The friday rally was almost as if the financial markets had forgotten the problems plaguing the US and EU markets. Now I do believe, looking at prices at resistances levels being another reason, that we are going to see some disappointing news over the course of the next few weeks which will allow markets to correct back to support zones. The first signs of this will be when markets increasingly ignore additional good news.
Fundamentally there was reason enough for financial markets to paint those massive green candles on almost all financial markets.This has been a roller-coaster ride. Spain and Italy refused to sign the stimulus package which would have led to a failed summit. This tough negotiation stance obviously succeeded. Under pressure from peripheral countries, the heads of governments from the EMU member states came together and agreed on emergency measures to help the highly indebted countries:
- Direct help for banks: The ESM treaty states that the rescue fund is not allowed to directly recapitalize banks but should transfer the money to the peripheral governments. This, in turn, would boost these nations’ government debt, which is why Spain and Italy protested against this procedure. Tonight, they succeeded with their demand that the ESM in the future might directly help banks. According to the summit communiqué 1, this first of all requires the installation of a common banking supervision in the euro zone under the auspices of the ECB. The governments intend to reach this until the end of 2012.
- More flexible help: According to the summit statement, the heads of governments agreed to “flexibly” use the existing instruments of EFSF and ESM to support the government debt markets. The ESM treaty guidelines as they are already allow that the ESM buys already issued government bonds from the crisis countries without the need for these countries to commit to stringent stabilization programs which are regularly controlled by the Troika. Such loose requirements also apply to the so-called precautionary financial assistance which are credit lines granted to crisis countries by the ESM. On first sight, therefore, the heads of governments did not agree on something new tonight. However, EU president van Rompuy in the press conference gave rise to the impression that the conditions attached to these support measures will be loosened further in the future.
- Spain: Spain already applied for EFSF help for its banks. Should this be transferred to the ESM later on, these claims should not be preferred with respect to other creditors. Spain insisted on this rule because it feared to deter private investors. Growth pact does not much to help growth Already yesterday evening, the heads of governments agreed on a EUR 120bn stimulus package for the euro zone. This program equal to roughly 1 ½ % of the euro zone’s gross domestic product – on first sight a sizeable sum. However, taking a closer look at the components of the program reveals that the government heads are not really committing any significant amount of new money
ES Continuous ends the day at the upper bar of 25,2 BB line which also coincides with the 100 DMA in the close vicinity. This is the second attack on the 100 DMA at 1358 zone in June. What makes this attack special is the shock and awe that i has managed to create with the move from 1320 to 1358 coming in one single day. Where do we go from here? Well two things could happen:1. We see a strong close above 1360 this week which just cements that the floor is in for 2012 (High likelihood)2. We see future fall back to 1320 zone this week which will be the more rational expected outcome.
ES on weekly stands above the BB25,2 at 1348 and 20 WMA at 1356. The push higher seems to have taken these out but given some space for momentum which allowed prices to swing. I strongly suggest to wait for a week more to see if 1356 was truly taken out. The downside 1280 looks bleak but still possible on the weeklies.
BTP has massive gaps at 97.0 which is almost sure to be filled. We saw another case of gaps being closed on friday as EURUSD closed 1.2580. These gaps here is of the highest priority and they will be closed which means EURUSD has downside back to 1.253 zone before any further charge at 1.2780.
EU Schatz for all the drama on EURJPY charts still closed almost where it opened which means the bulls fought back the lost territory. Schatz has the potentail to go full back up to 110.60 before any furthe test of the lower boundary. Inc ase 110.4 gives way, there is but air below to 110.039
EU bunds too like the schatz saw a late fightback on fri as prices closed well above 140.5 zone. Can the prices go for another test of 142 which will fight with our thesis of a retest of 1320 zone on the ES.
This is an easy chart to read. EURJPY charts ends at 100.98 which is after testing the 100 DMA at 101.46. The prices just about managed to expand the bollingers. The daily stochastics are bending lower while vortex too negative thus indicating this was short covering rather than well structured trend move. EURJPY will come down to 99.5 before re launching if at all.
The inside day mentioned more than once proved to be straw in the cames back as the inflection point at 80 was taken out and almost a gazzilion shorts covered by to provide June second longest green candle. The pair may still have enough to go for 82.76 before taking some rest but if it does turn back from here back to 80, should not surprise at all given the over extended trends in ES.
The June portfolio results are now put up at the performance section and is at the bottom of the current post. Please refer back to the site to see the performance.
For the month of June capital3x made 122 forex trading calls. 62 forex trading calls were executed while remaining missed entries or were cancelled. 38 of the 62 forex trade calls which were executed hit targets while 24 got stopped. A total of +952 pips were made from forex calls while +65 handles were made on ES SPX Emini trades.The entire Month of June 2012 forex portfolio is shared below:
There were 16 ES Emini trades executed for June 2012 as shown above.
Net of stops, they made 65 handles. For ES trades, we greatly rely on our internal bond market indicators: Gladiator and FalconFurther comparison of Capital3x performance over months:
Across months, the performance stands as:
Please note that from June we have started to account for the ES futures handles separately and hence the 65 handles on ES futures are not accounted in the above comparison sheet for June. If you were to include them and use the same rule as before to calculate the pips won, then the winning pips for June will be +1080 pips.
Capital3x stands out from the crowd in the murky world of internet forex trading by being able to trade its own bond market indicators to trade ES futures and Forex pairs. Not only does improve our accuracy to be among the best on the net but also is reflective of C3X ability to be at the front of providing superior forex research and setups.