Morning Thoughts June 28

  • Another good performance yesterday – VWAP held on SPX all day (we tested it more than 5 different occasions, and was a great support) – Overall not much short-covering (Energy saw biggest squeeze) – BETA bought (RTY and SOXX good moves). Volume tepid….5.8b shares – down 3% vs previous day and down 20% vs. 20day.


  • At 3pm et we started to rally after an FT article reporting that Euro leaders have worked a solution before the summit and most likely plan is to use the €440b rescue funds to purchase Italy and Spain bonds.
  • Now eyes on today Euro Summit – along with U.S. GDP, Core PCE and Jobless claims
  • Note that futures are gain gapping down big this morning causing anyone who leaned long after yesterday’s rally to be stopped out or hurting.  My theme remains clear for the time being; no overnight risk in the portfolios I manage
  • EURUSD is weak again today and note the bear flag we broke out lower of earlier in June.

  • One key indicator I am watching is the steepness of the Spanish bond curve.  On the chart below note how the curve has gotten flatter over the past few weeks.  What it means is that near-term risk is being considered ever so much higher.  And the flatter this yield curve gets the more pressure there will be on the EURUSD cross
  • Risk is huge here, keep your trades short if you must trade at all


Leave a Reply

Your email address will not be published. Required fields are marked *