Painful Market in Explosive Volatility

This environment is extremely painful. I have been lucky to close most my positions now only hold a small AUD short for a continued commodity rout for various reasons I won't go into right now. Gold is on the cusp of a technical bear market and periphery yields are blowing up, swaps are uneasy; in fact everything is a mess. This market is not one to pre empt as the EURUSD is trading in typical bear-market action. Traders are extremely unhappy having to sell at yearly lows; due to yield spreads - Macro & Real Money accounts are forced to sell.

If you are not already set in a profitable position then taking a position now in hope for a reversal/squeeze play is akin to going to the casino and playing roulette. You are effectively gambling against the house and the house in this instance is the 'establishment' or the banking fraternity. Don't tempt fate, you may get your 20-30 pip pop but the political environment in Greece is breeding market uncertainty in some cases to the extreme. Uncertainty over bank-runs, uncertainty over contagion, uncertainty whether yield blow-outs will deteriorate. 

It gets better - we will have no clear view of the political landscape in Greece for another month. So if all due diligence is correctly aligned, stay risk averse. The volatility is explosive and should be respected not played with like a toy unless gambling urges overcomes you or you are far-smarter than the market. Obey the chart and look at its trend.

I must stress though, there is scope for a decent squeeze and gamblers do occasionally win at the casino. Analysing recent COT data nothing suggests net-shorts are dominating the market this may change this weekend though. Friday is usually squeeze day so maybe for a very small outlay it may pay off but above all staying risk averse in an environment of uncertainty is where the money is. Fading risk-bounces should be at the forefront of your trading strategies.