Waiting Out The Storm

We’re being treated to a veritable laundry list of market moving events today, which for me means to hunker down and wait for less volatile conditions. By the time you read this Mario Draghi will already be delivering his speech which is scheduled for 8:45am Eastern. At 10:00am we get the Bank of Canada’s interest rate decision and just to round things off at 2:00pm it’s Yellen’s turn to deliver this month’s FOMC minutes.

General consensus thus far suggests that the Fed will be hiking rates a little in June. But as always attempting to predict Fed action is a roulette game and what’s being said is primarily aimed at gauging public response to what may actually be done later down the line. Which is interesting in itself if you think about it. The entire financial mainstream media is awaiting the Feds report with bated breath while the report itself is designed to assess market sentiment. What few ever realize is that the Fed rarely leads and mostly follows. So who’s watching whom?

Clearly momentum in equities has been waning and perhaps some of that was in anticipation of whatever is being decided by several central banks today.

The recent (realized) volatility patterns on the 60-min E-Mini are well worth watching right now. As you can see every time the RV signal swings above its lower Bollinger we’re getting a fast move in one direction or the other. And guess what – once again we’re lined up for a lower BB breach. Which way it’ll swing is tough to predict and somewhat dependent on what happens throughout the coming hours.

That said, a fast move to the downside would represent a great dip buying opportunity. A spike higher on the other hand most likely puts us into new all time highs and for me personally that means inactivity until further notice.

Quick update on our bonds campaign which was stopped out earlier this morning. There’s actually a chance it’ll bounce higher from here but it is what it is and I’m happily taking another 2.5R to the bank. If a new entry opportunity represents itself here later today or tomorrow then I’ll be sure to share it.

Otherwise I’m basically just waiting out the storm today. The EUR/USD is looking super juicy right here near its 100-hour SMA but I just don’t trust Draghi not saying anything stupid again. FWIW – if he plays it cool and does not suggest further measures to suppress EUR bullishness then we could easily see the EUR/USD snap higher into 1.13 or beyond. Whatever he does, don’t let him drive on the freeway and we should be okay.

Due to a rising Euro life is getting more expensive over here in Europe. So do your part and sign up for a month or two of Gold or perhaps the Zero – those servers unfortunately don’t run on Alpine milk and fresh air after all! Little tip – if you have a pair of analglyph spectacles lying around take a peek with them at the picture above which I took last week in Austria. Does life get any better than this?