Wednesday 6 July 2011

US Stock Market Outlook For 7th July 2011.

Something interesting happened today.  Normally Euro and SPX go in step, as both are part of “ Risk On” trade. However today we saw that correlation broken. While Euro started selling off overnight and was lower for the day, SPX on the other hand ended the day higher. When we see such anomalies we better be careful. Also let us remember that tomorrow the pompous clown of ECB will declare the interest rate. Everyone and their mothers are expecting a rise in rates by at least 25 basis points. How that is going to help the PIIGS is anybody’s guess.

Coming back to the US markets, we might see higher high tomorrow because today SPX had a head fake to the downside for a while, so the real move will be on the opposite side. But with sentiments extremely bullish, and all indicators on the overbought territory, the high may not go far.

My advice is to play on the side of caution and not take the long trade for now and wait for a correction for  better entry. 

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