Risk Asset Update-Micro to Macro

Hopefully in looking at our Risk Asset Layout we'll have a better short term understanding of what is driving the market, what would need to happen for any particular outcome. For newer members and long term members, the Macro update (bigger picture) that I'm including will show you why this market is so dangerous to the downside and why it is becoming increasingly unpredictable.

As far as this week since Sunday's European voter revolt against: the Troika/Germany/Former France/everything having to do with Austerity and to some degree bailouts; we are in a situation we haven't been in since, well I can't even remember the last time.

As you know, Wall Street is way ahead of the information curve and as such, following their plans is usually a lot easier, however there are certain fundamental events in which they have no control and no inside track on, that means as the situation develops and as news is released, we are seeing the markets react to the same information we have in real time, this doesn't happen often, 9/11/2001 was one such situation, the Greek elections and subsequent developments are another situation (although I find it hard to believe that they didn't expect a voter backlash, or maybe they did, but just not big enough to threaten the pro-bailout political establishment).

In times like these, Wall Street has in the past reacted aggressively first and then only after the dust and emotion settled, re-evaluated the situation. With the position the markets are in, an aggressive "fear" reaction could certainly be enough to break the thin ice, so this becomes a very unpredictable market however most of us have been building short positions over the last month or two and should be on the right side of the macro trade.

First ES and then I will continue the update in another post.

 ES, once having filled the gap yesterday saw a whole lot of downside volume, we do have our first real positive signal in ES, it is even higher now than when captured, but note volume is still quite low and the market tentative. It is also pretty well documented that accumulation does most frequently occur in low volume and quiet markets, although this seems a little more like trepidation.

 ES has finally reverted to the near term fair value of the CONTEXT model, this is a slightly bullish indication.

 The Euro and events in Europe controlling the Euro are still the biggest driver of near term trade and a break above that trendline will offer a more risk on environment in the market.

 The Euro approached the trendline, backed off a bit and is showing decent candlestick momentum as it approaches the resistance level again. If there's one chart worth watching right now it is the EUR/USD to see whether it can break above resistance or fails there, we should know shortly.

Update to continue...