All traders learn that there are 3 positions to have – long, flat or short – with flat sometimes the best ahead of fundamental news which risks changing the mood, writes Bob Savage Friday. He's presenting at TradersExpo New York March 11.
This is the case today where many are still reading their emails from the holidays and not quite sure what to do about today’s one-two punch of U.S. jobs and FOMC Jerome Powell. (He says he won’t resign if asked.)
Short weeks can kill traders and this one is one for the history books with volatility and fear leading views for the entire year. The curse of trading the first 5 trading days foreshadowing the next 235 days is in play.
The problem is short into events like today isn’t easy given the ongoing spike in volatility. The balancing act of risk/reward make today more about 8.31 am and less about the feel good hopes that started overnight:
1) Pelosi as the new Speaker of the House pushed a government spending bill – assumed dead in the water – but still a positive to some investors.
2) China PMI for Services jumped higher and lifted hopes that the worst fears about growth are overblown.
3) China PBOC cut the RRR by 1% with two stage easing 0.5% effective Jan. 15 and 0.5% more Jan. 25.
Markets are back up on these stories with hope that the U.S. jobs report will be robust and good enough to make this short week hobble home for a longer weekend rethink about risks and asset allocation into 2019.
For forex players, this is a time when the USD alternatives get interesting with the euro (USD/EUR) back in play and looking perky with hopes for a 1.1580 breakout, that would reflect less about the ECB and more about the FOMC reactions into the data – as the Eurozone 1.6% HICP headline and the even weaker PMI Composite makes the changes for ECB hikes into 2020 even less logical.
View TrackResearch.com, the global marketplace for stock, commodity and macro ideas here
