54% Of Chinese Stocks Halted & USD Gains – July 8th 2015
54% Of Chinese Stocks Are Halted…Go Back To Sleep Lemmings
Classic risk aversion means gold and silver gains along with USD, CHF, and the JPY. On the flip side equities get smashed. As of right now we are really not seeing true risk aversion. I probably sound like a broken record but once again metals get smashed while over 54% of Chinese stocks get halted?? Let me get this straight. The stock market associated with the largest economy in the world is getting smashed and metals drop as well? Something doesn’t smell right. Then again does it ever? Not when you have a group of criminals that are immune to prosecution running the world.
Meanwhile in the US equities rally off the lows. When the whole world is going to hell you might as well put your money in the least crappy location I guess. During our live training room today I was watching equities break through the lows and I noted the close of today was going to be important for the short term. As we were breaking the possibility of a stop run of the previous lows was thrown out and in fact that is what occurred. I’m not saying its all upside from here. What I’m saying is that a bigger daily stop run reversal like we currently have generally shifts direction for at least 2-3 days. The next key is going to be what the market does as it approaches the 61.8% retracement of the latest drop over the last few weeks. If today’s stop run lows break that is when I will get concerned. Especially on the daily chart we very rarely will see a stop run on a stop run. Another words when a stop run gets broken its often going to keep on going in the direction of the break.
Euro Recovers Most Of Early Losses
There is a lot of news coming out tomorrow that will/could have a large impact on the Euro. Obviously meetings on Greece are still on going with a new deadline of Monday set. Additionally we have the FOMC meeting tomorrow which I will cover in more detail below. It looked like we were getting a first push down in the Euro during the early part of the NY Session today. That was quickly changed during the late NY Session as the market made an almost complete retrace of the earlier push down. With that being said I still be open on direction today if a valid entry sets up from anyone of our levels.
Pound Makes Potential First Push Down
I do have some concern about this potential first push down in the Pound. As I discusses at the beginning of the week the COT report is setting up towards further upside potential in the Pound. I also stated I do expect a further retracement down before that move up occurs and we are getting that. The only question then becomes, if the move up is going to occur then when does the retrace end? The best decision is to let the market change direction and trade what the market has already shown you. How many people have been trying to short the equity market on the way up? Each and every one of them is heavily under water. Let it turn and then trade with it.
At this point on the Pound my short term perspective is for a second push down. Remember were not just randomly taking entries when our levels are reached. We then need to see a valid entry setup such as the confirmation entry stop run reversal.
Forex News For July 8th 2015
Eurogroup Meetings – With Greece being the main headline lately expect the potential for volatility. As I’ve said many times before there is no way to fully protect yourself against a tape bomb surprise. The best way to protect yourself is with a live audio squawk based news like Talking Forex or Trade The News.
FOMC Meetings Minutes – With Greece getting the attention will we see them squeeze anything in. If there is any further or more definitive talk of rate hikes it would be traumatic to the market. I wrote an article about 2 years ago talking about a hike being the catalyst for the next down turn. If the economy cannot grow with interest rates at zero then what do you think is going to happen at the slightest rise? This is still the biggest risk IMO. I can’t find that article but I did find another article and video I made on the subject titled, Understanding The Economic Climate – Learn To Protect Your Wealth. As far as FOMC is concerned, this is past our trading hours and as always I recommend sitting on the sidelines for the initial reaction.