US Equities Tumble, USD Mixed April 20, 2015
US Stocks Take A Dive Without Late Day Prop Up
Its funny how we start to think that something is wrong when any dip in stocks dont get the last ramp up at the end of the day as if seeing the plunge protection team (aka Fed Member speech, or HFT or the NY Fed stepping in) at work on a regular basis is actually normal. Is it not really amazing what we can get used to once we are exposed to something far from normal for extended periods of time. Of course there could be several reasons for this but the most ominous would be what I read in todays news. See below
Maybe it’s because all ammo (and there has been no silver bullet more powerful of late than a Central Banker press conference) is being reserved for a much larger crisis looming on the horizon. i.e. Greece and all its tenuous implications calling for an “All hands on
printing presses deck, battle stations” response.
To use the “reality show” thesis for an analogy: This is either going to end in another season ending episode (as in – to be continued.) Or, a series ending finality (as in “That’s all folks!”) If it’s the latter; contagion has the aspect of taking down the whole network (e.g., the EU) And that reality isn’t based in some scripted “reality show.” That script is quite possibly – all too real. And the bankers know it.
Now thats just one possible scenario but I have to admit it sure seems most plausible with the Greek government being pushed closer and closer to either snap elections or a referendum on staying in the Euro. Enter the latest in Greek negotiations if you could call it that.
And then Greece brought out the tactical weapons: “Snap elections or a referendum are possible options should negotiations with creditors stall, Dragasakis said.“
Which goes to the heart of the problem, because while the Greek population wants an end to austerity (hence the election of Syriza), it also wants to remain in the Eurozone and keep the Euro. As such a referendum and snap elections would finally push the decision away from the government and give it to the general population, something the eurocrats, who pride themselves in their “technocracy” are terrified of, and would never forgive.
Meanwhile, Greece may have no money left but it still has pride: “Greece won’t agree to any privatization, Energy Minister Panagiotis Lafazanis said in an interview published Sunday in Athens-based Real News newspaper. While “so-called” partners, including unidentified International Monetary Fund officials, want to “blackmail” the Greek government into adopting measures that would hurt the working class, “we won’t betray the people’s mandate,” he said.
EUR/USD Goes Into Chop With Equity Drop
At this point I wont have a bias for the EUR/USD today. Having the push up rejected and a nice head and shoulders on the hourly chart does suggest a reversal but the safest place to take it will be at the highs with a stop run. I will be open for the manipulation at the Asian highs of 1.0817 since we have the wide range already but I will need more than a single set of legs considering the added risk. The only place I will be looking to go long is down at 1.0748 but would be happier to be short already if it tests there.
GBP/USD Rejects Monthly Highs
I have to say I didnt expect such a deep push above this months highs on the GBP/USD before it pulled back to close the day below 1.4976. This pair does show more potential for the reversal with th how it closed Friday but thats not enough to give me a solid bias considering the extended pushes. This could just as easily be the resistance we would expect from such a level and having the 1.5000 psych number there surely helped. Again I wont be having much of a bias on this pair and looking to the extremes for the safer entries but the Asian highs at 1.4983 are valid but prefer a test higher into 1.5000 and a clean set up if I am going to take a riskier short. Otherwise the 1.4915 will be the place to potentially get long with the four hour 200 sitting there as confluence.
EUR/JPY Follows EU Chop
We dont have much for direction on the EUR/JPY either today. Again the safer entries will be at the extremes but the 128.13 is valid for a long and event though its higher risk the hourly 200 being there takes some of that away so I will be open for the long there with the right price action. Otherwise 128.73 is the best short and 127.85 the safer long.
Forex News Today
The calendar is pretty much dead today other than some German PPI data that shouldnt really get them moving. Of course there is always potential for a Greek tape bomb or any others that feel the need to do some verbal intervention off the cuff. Otherwise today should be more of a price action driven day.
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