UP – feat. Yellen

  • The picture says a thousand words so we shall leave it at that
  • Rate hike with dovish remark as expected
  • RIP zero interest rate – normalisation is expected going forward
  • A historic moment in 2015 but a new chapter awaits for 2016
  • VIX sold and calmness preside over the market with risk-on in full swing
  • The long awaited santa rally in equity has lift off
  • Dollar bulls got their mojo back and end of year book squaring will determine solid gains

Dollar Index

Daily

Are we going to reach the top of the megaphone channel before the end of the year? Low volume trading could well propel it higher and end of year book squaring could be the catalyst.

Euro

Daily

The agenda is clear here – euro weakness should continue though the initial script was for a crash and burn in the EUR/USD. Failure to recapture above the bear flag will remain as a strong resistance and there are many potential for a retest lower (or just consolidate before fresh positioning for 2016).

VIX

Daily

Weakness in the VIX gave the market confidence to rise higher. We are adding the chart so as to show the change in market sentiment and there are further room to retest lower. The rally in equity market (santa rally) is only at its infant stage it seems.

SPX cash

Daily

A potentially large inverse formation and a bull flag seems to suggest that the equity market can take additional rate hike. Market confidence remain high despite poor earning seasons and the lack of worry of any slowdown remain unfounded. Certainly one to watch as we head into 2016.

Gold

Daily

We remain steadfast with the view that the risk reward remain the same going forward. The rate hike is now out of the way – if there are no fresh sellers in the market then a period of dead cat bounce could happen. A retest lower cannot be rule out but with end of year, trading this means working with wider stops. Thread carefully is the best advice.

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