Market Report Tuesday 7th of April 2020
Big risk on rally yesterday and it continues this morning. Was huge volume on the break higher into the close last night, so it looked apparent that the shorts were stopped out and the move higher was also a lot of short covering. We have now basically retraced 50% of the down in most US equity indices. To me it looks like the market is front running this risk on. The outlook now is that things will work out very smooth and the Corona virus is pretty much going to be a smooth solution. It might be a bit aggressive until we see more data supporting that fact in, especially NYC. It also looks like short sellers are covering their positions ahead of the Easter Holiday. I think it will be a bit more problems ahead of us and looking at several European countries it has taken several weeks to see the light at the end of the tunnel on the corona outbreak. It looks like in general that it will be important to keep the approach flexible and accept that the equity market could easily move back towards the all time highs seen earlier this year or it could also fall below this year’s low.
Gold is made it up to 1712 this morning but was not able to hold the 1700 level and it now back towards the day’s low at 1693.
Another thing to note is that the correlations between different assets are a bit all over the place over the last couple of days. So, I think that indicates the market is just very confused how to price different assets at the moment. Today’s will be very interesting to see if the market can hold the gains created over the last few days. That is going to be key to avoid a fall back to test the breakout levels from yesterday.
Happy Trading
Erik – Delta1Trader Technology
Big risk on rally yesterday and it continues this morning. Was huge volume on the break higher into the close last night, so it looked apparent that the shorts were stopped out and the move higher was also a lot of short covering. We have now basically retraced 50% of the down in most US equity indices. To me it looks like the market is front running this risk on. The outlook now is that things will work out very smooth and the Corona virus is pretty much going to be a smooth solution. It might be a bit aggressive until we see more data supporting that fact in, especially NYC. It also looks like short sellers are covering their positions ahead of the Easter Holiday. I think it will be a bit more problems ahead of us and looking at several European countries it has taken several weeks to see the light at the end of the tunnel on the corona outbreak. It looks like in general that it will be important to keep the approach flexible and accept that the equity market could easily move back towards the all time highs seen earlier this year or it could also fall below this year’s low.
Gold is made it up to 1712 this morning but was not able to hold the 1700 level and it now back towards the day’s low at 1693.
Another thing to note is that the correlations between different assets are a bit all over the place over the last couple of days. So, I think that indicates the market is just very confused how to price different assets at the moment. Today’s will be very interesting to see if the market can hold the gains created over the last few days. That is going to be key to avoid a fall back to test the breakout levels from yesterday.
Happy Trading
Erik – Delta1Trader Technology