The broad markets continue to show traits of being unfit. While Wall Street continues to primp itself and toy with new highs, traders must be beginning to wonder if they are trying to lift too much weight and the barbells are going to come tumbling down and strike. Even as global bourses continue to flex excellent results volatility is starting to claim victims caught up in sudden storms where price spikes are occurring. The Nikkei index of Japan opened with radical declines earlier today only to climb back into positive territory before it closed.
The Preliminary GDP report in the U.S. yesterday missed expectations with a mere gain of 2.4% compared to the estimate of 2.5%. This actually might have helped Wall Street fuel more gains from investment institutions which may have interpreted the lackluster economic showing as yet another clue that the Federal Reserve will be left with little choice but to continue its monetary policy tactics. As June gets ready to kick in tomorrow it appears that traders are beginning to become more nervous and grasping for reasons to stay long in the equity markets as summer begins.
The EUR and GBP have gained against the USD in the last twenty-four hours as ranges are continuing to test the forex landscape. Commodity prices except for Gold have largely declined however. Crude Oil has sunk to short-term lows and may continue to face headwinds going into the weekend without any signs that the global economy is about to suddenly emerge from its sluggish path. Gold has climbed as noted and as of this writing the precious metal is around 1409.00 USD. Gold may prove attractive to traders who have the courage to try to short these higher values.
The broad markets continue to show signs of volatility and traders should be aware for short-term thunder claps. Personal Spending data will be released from the States today and two other reports that could cause a stir are the Chicago PMI reading and the Revised Consumer Sentiment marks from the University of Michigan.
German Retail Sales figures have already been released today and were negative. The result of minus -0.4% was far below the expected gain of 0.3%. Germany’s economic data has taken a turn for the worse in the past few days. Its unemployment numbers on Wednesday surprised many with a higher amount of jobless claims. With Europe sinking into a deeper recession the weakening data from Germany only increases the vigor of E.U. economic critics.
Bears who have been waiting for their chance to short the rising markets may see their opportunity approaching. While it is never advisable to step in front of an approaching train at some point the locomotive will likely have to stop and find more fuel to run on. The global equity markets have been running on cheap central bank money for sometime, but there has been a sizeable crowd of investors who never hopped aboard. The bull rallies that have been underway since the beginning of this year have been drawing ire almost since they have started from doubters. While some market wizards continue to proclaim that the U.S. economy is recovering and optimism should be cheered, many including Digital Markets Advisor continue to be weary of possible storms.
Ranges must be taken advantage of by traders and unless deep pockets are involved it may prove more profitable to get in and get out of positions quickly while forex values and commodities test their daily ranges. Timeframe is vital in these market conditions. Going into the weekend we are not particularly in love with the idea of holding onto trades until next Monday. And if the volatility that has been seen in Japan from the Nikkei is any indication, equity markets worldwide may begin to see some downward pressure.