US Equites posted solid gains in a shortened, post-Thanksgiving, holiday trading session with the New York Exchange closing early with trading thin, volumes around 25% below average. Sentiment was helped by optimism about a budget deal to avert the US Fiscal Cliff, a better than expected IFO Survey in Germany and positive Chinese data. But a deadlock over budget reforms in Europe remain a concern. The initial catalyst for much of Fridays price action was a better than expected German IFO Survey. Having been expected to fall further from its 2 1/2 year low of 100 in October, it actually rose to 101.4, its first gain in eight months. In Spain the pro-independence parties won a majority in yesterday’s Catalan regional Spanish elections and this will doubtless prove a constraining influence with the Euro a tad weaker from the 1.2990 high made on Friday.
The market will today be looking for anecdotal reports on how retailers performed on Black Friday in the US. European Finance Ministers are meeting later today to try and iron out a Greek deal and more lasting reforms. The OECD’s Economic Outlook is due, as is a suite of Business and Consumer surveys for Europe. In the US we also have the Chicago and Dallas Surveys.
Dec S&P 500
The rally in the S&P continues with the market having risen from a 1340 low to a 1407 high in a week. We have two main Gaps outstanding, the first, a Gap up from 1413/ 1421 post Presidential Election and the second, a Gap up last Monday which runs from 1360/1373. I was stopped out of my 1400 short last Friday at 1405 and I am now flat. I think the market has come too far too quickly and this morning I will look to go short from 1406/1410 with a 1413 stop. I will also look to buy the market on any dip to 1388/1392 with a 1385 stop.
Dec DAX
The Dax worked really well as the market tested the 7300/7320 level that I was looking for last Friday. I took a really nice gain at 7310 on my 7228 long position and I am now flat. This morning I will still look to buy a pull-back and I will look to go long from 7255/7275 with a 7240 stop which is just below Friday’s congestion zone. I do not want to be short at this
time.
Euro/USD
The Euro also continues to strengthen and I was stopped out of my small 1.2940 short at 1.2970 and I am now flat. Today the Euro is at the top of it’s Bollinger Band and Williams Index and I will look to sell in half my normal size from 1.2980/1.3010 with a 1.3030 stop.
Dec BUND
The Bund just missed my 141.90 buy level and this morning I will raise my buy level to 142.00/142.20 with a 141.90 stop on any long position. Just like the Dax I do not want to be short at this time.
Nasdaq 100 Rolling Contract
No change, as I am still short at 2605 with the same 2640 stop as per the previous update.
Dec FTSE
I still like the FTSE and I will use any pullback to the 5775/5795 level to go long with a 5760 stop.
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