08Feb Attention remains focused on news flow from Europe as the world awaits some kind of indication about how Greece, and the rest of Europe will run between the raindrops in their sovereign debt crisis.
While the specifics throughout the region may be a bit different, the overall dynamic is very similar: the first to run the gamut (in this case, Greece), will set the stage for the rest to come: Portugal, Spain, Belgium, (France?) etc. On that note, it is interesting to note that there are rumblings out of Ireland that its Greek counterparts are getting preferential treatment which only serves to magnify the situation and tempt the powers-that-be to find a way to impose the cliché that is becoming too popular: “kick the can down the road”.

Volatility remains at stubbornly low levels across a variety of the markets we track, but is most evident in just about anything “financial” in nature. When we take a closer look, we see some of this paired with the overextensions we have been writing about for quite some time. This history reminds us that these overextensions typically have not lasted too long. A sustained reversal in their Rates of Change have often served to reverse the Momentum. This time around, it is taking a bit longer than “normal”, but is definitely something to watch. The well below average Volatility may open the door to option purchase opportunities if trying to protect profits, or institute a directional strategy.

Currencies :
08Feb Volatility remains at stubbornly low levels in most of the majors we track as the world awaits some kind of indication about how Greece, and the rest of Europe will run between the rain drops in their sovereign debt crisis.
While the specifics throughout the region may be different, the overall dynamic is very similar: the first to run the gamut, in this case, Greece, will set the stage for the rest to come: Portugal, Spain, Belgium, etc. On that note, there are rumblings out of Ireland that its Greek counterparts are getting preferential treatment.

Aussie: 08Feb The powerful rally remains intact, but watch if our falling Rate of Change can undercut the positive Momentum that has been in place since mid December. The Aussie remains quite Overbought, based on our measures, but breaks have proven only termporary.
Seasonal Snapshot: An upward bias commences 09Feb and lasts until March.

British: 08Feb After making a new high over yesterday, Sterling fell back ahead of tomorrow’s BOE meeting, expected to yield no change in rates, but a potential expansion of asset purchases. Our falling Rate of Change is undercutting the positive Momentum that has been in place since mid January. Then currency is still bumping up against Overbought conditions, but is starting to tilt down.
The falling 200-day moving average at 159.50 may offer near term resistance.
Seasonal Snapshot: Choppy consolidation in all three patterns with a modest upward bias into Mar.

Canadian 08Feb Another test of the still falling 200-day Moving Average just above par has held again, as of this writing. Our indicators show this market is still vulnerable with secondary indicators and the RSI all falling. Remains Overbot
Seasonal Snapshot: The 15 and 30-year patterns are modestly negative until Feb. 16. The 5-year is positive until Feb 16.

Dollar Index: 08Feb Although a quiet, Doji Candle session overall, our Rate of Change continues its rise since the end of Jan. The 200-day Moving Average is still below, but is rising.
Seasonal Snapshot: The 15yr breaks away from consolidation and rallies again until the end of Feb.