Daily Alert: For Tuesday 15th December 2015

Mark Nugent2015 H2, Daily Alert

I said in the Weekly Review and Outlook that I’d do a  Daily Alert on Monday as we may be entering a more risk off situation and trading may become more risky.
Here is my summary as of 1700 GMT, Monday 14th December.

Stock Markets

All markets bar the Hang Seng are down so far on the daily chart. (This is almost certainly due to the looming Fed rate rise, which is fundamentally bad for corporations.)

WTI (Oil)

Hit new low around noon GMT of USD35.92/barrel but has been climbing since. Currently up on the day.

Indices

Euro up (still bullish sentiment, safe haven flows); JPY up (safe haven flow) and CAD down.

VIX

Up on the day. Currently at 26.12.

Risk Status

My view is that we are now RISK OFF. The risk status is a continuum. It is not simply “on” or “off”. Think of it as a scale form 0 to 10, 1 to 5 being “off” and 5 to 6 being “on”. Friday probably represented a move from the 5 to 10 zone into the 1 to 5 zone. Today is a further move down towards 0.
The implication for trading is that we should be careful. Not trading is a perfectly fine decision. Trading with lower risk and bigger stops is sensible.

Opportunity Review

GBPNZD – going against me today.
EURUSD – still considering shorting once a candle closes below the 8EMA line. However, the Fed’s rate decision is looming.
GBPCAD – a move down today. I will short below Friday’s low.
AUDUSD – in middle of triangle. Observe.
GBPJPY – big move down today on safe haven flow. Observe.