They’ll look very different next week given the big euro rally to end the week.
11 Responses to “COT data as of Tuesday’s close”
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AUTOREFRESH 
hi all. i think this website is great
http://wjmc.blogspot.com/2010/05/those-europeans.html
fwiw http://www.zerohedge.com/article/goldman-sachs-second-half-slowdown-has-begun
The renewed optimism in the European situation and the euro specifically doesn’t really make sense given the fundamental picture. The conditions there were rather bleak in an environment where US growth was relatively stable. Now, it has become clear that growth will slow considerably and the chance of a double dip is growing increasingly likely. How will Europe be able to handle the reduction in US demand for its goods? I don’t see any reason for this renewed optimism and the platitudes from the ECB should not make the market believe the worst is now behind us. The stress tests are obviously going to try to present the state of the banking system in the best light possible so those should be regarded with some skepticism. There appears to be a concerted effort to restore confidence and events are being spun to create a positive mood. Speculators are obviously taking advantage of this situation. However, reality is certain to set in soon as the market will realize that a slowdown in the US will be utterly crippling for the Euro zone.
RS…and others…yes, the run up last week in Euro and CHF really was strange cuz next week all the Econ News is really from Europe, we have both ECB and BoE meetings plus so much econ data and not much of anything from the USA. I actually have been wondering if the Play that Sean once mentioned happened????…………Mainly, some of the big boys put in some really big orders at higher prices and in the confustion unloaded a lot of their European exposure going into next week?? If that was the case, they should be cancelling those orders and we could see a massive sell off of Euro and or CHF next week…which really would make more sense…unless the ECB and BoE are going to save everything which I kinda don’t think so because a weak China means a lot of pain for them.
Trading Nymph, yup, that’s another good point, the China story. A lot of factors seem to be coming together at once that are certainly extremely negative for the Euro zone. I think we’ll open the week with renewed fears about the region. As I posted earlier, a consumer retrenchment in the US would be devastating for Europe. Global growth is imperative for the crisis to ease which is now not the case going forward. It will become clear that the PIIGS might never be able to pay down their debt and the magnitude of the load coupled with sharply declining growth will inevitably lead to a domino of defaults. I think the die has been cast and the market will soon come to this realization. Yields on European sovereign debt and CDS prices will likely spike this week.
What about Hungary about to ask for some small change?
http://www.guardian.co.uk/business/2010/jul/02/hungary-bailout-eu-imf
FT has an interesting article today:
It’s no secret: Greece is restructuring debt
http://www.ft.com/cms/s/0/2ac462f6-8600-11df-bc22-00144feabdc0,dwp_uuid=d8e9ac2a-30dc-11da-ac1b-00000e2511c8.html
I’m having a really hard time planning ahead, myself. I’ve told myself that, it’s time to set aside my views and follow da money! I’m going to trade on strictly on price momentum. And be very patient, waiting for the flows to get organized and heading in one direction. Not very much sleep, ahead!
The Euro runup makes perfect sense. Two weeks ago, we had the hedges short squeezing out. Their relentless covering (buying to get out) damaged the technicals greatly. On Thursday, first day of new month, some key ALGO trading indicators inverted to the upside. This caused the machines to buy as they are programmed to do. This buying caught the shorts by surprise so they covered in a panic. This resulted in an epic rally we saw. As we stand now, critical ALGO indicators are all pointing north. Unless the forex fundamentalists sell again, the ALGOS will push this higher. What we need is more selling volume to offset the ALGOS and we will be in balance again. Remember, to trade forex successfully, you must be one with the machines.
“Remember, to trade forex successfully, you must be one with the machines.” Word! Well said.