Nimble exit on Silver yday, story names in focus

The house Macro view here is that whilst the Euro area remains fundamentally flawed - and therefore we expect another leg down - immediate technicals remain robust. Money market and short dated liquidity now must find another home in a ZIRP/NIRP environment and corporates are increasingly the targets. This has a read through to all risk assets.

Yesterday, we exited the full Silver position (a legacy from last Thursday when XAGUSD was trading in the mid 26s) in the AM, well ahead of Bernanke's conference. QE 3 is totally off the radar now and Silver is subject to appalling technicals - taking ~80c was the correct call 95 times out of a 100. The probability of near term QE is down into the single digits.  However, we are still happy with the R/R in defending the 26 glass floor and expect to re-enter our position shortly.

In low volume/volatility markets we turn to swing trading single names: idiosyncracies and corporate themes. "The search for another CEDC."

On the agenda: LINE, JAPAF, VXX, VIX and keeping an eye out for downside risk catalysts.

75% flat, up 4.4%  this July.

CEDC rallies

Following on from a recent post (http://jfcapitaluk.blogspot.co.uk/2012/07/active-trading-resumes-silver-cedc.html#more) we have seen some very interesting developments within a short period of time today:

9:54 AM Central European Distribution (CEDC +0.9%) announces that it signed a strategic agreement with Russian firm Standard Corp. and that its CEO has stepped down to be replaced on an interim basis by one of its board members. Shares of CEDC are currently under a trading halt.
(seekingalpha.com/currents/post/405441)

12:11 PM Shares of Central European Distribution (CEDC) come off their trading halt to rack up a cool 28.6% gain off of news of a new distribution agreement in Russia. Extra funds kicked in by Russian Standard as part of the deal will allow the company to retire debt. (http://seekingalpha.com/currents/on-the-move)

Having bought stock in this company at 3c we will be staying long for the foreseeable future, confident in the decision especially after this positive news.

Friday Roundup

NFP was an underwhelming small miss today and didn't trigger much momentum in risk assets. We were positioned well - long Silver, short S&P in order to benefit from a poor number (= QE with initial gut sell off) and clearly this materialised.

Having covered our short, we crystallised around 0.5% profit but Silver (XAGUSD) reversed and traded poorly as the market came to its senses: We are still some way off further easing. Payrolls may have missed consensus but it is still in positive territory.

Attention then turned to EURUSD which has punctured a large support area of 1.2330 and now must hurdle 1.2300 before it plummets through fresh air - next stop 1.2000. I shorted at 1.2332 and mark our position up nearly 0.8%, also performing a neat hedge for our small Silver long.

Have a great weekend. With any luck you outperformed our +2.1% for the week - certainly Tuesday and Thursday were great days for any technical trend follower with other days a bit noisy.

ECB and BoE decision previews

With central bank decisions from the ECB and BoE and supply in France and particularly Spain, markets will have a significant amount of information to digest.

Dreary 4th of July Markets... Downtime Research: Linn Energy

We saw real technical strength in Silver yesterday, a return of consistent and stubborn buying not seen since late May. I was able to add to my position at 27.88 in a scrap, taking the total position to about 1/2 of what I consider to be a moderate conviction size.

Independence Day has brought sideways action, especially prevalent this afternoon as the usual trans-atlantic trend reinforcement has been lacking. For stocks and other risk assets, this is not necessarily a bad thing - a pause in price action can allow a trend to reload, consolidate and continue. I would not want to be short equities just now.

Read on for our new med/high conviction long - perhaps not at the right levels to enter, but nevertheless one I am keeping an eye on: Linn Energy (LINE).