IIFT Daily Note with Peter Brown

Amazing rally, will the ECB do a u-turn?

Posted by:  |  Time: 7:47 am  |  Topic:  |  Comments: 2
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There are days in the market when you fundamentally disagree with the market. Yesterday was one of these and you loose. I did, but that is what stops and risk management is for. We started the day with bad figures from the Euro zone and selling. Then the market focused on a comment from an ECB member that it may be time for a rate cut. This story was released at the weekend but a re-release yesterday caused the most amazing rally. The market has decided that the ECB are going to change tac and reduce interest rates and start a stimulus policy. Wow! The most money I have made in my career has been backing the ECB to be constant. There was no comment from Draghi yesterday and this rally to me is based on pure hope. However when you stand in the way you get killed.

So today I may have to accept that this rally will continue. DAX and IBEX are at crazy levels but I will not sell until this stupidity leaves the market. I will be stunned if the ECB , so steadfast in their history have, at the drop of a pen, change the habits of a lifetime. Expect this market to reverse hard, if not today then soon.

Elswhere we had a flash crash to add to the excitment and the Apple results were a damp squid.

To trading: Euro is weak on the basis of what I outlined above, rate cuts etc, 1.3000  to 1.2980  support

S&P in rally heaven and back to it’s buy on dips  1570 support 1582  and then 1590 resistance.

USD/JPY still holding below 100 watch for the corrections.

Today, be very careful on the buy side, one negative comment from the ECB on interest rates will crash this market. Trying to find the top is not the strategy (tried that yesterday) The market moves are massive so wait for the day trend to emerge and good luck.

2 Comments

Ciaran Scolard

April 24, 2013

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It is so refreshing to read an honest credible market blog. Your daily morning update is essential reading and certainly appreciated by traders. Thanks – and keep up the high standards!

    Elva Burns

    April 24, 2013

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    Thanks Ciaran,
    Will get a handle on this over the next few sessions

    Peter