US Equity markets traded flat on Friday, in a very narrow range, as US policy makers continued to trade barbs over the lack of progress on Fiscal Cliff negotiations and US data was slightly weaker than expected. The German Parliament voted 473-100 to approve the new Greek Aid Package which cuts the Greek Debt burden to 124% by 2020 and also clears the way for the next tranche of emergency aid worth €44 billion. Over the weekend China released the November Manufacturing PMI which came in above expectations at 50.8 providing further confirmation that the Chinese Manufacturing sector is firmly in recovery mode. Moodys cuts EFSF and ESM ratings to Aa1 from Aaa in the wake of the recent French downgrade.
This is a very busy week for Economic news with the Non Farm Payrolls due on Friday, This morning we have PMI Manufacturing for the Euro-Zone, Germany and the UK followed in the US by ISM Manufacturing and Construction Spending. Later. the Fed’s Bullard speaks on the economy in Little Rock Arizona.
Dec S&P 500
No change from Friday which was one of the quietest days of the year for the S&P. I still want to sell the market in small size from 1421/1425 with a 1428 stop and I will also look to buy the market on any dip to 1406/1410 with a 1403 stop. We are still going to get wild fluctuations in the market as both positive and negative news comes out on the Fiscal Cliff but the bottom line is some sort of deal will be done as politicians delay the process to maximise their own exposure in the media.
Dec DAX
The Dax worked really well on Friday as we traded up to my 7435 sell level with a 7444 high. I took a nice gain at 7410 and I am now flat. This morning I am a seller from 7460/7490 with a 7510 stop. This 7500 is key resistance and I would expect the market to have trouble breaking this level.
Dec BUND
No change as the market continues to trade in a narrow range. I will give the Bund one more day to break down or I will go flat. I will leave my stop the same at 143.20 on my 143.00 short position from last week. I will still look to take profit in front of 142.60.
Euro/USD
The Euro just missed my sell level on Friday and I am still flat. I got a few emails on Friday where subscribers wanted to know why I thought the Euro was going to trade up to the 1.3250/1.3400 area before going lower. I still believe the market is short and technically it would look better if we trade up to this level first. As long as the Fed continues to print so many Dollars it is very hard to fight this trend and the fact we are back over 1.3000 this morning enhances my thinking. If the Euro trades higher to my target I will look to by the USD Index as this contract is not as volatile as the Euro. This morning I am a buyer from 1.2980/1.3010 and I will only look to go short on any further rally to 1.3070/1.3095 with a 1.3120 stop.
Nasdaq 100 Rolling Contract
This morning I am going to raise my sell level to 2710/2725 with a 2740 stop on any short position as 2730 is the next key resistance.
Dec FTSE
The FTSE worked really well as we traded up to my 5903 sell level and I took a nice gain at 5873 on this position and I am now flat. This morning I am seller from 5905/5925 with a 5940 stop. I do not want to be long at this time as we are approaching very overbought levels.
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