Ken Veksler's Market Commentary

Good morning,

For those that own a helmet, put in on now!
For those that don’t, run out now and buy two, you’ll no doubt need a spare before the day is through.
Upbeat, aren’t I? Well the harsh reality is that my timing may have been a little off as far as this equity correction was concerned (too early to pull the trigger) but here we are on the precipice of a massive pullback and in the words (somewhat bastardised) of my former Prime Minister Paul Keating “this is the correction we had to have”.

If we look at the picture objectively, we now see the obvious;

• A NFP number today that could swing at least +/-150k either way, and in all likelihood to the downside
• The PIIGS in some serious trouble that is not just rumor and hearsay any longer, but I mean “SERIOUS” trouble. Spanish equities lost over 6% last night/yesterday
• Gold is now the new/next risky asset, don’t believe me look at the $55 move lower overnight
• The bulls have lost control!
• And to prove the point the DXY hits 6 month highs

Prepare for pain and lots of it…..
Risk is now firmly off the menu (as it weren’t already obvious) and those positions that have as yet not been unwound will be today and over the coming days.
Overnight, outside of massive sell off’s on all global equity indices, we had the SNB intervene and prove useless, EURCHF 2% higher on the move and now given all of it back. The RBA monetary policy statement gave the market an understanding of how they were positioned and that being they see GDP forecasts for 2010/11 between 3.25 and 3.5% while their intermediate target for the OCR by year end is likely to be 4.5%. None of it really matters… buy dollars and just sit there for another little bit longer until this thing stabilizes.

I am not going to offer any insight into FX crosses today, simply because it’s all too messy and volatile. Your best bet is to stay out of the market today and watch the carnage from afar.
On my USDCAD position I was taken out on my lowered stop loss and took back the other half of my position for a small profit.

Good luck out there today and a good weekend to all.

Best regards,

Ken Veksler.