Digital Markets Advisor took a day of rest yesterday and perhaps traders should have too. If you happen to be a short-term trader in the broad markets and lucky enough to be on the correct side of the trend you may have profited this week. However if you are a trader holding onto positions for several days without enough equity in your account and using a large amount of leverage you have likely been whipsawed and may need to refund your account as of this morning. At least your brokers are probably happy.
Forex, commodities, and equities have put on fast and volatile shows that have left many values like the EUR/USD, GBP/USD, Gold, Crude Oil, and global equities feel as if they are standing in place but on a floor that continues to shake. The JPY has continued to lose some ground to the Greenback and is certainly at a mid-term low alluding to the possibility that it might test its March weakness. The question for the JPY is if it really will evacuate its long-term consolidated strength or if this is merely an illusion?
The choppy sessions seen across the boards relate directly to investors trying to decipher the ‘larger picture’ risks that have plagued the global economy since 2008. Economic reports continue to turn in mixed to lackluster results. New Home Sales in the U.S. yesterday showed that there is no magic pill for the housing sector. The ‘fiscal cliff’ discussions put a sudden dose of optimism into Wall Street when several media outlets reported progress on the possibility of a ‘limited agreement’, but the reality is that Democrats and Republicans have a way to go. And it should be noted that even if they are able to find a ‘solution’ that it will likely be yet another political attempt to avoid as many tough issues as possible and merely a way to make sure the U.S. government is functioning enough not to ruffle the feathers of its immediate lenders – meaning the likes of China who continue to buy huge quantities of U.S. bonds.
The U.S. will release Preliminary GDP figures today and the expectation is a gain of 2.8%. Also weekly Unemployment Claims numbers will be forthcoming. Tomorrow German Retail Sales and French Consumer Spending results will be published.
Gold as of this writing is near 1721.00 USD which is well off of its highs from the beginning of the week. Crude Oil has also lost ground. Trading in the commodities as said above regarding the broad markets has been volatile.
What traders are witnessing are the effects of the global confidence game being played by politicians and their appointed officials who are doing their best to keep investors calm. However, quantified numbers still continue to show a massive amount of debt and lackluster growth. But it is the holiday season and smiles are now in fashion and the mantra ‘don’t worry, be happy’ is the vogue.