Last week’s decision to hold through a trading bot driven low participation reversal higher appears to have been a good one as of right now. At least the campaign managed to survive the weekend and that’s no small feat in this volatile market environment, which incidentally is why I am choosing my words very carefully. The ides of October often bring us stormy weather as well as volatile markets. Given ongoing fears of a large scale sell-off another momo update seemed appropriate.
In my recent momo update I was quite adamant about the increasing odds of a major market correction. Since then we’ve seen a further increase in spasmodic intra-day gyrations across the board, fueled by a mix of low participation bot trading, heightened emotions and a constant stream of contradicting market rumors (e.g. Deutsche Bank). The trading lair has been in defcon 3 mode for a while now which clearly affects our daily trading activities.
Today and tomorrow we are being treated to a veritable triple whammy of central banker sponsored market perturbations. For an early sample of what to expect over the next two sessions look no further than the spasmodic whipsaw the USD/JPY just painted earlier this morning.
We’ve got a lot to cover today, so I will spare you the pleasantries and dive right in. Yesterday’s session once again must have been frustrating for many participants due to a continued lack of direction. But I expect resolution to be delivered swiftly and brutally as the equities are now coiled up like the proverbial snake.