The big day trade continues.

The main features of the market continues to be 2 spreads. The Italian 10 yr (BTP) vs the German 10 yr. (Bund) and of course SPU/Bonds “Long the S&P 500 Futures and short the 30 Yr. U.S. T-Bonds.”

Volatility in the above is being mirrored in the currencies, ripping from one macro level to another, in a big day trade. You should be looking to make 80 pips minimum on a trade you’re risking 25.

The Metals and the Oil have been following the Risk On-Risk Off theme.

This is presently a market for a skilled professional day trader, not an investor!

The VIX looks like it needs all new price action as well as closes over 31 to confirm more stock downside.

Oil… a close “today” below 97.10 would mean there is more downside for the oil and risk assets in general. With a close below 97, Oil could easily break to the mid 92 range coupled with a 30 handle drop in the Spu’s.

Grains…There is a crop report this A.M.

We are not contemplating doing any trades for at least another week for our longer time frame traders.

Day Traders…every trade is still the same trade! Find one with low risk that is in keeping with the risk theme of the day.

This is a market which risk has to be managed tightly. If you don’t have a good stop in mind, don’t do the trade! Risk 1 to make at least 4 or don’t do it.

Model Trading Portfolio…Current Holdings

No positions

Our view is that the rest of the year will be a High Volatility, Highly Technical, Rumor Driven, Time Frame, Lemming Effect Day Trade.
The question is who’s day? Right now it’s Europe’s.

Medium Term View…

We believe the political and economic risks are now heavily skewed to an all cash portfolio. The markets will become a big day trade.

30 Yr. Bonds …I’m treating 147 as the high for a long time. 143.10 now becomes our upside pivot. Closing above this level
will be short term positive the Bonds and negative the equities.