The Sell Friday and Buy Monday Rewards Less Obvious to Traders
01/22/2018 6:00 am EST
Bad things can happen any time trading a book of risk. Weekends are always problematic. This set of Friday rules has been lost somewhat as risk on moods across almost all asset classes makes the rewards less obvious, writes Bob Savage, CEO of Track Research Thursday.
Fridays used to be more important. You spend the week trading the trend and then reverse it for safety into the weekend news vacuum.
Bad things can happen at any time trading a book of risk and weekends are always problematic.But this set of Friday rules has been lost somewhat over the last 2 years as risk on moods across almost all asset classes has made the sell Friday and buy Monday rewards less obvious – dips have been a precious commodity to traders.
Perhaps we are back to the old school and Friday rules will be in force given the focus on U.S. government shutdown risks and with little other economic or other events to shift the headlines.
This means that the U.S. dollar (USD/EUR) and the U.S. rate markets are going to be the key barometers for risk-off moods. There is a tail-risk that this is going to lead to a larger move down in the dollar and in U.S. assets. However, politicians like central bankers, watch markets and if they see fear and blame from them for their inability to get a spending bill passed, watch for the usual set of reversals.
For the USD, the 91.01 and 90.11 levels look important and little else matters. The key day reversal the other day didn’t manage to do anything yet in Asia, perhaps we are all back to waiting for UK retail sales during Christmas and the British pound (GBP/USD) to be the tie-breaker in the race for dollar recovery.