Squawk Morning Briefing: Risk Aversion

Last week’s LTRO operation in Europe saw a larger injection of capital into European banks than many were expecting.  With it came the expectation on the part of some traders that it would lead to the same sort of asset inflation which accompanied quantitative easing in the U. S.   However, last night brought the news that the ECB took a record level of overnight deposits from banks.  The implication is that right now European institutions are more comfortable parking their money for minimal safe return rather than using it to continue to buy up the value of gold, equities, or other assets.

As of this writing, most European indices are down more than 1% for Tuesday.  U. S. equity futures are also down, suggesting that, for the moment, many traders have switched from risk on to risk off.  The pattern in the Euro is beginning to suggest a turn, but needs further confirmation and may be due for a bounce.  See today’s video for the full update.   U. S. equities and equity futures have yet to put in a convincing downside pattern and so we’re paying close attention to the short-term moves as we’ve outlined in their respective briefings.  Unless and until we see that convincing downside action we will need to allow for the possibility of another attempt at a new high.

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Elliott Squawk delivers thorough market preparation every morning in time to take action during the trading day. By combining up-to-the-minute futures activity with traditional end-of-day analysis from cash indices, you receive analysis based on the latest conditions as the trading day sets to open. Each issue of Elliott Squawk goes beyond traditional Elliott Wave analysis because we recognize that trading Elliott Waves is much more than just looking at the most likely current count. Squawk will prepare traders to assess the market action as it unfolds by answering questions that any Elliott Wave trader should consider:

• What price levels and wave motions would confirm an expected move?
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