Markets on Friday were choppy with Asia mostly weaker, apart from Japan, bedevilled by US Fiscal Cliff worries and Middle East tensions. Those concerns dogged the European session as well as the opening of the US market. However when the Fiscal Cliff talks between the Presidential Administration and Congressional leaders concluded, which were variously described as constructive and productive, US sentiment lifted but too late for Europe. This lift in the US stock market led to a text book ‘Key Day Reversal’ for the S&P futures contract as we made a new low at 1340.5 and then broke and closed above the previous day high at 1359 (If you click on the Education Section of the site there is a nice commentary written on Key Day Reversals and how they work).
Early tomorrow morning the Bank of Japan will have their monthly meeting coming in the aftermath of political pressure from the LDP leader, and likely next PM, Abe to ramp up QE until deflation is defeated. In addition, Euro-Zone Finance Ministers meet tomorrow to discuss Greece. Later this afternoon we have the NAHB Housing Index and Existing Home Sales from the US.
Dec S&P 500
The S&P duly obliged on Friday as we got the washout and reversal from the 1340 level that I was looking for to give a text book Key Day Reversal. I bought the S&P from 1347/1342 and took a nice gain near the close at 1358 and I am now flat. The Key Day Reversal only happened in the last five minutes of trading and as long as we stay over 1340 then we have a short term bottom. This morning I will be a buyer from 1355/1360 with a 1353 stop as I look for a retest of the 1375/1380 which is the next resistance level.
GBP/USD
Yet again the Bollinger Band and Williams Index worked really well as we got a nice move off the 1.5840 level and I took a gain this morning at 1.5914 and I am now flat. This morning I will look to reset my long position on any dip to 1.5860/1.5885 with a 1.5835 stop as I look for a retest of the 1.60 area.
Euro/USD
The Euro dropped down to my 1.2720 buy level and I have taken profit this morning at 1.2765 and I am now flat. Everybody that I read is bearish on the Euro but I am not so sure and this morning I will look to reset my long position from 1.2710/1.2740 in small with a stop at 1.2690 which is just below Friday’s low.
Dec BUND
No change I am still short at 143.30 and I will leave my stop the same at 143.40 as I still look for a test of the 142.60/142.80 area where I will look to take profit.
Nasdaq 100 Rolling Contract
I was stopped out of my 2558 long at 2510 and thankfully I left an order to rebuy at 2520. I have kept this position and I will leave a 2490 stop which is just below the low made on Friday. Apple also had a huge swing making a $505 low before closing at $527.
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