US Equities fell yesterday after Wednesday’s spectacular rally as the Fed said they will probably end their $85 billion monthly Bond Purchase Program sometime in 2013. The minutes released yesterday show a divide among FOMC participants who provided estimates were approximately evenly divided between those who said it would be appropriate to end the purchases around mid-2013 and those who said they should continue beyond that date. The S&P climbed to within 1 handle of its highest closing level in five years before retreating. After this weeks deal to avoid the so-called Fiscal Cliff, investors are turning their attention to impending confrontations between Congressional Republicans and the White House over spending. Lawmakers may need to approve an increase in the $16.4 trillion debt ceiling as early as Mid-February with Republicans planning to use the vote to force President Obama to accept cuts in entitlement programs such as Medicare. Equities gained earlier in the day as after the ADP report showed an increase in 215,000 workers, well ahead of forecasts.The Weekly Jobless Nos increased by 10k to 372k. This weak data was due to the shortened week due to the Christmas holidays and should correct itself next week.
All eyes will be on today’s Non Farm Payrolls where Economists expect an increase of 150K. In the US we also have Factory Orders and Non Manufacturing ISM.
March S&P 500
The S&P worked well today as it rallied up to my 1459 sell level with a 1460 high on the back of the strong ADP Nos. I went short at 1459 and I took a nice gain at 1452 as I want to be flat ahead of the important Non Farm Payroll Nos at 1.30pm. If we get a strong no. I will be a seller from 1462/1467 with a 1470 stop but only in small size given the expected volatility after the release of data. The market is very overbought and I do not want to be long at this time unless we trade a lot lower to close the GAP left open from Monday’s close at 1422.
Euro/USD
As I have been saying for the last few months I expected the Euro to trade into the 1.3250/1.3400 resistance area before running into difficulty. We now have a Double Top in the market at 1.3310 and as I said yesterday I believe we have put in some sort of top in the market as shown by the sell off in both Gold and Silver yesterday. The Euro is now at the bottom of the Bollinger Band and Williams Index and I will be a small buyer today on any further dip to 1.2970/1.3000 with a 1.2950 stop. If I am taken long I will only look for a 40/50 point move in order to take profit.
March FTSE
No change from yesterday as the market just missed my 6020 sell level with a 6012 high. Today I am still a seller from 6020/6040 with a 6050 stop. I do not want to be long at this time.
March DAX
Again the Dax just missed my sell level and I will leave the same guidelines as yesterday. I am a seller in small from 7800/7830 with a 7850 stop,
March BUND
Unfortunately I was stopped out of my 143.80 long position at 143.50 and I am now flat. The Bund continues to trade oversold and today I am a small buyer from 142.90/143.20 with a 142.75 stop.
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