US Equities ended Friday little changed with the S&P posting another up week. This represented a recovery from intra-day weakness prompted in part by a leaked memo from a Wal-Mart official suggesting that early February sales were very poor. The suggestion was that this reflected the impact of the payroll tax rise that for many workers only hit pay packets at the end of January. The University of Michigan survey was having none of it however bouncing to 76.3 from 73.8. At the G20 meeting in Moscow at the weekend, the main takeaway was the pledge, following an initiative by Britain, France and Germany and strongly supported by Australia, to tackle tax avoidance and profit shifting by large multinational companies. Ben Bernanke told the gathering that the US Economy is far from operating at full strength and reiterated his commitment to easing. The statement on currencies issued by G20 was arguably a little weaker than the earlier G7 statement. G20 agreed that they will refrain from competitive devaluation and they will not target exchange rates for competitive purposes. The message from G20 is mind your language, meaning that exchange rate shifts arising from appropriate domestic monetary and fiscal policies, will not be criticised or challenged but direct references to currencies as a policy objective will be.
Today the US Equity markets are closed for Presidents Day and the only data of note is the ECB Euro-Zone Current Account. Remember, the Italian elections are next weekend and therefore we could see a lot of market volatility this week.
March S&P 500
The S&P trade worked well on Friday as I was able to take profit at 1520 on my 1515 long position and I am now flat. The S&P was the only US market to close higher for the week. European Indices closed weaker as these markets are nervous ahead of the Italian elections next weekend. The S&P is still overbought on both a daily and weekly basis but until we get a sell extreme it is very hard to pick a top. As the cash S&P is closed today and the futures market will close at 4.30 pm, and given the weakness in Europe, I am only interested in buying the S&P on any dip to 1510/1513 with a 1508 stop. Remember I still want to go short on any rally to 1527/1532 with a 1535 stop.
Euro/USD
The Euro also worked really well. After I posted, the Euro traded down to 1.3305 before having a nice rally. I took profit at 1.3350 on my 1.3315 long position and I am now flat. This morning I will look to reset my long position on any dip to 1.3300/1.3320 with the same 1.3270 stop. A break and close below 1.3250 will be very bearish.
March FTSE
Given how quiet the markets are you have to take whatever profit you can get. After I posted on Friday the FTSE finally had a rally and I was able to take profit at 6320 on my 6290 long position and I am now flat. The FTSE is back trading at 6290 and I have gone long here at this level with a tight 6272 stop. Again I will look to take profit in front of 6320.
March DAX
The Dax finally traded down to my 7575 buy level, late on Friday. I like the Dax here and I will leave a tight 7565 stop which is just below the low made on Friday and I will look to take profit on any rally to 7640/7660.
Gold Rolling Contract
Gold got smashed on Friday and traded down to my 1607 buy level with a 1597 low. Gold is very oversold and is due a sharp snap-back. I will raise my stop to 1595 and I will look to take profit on any rally back to the 1630 area.
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