- Learn ground during the Asian and
European morning sessions yesterday and hung onto the gains in a
choppy range until Bernanke's speech at 20.45 BST last night finally
undid all the positive work. Having set a new 10 week low on Monday
equities managed a small bounce back above the key technical level
of 1290.25 following positive comments from the IMF regarding the
next tranche of the Greek bailout and also better than expected
German factory orders. However, Bernanke said late on in the session
that the US economic recovery was frustratingly slow and warranted
continued accommodative monetary tightening, although he did
indicate QE3 was not likely and so equities sold off with the S&P
dropping 9 points to close back on the lows at 1284.75.
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- Strategy Thanks to Bernanke’s comments the E-mini
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- S&P posted its fifth down day in a row yesterday, which
hasn’t happened for nearly a year. We had a counter trending long
entry yesterday which worked very well until the Fed President’s
comments hit the wires 15 minutes before the close. This morning the
downside has continued due to Moodys saying weak growth and fiscal
slippage may lead to the UK losing its AAA rating and also a worse
than expected German Industrial Production number for April. We feel
the negative sentiment is again dominant and without any other
economic data expected today we look to join the trend with an entry
short on a pullback to the overnight low at 1281.00
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- Alternative Scenario A reversal of investor sentiment may lead
to a bounce in risk assets and a break back above this morning’s
high at 1286.25. This may result in a higher move to test 1290.25
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