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Time To Buy Back In?
A report from Germany this morning showed slower than expected economic growth, which is being widely touted as the reason for the sharp decline in Europe and for the earlier decline in the U.S. futures. The actual figures showed the German economy's GDP was +0.1% (not annualized) for the 2nd quarter.
If that rate was annualized it would equal the U.S. Q1 GDP figure. I think that the real reason for the weakness was that a weak German GDP figure calls into question their ability to continue to provide the bulk of the EU bail-out support. That, I feel, lead to weakness in the Euro and strength in the U.S. Dollar.
And, in turn, that flips the "Dollar Carry Risk Trade Switch" into the "OFF" position.
About 1 hour ago we got the Housing Starts report figures for July which were blase at best. But the futures rallied; perhaps because the report wasn't terrible. The, about 25 minutes ago the latest Industrial Production Report was released and the news was a very pleasant surprise. The July level of industrial production increased 0.9%, easily beating the consensus expectation of a 0.5% gain.
And the futures improved dramatically.
Now the market has opened with a moderate decline. But to my way of thinking, the market is acting quite well, and is giving signs of being willing to ignore bad news and focus on the positive news of the moment.
As things stand now I will be looking for some good spots to buy back in the positions I sold yesterday or to purchase some other bullish positions as replacements.
Not yet, but perhaps soon.
Have a good one...
Curtis Bergquist
Options Manager: Daily Decision-PRO
S&P 500 - Last 12 Month
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