EURO, JAP YEN and EURO-YEN
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Our comments on Dollar-Swiss, Sterling Pound and Australian Dollar are given below
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The view has not changed much during the day. The market remains highly uncertain and volatile. Euro (1.3825) continues to face Resistance at 1.39, which was tested a couple of times during the day. USD-JPY (104.88) continues to remain pressured below the 21-day SMA at 106.20 and could re-test the Support at 104.50.

Swissy (1.1328), has found Support at 1.13 during the day, however the immediate Resistance at 1.1330 cannot be overlooked either. Resistance at 0.78 could push the Aussie (0.7750) lower towards the Support at 0.7660. Cable (1.7653) is uncertain and faces Resistance at 1.7760 while 1.76-75 provides Support.

Our morning comment is given below.

TRUST BEING SOLD FOR TRASH
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We are not going to post the usual trading calls today, because there's no point - the market is too volatile. The biggest trade going just now is the selling of Trust in exchange for Trash.

The market is waiting for the House of Representatives to vote on the bailout package today and betting that the plan will be passed. That may well be so.

The point that troubles us is that several rules are being changed in order to accomodate this plan - one such rule is the "mark to market" rule. Whether the "mark to market" rule has merit by itself or not can be a subject of debate (and surely must have been extensively debated when the rule came into being for the first time), its proposed suspension just now is being pushed not because there is a debate on its merits/ demerits.

The suspension is being pushed because Wall Street knows that there IS NO MARKET for the trash "assets" it holds - and that is why it wants to replace "mark to market" with "mark to model". What "mark to model" basically says is, "Trust me, I know more than you or the market. And, just to clarify, the trash will be marked to MY model, not to yours".

The Adminsitration is pushing this absurd amendment to accounting rules. And where is the question of "trust" anymore, when the owner of the stadium (the Treasury) tells the refree (the SEC) to change the rules of the game in favour of the loser (Wall Street) after the game is over? Where is "trust" anymore when banks are not willing to lend to each other? And yet, the Treasury is asking the US public (and the world) to trust the banking system.

To our mind, therefore, TRUST, the most priceless of assets, is being squandered at throwaway prices today, in exchange for worthless trash.

Further, the Treasury, for all practical purposes, is going to end up taking in all this worthless trash, which no bank wants to buy (or why else is there no market for the trash anymore?). Yet, the world is piling cash into Treasury Bonds. We just cannot understand this.

And when we cannot understand the market and the trade, there is no point participating in it.

Happy Trading!