Equity markets were initially weaker on Friday morning despite strong gains in Asia after better than expected China GDP numbers. Unexpectedly poor UK Retail Sales depressed the FTSE and a weak Michigan Consumer Confidence reading saw US Equities lower early in the New York trading day. However whilst company reports were mixed, better than expected profits from GE and Morgan Stanley boosted sentiment. Late in the session, news that the Republicans were planning to temporarily raise the Debt Ceiling saw equities rally strongly into the close. On currency markets, Japan’s Finance Minister appeared to retract his earlier view that the Yen had fallen too hard triggering sharp selling of the Yen before profit-taking hit the currency overnight and USD/JPY is back down to Y89.50. Sterling was the weakest currency on Friday after the poor Retail Sales data.
Today will very quiet as the US markets are closed for Marin Luther King Day and the only data of note is German PPI. Later European Finance Ministers are meeting in relation to the latest ESM Funding.
March S&P 500
The S&P worked well on Friday and the market dropped down to my buy level with a 1470.50 low. I bought the S&P at 1473 and I took a nice gain at 1480 near the close and I am now flat. The VIX has now fallen 46% in three weeks, to a six year low, as complacency kicks in. Today I am still only interested in selling the market on any rally to 1490/1495 with a 1497 stop. If the S&P sells off from here I will still leave my buy zone the same as Friday from 1470/1474 with a 1467 stop. As the cash Equity markets are closed for Martin Luther King Day, trading will be very quiet and just to note Futures trading closes at 16:30 and re-opens at 23:00.
March FTSE
The FTSE broke my 6130 resistance level triggering my buy order. I am now long at 6130 and I will leave a tight 6105 stop on this position. I will look to take profit on any further rally to 6175/6200.
Nasdaq 100 Rolling Contract
Despite the huge rally in the Dow and S&P over the last few weeks, the Nasdaq is having trouble making any headway. If the Nasdaq decides to play catch up I will be a very aggressive seller from 2790/2810 with a 2830 stop.
March BUND
Unfortunately after I posted on Friday the Bund just took off and I was not able to get a long position on and I am still flat. This morning I will raise my buy level to 142.75/142.95 with a 142.55 stop.
GBP/USD (Cable)
After the poor Retail Sales No’s on Friday, the Cable got hammered and I was quickly taken out of my 1.5940 long position at 1.5895 and I am now flat. Cable is still very oversold and at the bottom of the Bollinger Band but the Williams Index has started to turn up. I have reinstated my long position this morning at 1.5880 and I will leave a stop at 1.5835 which is just below the low made overnight.
EUR/USD
It was a good call on Friday saying that I did not want to be long at this time but unfortunately the market never rallied to my sell level before falling hard. This 1.3400/1.3430 is huge resistance on long term charts. Today I am only interested in selling a rally from 1.3370/1.3400 with a 1.3435 stop. A break and close below 1.3260 will be short term bearish.
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