Consolidation was the name of the game as far as equities were concerned with the US in particular already at 5 year highs and US data released yesterday somewhat mixed. Pending Home Sales surprisingly fell in December by 4.2% whilst Durable Goods Orders rose by a handy 4.6% even if the headline was flattered by volatile aircraft orders. Core orders managed to eke out a modest 0.2% gain to cap off a good Q4. In a survey of Bloomberg Economists, the consensus view was that Fed Chairman Bernanke’s latest round of bond buying will reach $1.14 trillion before he ends the programme in the first Quarter of 2014. Bernanke will push on with purchases of $40 billion a month of mortgage bonds and $45 billion a month of treasuries. The FOMC, which begins its first two day meeting of the new year, will renew its commitment to asset buying after determining that the benefits of the programme exceed any risk of inflation or financial instability.
Today is relatively quiet on the economic front with Consumer Confidence due from Germany this morning and then in the US later this afternoon, ahead of the two day FOMC meeting.
March S&P 500
Another very quiet days trading for the S&P. After the release of the weaker than expected Home Sales for December the S&P dropped down to my 1492 buy level before the market recovered and I was able to take a nice gain at 1497 and I am now flat. Even though the S&P, as I said yesterday, is very overbought on both a daily and weekly basis we need to see a sell extreme first before we can get excited about a move to the downside. Thursday is the end of the month and Friday is the start of a new month where traditionally new money is put to work in the stock market so maybe we will hold up for another week to 10 days before we run into trouble. Today I am still a buyer on any dip to 1490/1493 with a 1487 stop and I will also only look to sell the market on any rally to 1503/1507 with a 1510 stop. If I am taken short and subsequently stopped out I will a more aggressive seller between 1520/1530.
March DAX
The Dax just missed my 7890 sell level yesterday and this morning is on the defensive. I am still flat and I am going to leave my sell level the same as yesterday at 7890/7910 with a 7925 stop. I am going to lower my buy level to 7800/7820 with a tight 7790 stop.
Euro/USD
Yesterday was one of the quietest trading ranges for the Euro/USD in a very long time as literally nothing happened. As I said yesterday the 1.3400/1.3420 is key support and 1.3490/1.3520 is very strong resistance. Today I am a buyer on any dip to 1.3400/1.3420 with a 1.3390 stop and I will be a more aggressive seller on any rally to 1.3490/1.3520 with a 1.3540 stop.
March FTSE
No change as I am still short from Friday night at 6255. I am going to raise my stop on this position to 6290 in order to give this position some more room. The FTSE is extremely overbought and the Williams Index has started ever so slightly to turn down. If it sells off I will look to take profit from 6200/6220 which is moderate support.
GBP/USD (Cable)
Cable still continues to frustrate me and is still at the bottom of it’s Bollinger Band, however the Williams Index has started to turn up. I have reset my long position at 1.5698 as this 1.5670/1.5710 is very strong support and a closing break here will be very bearish. I will leave a 1.5660 stop on this position as I look for Cable to retest the 1.5800 level over the next few days.
March Bund
I was stopped out of my 142.20 long position taken yesterday at 141.95 and I am now flat. I am going to stand aside here and take a look again at this market tomorrow.
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