Bulls to the slaughter
Today is a landmark day for macro data fans. This morning the EZ numbers were truly dreadful. GDP for Q1 was up a little in Germany (no surprise there), but France was flat, Italy was down but Holland was 1.4% lower Q on Q. The pressure is now on the ECB to do something.
But the markets have already signaled these problems with the EUR/USD down 3 cents plus since last Thursday. And EZ bonds have been bid up to the stratosphere in anticipation that ECB will barge in and buy anything that moves.
In terms of my favourite trading vehicle the Dow, when it made a new high above the critical 16,600 level, I noted that my best guess was for a re-test of the 16,600 level and if it closed below it, that would put the 16,700 high as a major top. Downhill from there.
US Industrial production missed by a mile and housing index likewise. Even e-commerce sales were down. It is starting to look as if the bulls may be throwing in the towel, so look out below.
This is the chart I took this morning before all the data and advised shorting then:
I was looking for another leg down to confirm a five down and the top was in.
This is the latest chart:
My next target is the 16,200 area. I remain aggressively short.