Virt. Portfolio Action : 1/ Buy Put Certificate 2/ TP on Dax 2X tracker // Will Equity markets make a pause after Fed decision today ?

The SP500 closed yesterday at 2271 i.e. 13% higher since the day after election (SP500 futures nearly touched 2000). No clear signs of reversal are  noticeable at this time ; the main trend is still up but main US indices (and some Europeans ones) are clearly overbought which is not sufficient to guarantee an immediate reversal. Nevertheless  a partial hedge of the Equities part of the portfolio as a precautionary measure is the right thing to do at this stage, in my opinion. Fed meetings days are historically high volatility days !

Action  : Buy 0,2 unit (1% of portfolio) of the UBS Put Certificate on SP500 with Knock out level at 2354 i.e. certificate become worthless should SP500 goes beyond 2354. The leverage level on this certificate is currently at 26 so by investing 1% we « hedge » 26% of portfolio , around 1/2 of equities in portfolio (out of commodities linked positions).

Action : Take profit limit on the 2X daily Dax tracker at EUR 259 (Current EUR 254). The take profit level matches with Dax reaching our 11400 first target level.

 

 

Forex : Dollar higher across the board // GBPUSD ………………………………………………………………………………FLASH CRASH THIS MORNING IN ASIA IN CABLE which hits 1,19 and recovers.

GBPUSD  Monthly Long Term Chart:

After Brexit vote GBPUSD prices broke a trendline joining the 3 MAJOR BOTTOMS of last 25 years (1993 , 2001 & 2008) … this is a SIGNIFICANT move .

GBP looks oversold with RSI below 30 … this same level of RSI in 2008 matched with a GBP quote around 1,60 . This did not prevent Cable to fall further to 1,37 a few months after.

Mid and longterm trend are down and short term bounces are likely in the 1,28 – 1,30 area . Only a bounce above the red long term trendline can improve the mood , ie above 1,32 -1,33 area but this does not look to be in the cards at the moment . So watch 1,32-1,33 to be neutral to bullish again.

gbpusd-monthly

Flash crash on GBP this morning : GBPUSD hits 1,19 and is now back jut below 1,25 :

http://www.bloomberg.com/news/articles/2016-10-06/pound-plunges-6-1-percent-in-biggest-drop-since-brexit-result