• A fresh record high from S&P 500 after Monday's tumble reflects short-term speculative appetites
• Selling vol, covering shorts and leverage are the prevailing means for carry risk higher now
• More precarious currents for risk trends will leave EURUSD and Yen cross traders skeptical
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The risk aversion scare Monday related to the Ukraine standoff was abruptly reversed this past session. Yet, momentum and market-wide correlation continue to undermine the sense of confidence. In the absence of a steady build in participation and volume behind the capital markets, carry trade and yield; we are faced with leverage, short covering and volatility selling. In other words, the bullish sentiment behind these markets is growing increasingly dependent on short-term drivers. For benchmarks like the S&P 500, this means troubled follow through at record highs. For USDJPY and the yen crosses, breaking range highs will be difficult. For the more risk-resilient like EURUSD, technical levels will require other catalysts (like the ECB decision). We look at the quality and direction of 'risk trends' in today's Trading Video.
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