Massive Short Covering Play
Traders who have made lots of money shorting this recent bear trend would be covering their short positions after job data was not as bad as hoped. Traders were hoping for a double dip scenario which would have been proven if the job data came out worst than –160k jobs.
EUROPE and Italy unemployment rate
Both beat expectations, allowing the EURO to rise to new highs since a long time.
The Stronger EURO
The stock market tends to be correlated with the EURO, should the EURO suddenly restart a bullish trend again as it seems that the recent bear trend was overdone and a result of bearish bets against the European economy, then it is possible that the DOW may continue its bullish trend. However, this wont happen now. We need to see clear signs. And these signs will be in the form of commodities demand.
Commodities Inventories decline
Aluminum inventory has been decreasing, it is almost below 4.4mln ton in the LME which is at a 1 year low.
China is not supporting cheap electrical supplies to its metals manufacturers, thus limiting the supply especially that Chinese smelters are now producing aluminum at a much more expensive cost than the current spot price of the metal itself.
Double Dip is a distance dream
The United States has just survived the worst financial storm in history, it has emerged much more powerful than before. Companies are able to cope with current conditions and continue to profit, except some metal companies. Current economic data still supports a global recovery, albeit at a much slower pace than we hope for.
Sentiment
Bullish to 10500.
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