The Day So Far
Yesterday gave our traders one of the opportunities of the year as confidence came back to risk assets after a week of turmoil and volatility. Overnight and in the early morning session equities had delivered an impressive rebound which had the potential to shift market sentiment. However despite this shift crude had not yet responded to the recovery in expected future demand. As soon as 39.85 was broken we were set to take advantage of the move higher but had not expected such a significant move with our targets set at 41.00. This level was smashed as WTI staged an almost 10% gain on the day to breach $43.00! In other assets the volatile conditions continued with the S&P strategy and EURUSD strategy also performing incredibly well.
The Afternoon View
Already the markets feel serene and calm compared the activity we have been used to this week.This, in the medium run, should be good news for equity bulls, extreme volatility such as we have seen does not instil confidence in bullish investors. In the short term the volatility is not over however, the chart of the SnP actually looks very similar now to after the Flash Crash on May 9th 2010, and that did not bode for a good 6 months for risk assets. After suffering such a shock correction traders now look for extended moves and this can create a self fulfilling pattern lower in risk assets.This morning fixed income has been higher and equities trading generally lower, we will be positioning ourselves for a quieter Friday with risk being taken off the table before the weekend.
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