new high on below average volume and range. Indeed, as Figure 1 shows, the breakout has been on below the 10-day average of volume.

Prior to QE, in this situation, I’d be looking for a sell-off. But, since QE, what I’d expect to see is a consolidation holding the Primary Sell Zone at around 1984 (basis cash) before continuing higher.

The other ‘long or out’ strategy is the USD.

On Friday, we has the Non-Farm: BLS numbers were about 10K below expectations but the BLS revised the prior two months up and had the unemployment rate down. Nevertheless, the USD headed South for the night. This price action continued into yesterday’s Asian time zone. The USD then recovered in UK and US trading.

For the pairs I trade, the Primary Buy Zone held where the USD is quote currency (e.g. AUDUSD) and the Primary Sell Zone held for the USD is quote currency (e.g. UDSCAD).

I saw the price action as a ‘normal’ retest of the breakout. Of the pairs, I see the EURUSD and AUDUSD as being the weakest against the USD and the pairs offering the best opportunities for gain with the lowest risk.

BTW I’ll be home next week so publication of the blog will be back to normal.

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FIGURE 1 S&P