US Equities ended the day on their highs following tentative signs that politicians will not let the economy fall over the US Fiscal Cliff. John Boehner, the Republican Speaker of the House of Representatives, offered to accept a tax increase for the wealthiest Americans, whilst falling exports weighed down sentiment in Europe. The Senate majority leader, Harry Reid (Democrat), said that Congress will have to return to work the day after Christmas Day to complete work on the deal for the Fiscal Cliff. Asian stocks closed at an eight month high following on from the weekend victory for the LDP (with Shinzo Abe as it’s leader) in the Japanese elections. Abe is urging more aggressive easing of monetary policy which will be very good for the economy and Japanese Equities. In the US, the New York Fed Manufacturing survey slid to -8.1 in December down from -5.22 in November
and well below the median market forecast of -1. The last four readings are the worst since late 2011.
On the Economic front this morning at 9.30 we have CPI and PPI from the UK. Spain and Greece have a Bill Auction and in the US we have the Current Account Balance and the NAHB Housing Market Index.
March S&P 500
We have now rolled to the March Contract which has a 6 handle discount to both the cash market and the December contract, which expires on Friday lunch time. The S&P trade worked really well as after I posted yesterday the December contract traded back to 1416 (1410 in the March Contract) and then we had an explosive rally in the last hour of trading on US Fiscal Cliff hopes plus year end seasonal factors so I ended up taking a nice gain at 1430 on my 1416 long position and I am now flat. This morning in the March Contract I am a buyer from 1423/1427 with a 1420 stop and I will also be a seller on a rally to
1438/1442 with a 1445 stop.
GBP/USD
The market traded up to my 1.6215 sell level this morning and I am now short with a 1.6250 stop. We are still at the top of the Bollinger Band and Williams Index and hopefully these indicators start to kick in today and I will look to take profit in front of 1.6160.
Gold Rolling Contract
I was stopped out for a take profit at 1695 on my 1702 short position. This morning I am still looking to sell Gold again at 1710 with a tight 1717 stop.
Dec DAX
The Dax worked really well yesterday as the market sold off hard on the back of the weak exports and I was able to take a nice profit at 7575 on my 7625 short from early yesterday morning and I am now flat. This morning I am a seller from 7650/7670 with a 7680 stop.
Dec FTSE
The FTSE traded up to my 5925 sell level last night and I will leave a 5950 stop on this position. I am very surprised the FTSE is not trading higher and the market continues to underperform the other European and US Indices.
Eur/USD
No change from yesterday as I still want to go short from 1.3190/1.3220 in small with a wider 1.3240 stop.
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