What I'm looking at this morning, if anyone cares:
Futures are up 50 bps - not surprising. This "teflon market" has been disregarding negative catalysts recently (conflicts in the middle east, global GDP revisions post Japan disaster, Eurozone downgrades) as investors rush to buy the 5% correction.
I've learned to pay attention to fixed income and currencies - these are a fairly good indicators of risk aversion and tend to lead equities intraday. Interestingly treasuries are bid up, which is "risk off." Also, the dollar is bid up slightly - I look at USD as a safe haven. With the futures up, I'd expect the opposite in FI and FX land. Thus I'm skeptical of the sustainability of gains today and will not add to positions but will look to hedge my dollar related positions (gold and energy) by trading DZZ and ERY. Shorting this market has proven to be disastrous, so I will do so very carefully and only if the euro breaks down significantly.
The euro has had a ridiculous run lately despite deteriorating conditions in Portugal and Ireland and several downgrades of Eurozone debt. The euro strength is based on Trichet's hawkish statements and expectations ECB will raise rates when they meet on Apr 7. I have a feeling these expectations are overblown and have been looking to short the euro as this crowded trade reverses its course. I like playing EUO (ultra short euro etf) and I've noticed it has been a good hedge to my long positions. I've also noticed the EUO Apr 19 calls are very cheap so I've been loading up at .10. EUO is currently 18.08 so the euro would have to fall about 2.5% by option expiration (Apr 15) for these calls to be in the money. I expect the euro to be volatile after the ECB meets and will get absolutely crushed if they hold rates steady with their easy money policy.
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