• 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
What kind of Trading best suits you? Technical or Fundamental? Short-term or Long-term? Take our Trader Survey and find out.
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.
Sign up for John’s email distribution list, here.