Brand New: Enis’s Macro Wrap

by Enis June 14, 2012 7:57 am • Commentary

Welcome readers to the new Macro Wrap.  We’re moving the Chart of the Day piece to the middle of the day so I can make it even better for you, not rushing it out in the wee hours of the morning.  It should appear daily between 11am and 2pm, and you can sign up for the email alert reminders as usual.

I’m excited to start the Macro Wrap  It’s a daily morning piece that will be a quick run through of my thoughts on price action and news overnight, and my perspective on the coming trading day.  Throughout my trading career, I’ve done my best thinking and planning before the start of the trading day, before all those trading emotions kick in after the opening bell.  The Macro Wrap will be a summary of that pre-open preparation.

The first thing I noticed overnight today was the price action of Spanish yields.  Ever since the poor reaction of Spanish yields on Monday to the weekend bailout package, the path of least resistance for Spanish yields has been higher, so it was not a surprise.  More surprising perhaps is the resilience of stocks and currencies in the face of sovereign debt weakness, as the Euro held its 20 day moving average overnight (1.2540 or so), and SPX futures indicate a slightly higher open.  Today’s FT article is another example of the French tendency to throw out comments to the press to calm the markets, which is no surprise given that their 3 largest banks have massive exposure to the European periphery.

I’m still anticipating weakness over the next 2 days ahead of the Greek elections.  Yesterday’s price action in the VIX was a good example of building investor nervousness, as the VIX was up more than 4% even when the market was higher on the day.  For expiry tomorrow, the SPY 130 put strike has the most open interest, which might act like a magnet by tomorrow’s close.  My plan is to keep many of my long Jul puts, but lock in some profits ahead of the Sunday elections as prudent risk management.