Finally! New year.

Dear All,

Old rule of thumb from back when Macro trading used to be macro trading and Paul Breitner hair was still in style used to be to stay away from the market in the first two weeks of January. The lesson being too much new risk capital is at play and is eager to commit to the extension of last years trend.

In this light the major boost to stocks yesterdays made a lot of sense - add to this that Goldman Sachs seems eager to let their internal clients pay 50 bln. US dollar for a small stake in Facebook (while GS ripes the huge IPO fee for themselves - nothing wrong in that, just smart......) and we had perfect day as the 1st day of trading also constitutes the best day to be long of all days according to the increasing numbers of 'counters' in the market.

I will not be the one to suggest that going into 2011 most investors and commentators are too bullish the extension of 2011, but I note from the model work I did this morning a few surprising signals:

• I will have to sell US Dollars if either or both EURUSD (March contract) trades above 1,3424 or DX (March) trades below 79,025. Considering the vast majority of all FX watchers expects EURO to go to parity this year this goes against some conventional wisedom.
• Stock market divergences.  All my US index' are long on the model, while the equivalent European ones are neutral, but...... with sell signals. DAX (March) have sell signal @ 6920,00 & STOXX50(March) have sell signal @ 2784,00
• Short-term Fixed Income seems to have turned around to bullish - I need to buy 2y notes @ 109'160 (March) in the model...........
• Finally, and most significant to me at least: Most commodities shows signs of trend reversal. I have "Inverted Hammers" in just about every single market and in particular in the grains segment (but also Crude og Gold). Is it the 'tangible safe haven' premium going out as market optimism reaches new highs? I do not know

Next two weeks have major macro events, with issuance dominating most of the European traders - Germany and France comes to the market Wednesday and Thursday this week, while the PIIGS Circus restarts next week with Portugal and Spain (Wed+Thurs) most likely. 

The US Congress will be back in session Wednesday and the new Speaker of the House John Boehner will be sworn in - Congress will be at war for sure. Keep a close eye on Illinois Budget (one of the states I got going into volentary bankruptcy in 2001) as indicator of action and reaction from Washington and investors this week. Headline from Bloomberg goes: Illinois has days to play $13 Billion deficit that took years to produce.

Attached is my partner Jesper Christiansen's excellent timeline overview from our Investment Meeting this morning.

Good luck in 2011