Friday, February 26, 2010

25/02: Shares bounce decisively off intra-day lows

O Goldman, who art on Wall Street...

So might begin my inspired chant of contrition to those crazy enough to read these pages. (Thankfully there are very few of you.) More frequent posts are forthcoming. Oh yes.

Markets recorded a volatile session on Thursday, with the Dow initially free-falling nearly 188 points before paring losses to close down 53 points, or 0.5%, at 10,321.

EUR/USD trade proved dramatic, with the European currency declining to an intra-day low of 1.345, a level only a whisker above last Friday's touch of 1.3444, which represents the currency's nadir since May 2009. Of course, fears of Greek default and spillover into other EU weak links are the drivers behind Euro weakness.

Gold futures also had a notable session. Front-month contracts kissed a critical support area around $1090, a support that takes the form of a descending trendline that begins at price action on December 3, 2009 (a day after the market's peak), incorporates the upward reversal peaks in mid-January, neatly contains the highs of February 3rd, and beautifully underpins support of February 17th, 18th, 24th and 25th. I anticipate either a durable bounce upward (if the Greek situation should become resolved and leads to dollar depreciation), or a downward break (if Greek problems re-intensify).

I have been trading, among others, MT (Arcelot Mittal ADRs) and AKS (AK Steel), perceiving recent selling pressure to have reached durable support. I entered both positions earlier this week, and while yesterday's sharply lower open brought losses, the ensuing turn-around changed these to slight gains. As the overall market and steel were both trading into significant resistance off 5-day charts near yesterday's close, I sold both positions near yesterday's respective intra-day highs.

Good luck today, traders of the world!

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