Daily Alert – Thursday 3rd March 2022: Solid risk-on sentiment gives opportunity
Yesterday was solidly risk-on with all indicators in agreement. In fact, it was the most risk-on day so far this year, by our measure. I looked at going long on equities, but my favourites were stuck at resistance. The EUR was falling, and we know the reasons why. I looked for a counter-currency. AUD looked good as it was rising with the sentiment. I went short on EURAUD. This is essentially a “weak EUR” trade. It’s nice if we can choose a counter-currency that’s going in the opposite direction, but one that is simply going sideways will also do. So far there’s an unrealised profit on the trade of around 1 percent.
The world (except China) continues to turn the screw on Russia. Russian debt has been rated at junk by the ratings agencies. Maybe more importantly, Russian equities have been removed from global equity indices. This is a serious move and will have a significant negative impact on the Russian economy.
Elsewhere, Fed Chair Powell, testifying before Congress, said he would be happy with a 25-basis point interest rate hike at the March 16th meeting, quashing previous suggestions of a 50-basis point hike.
There’s little else on this week’s calendar.
Tomorrow, I will have your Performance Report for February.
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