Market Overview


General


The overnight session was muted with current trends prevailing. It's unclear the payroll number from Friday properly classified certain jobs but the underlying trend in markets is an impressive recovery in credit and risk appetite. "There is no alternative" is the dominant theme and one that's helped to reallocate risk across the globe. For the short term trader, risk/reward is poor. The distance between current S&P 500 levels and the 50-day moving average is the widest in a over a decade. But the fact remains any multi-day pullback in risk, either equities or currencies, will be met with buyers.


The calendar suggests June triple witch next Friday (June 19) markets could be at the highest levels. The benefits from CARES Act don't expire until the end of July and it's increasingly clear the ultimate high in risk by then could be materially higher. Our task is patience for more favorable risk/reward entries.

Scoreboard

The mover board is pretty light with Platinum, Silver, and Euro banks the leaders. The first two are just recouping some of Friday's losses and the Euro banks are second only to WTI over the past five and ten days. In retrospect, the Franco/German agreement was a major catalyst for European risk.

Events

FOMC Meeting Wednesday

Strategy and Levels

Favored pullbacks are Eurostoxx, Emini, Aussie, Kiwi, Cad, and the Dollar Index. Metals surprised to the downside Friday but in the end the rotation emulated risk as Copper outperformed Gold. I remain positive on Platinum and expect any move above last week's high to see CTAs and macro funds initiate new longs.


Today is setting up to be two-sided from the open and countertrend Tuesday seems isolated to risk in general--not currencies. Aussie is working on the 8th straight up close. I'm looking for a range day during New York and lower prices into the morning before ultimately recovering into the Fed meeting mid week.

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