Equity markets lost further ground yesterday. Weak Euro-Zone data added to market pessimism after Wednesday’s news that the US Fed may start winding back its QE Asset Purchases sooner than had been anticipated and that China may increase its property restrictions. European Equity markets lost 1.5% yesterday while the US rallied at the end of the day to close just 0.5% lower. The advance estimates of the Euro-Zone PMI’s showed the Manufacturing Index fell to -47.8 against expectations of 48.5 whilst the Services PMI’s fell to 47.3 versus 49.0 expected. There was some good news in the data with the German Manufacturing Index rising to 50.1. US Economic data was mixed where Existing Home Sales rose 0.4% in January (-0.8% expected), Jobless Claims rose 20k to 362k whilst the Philly Fed fell to -12.5 in February versus +1.0 expected. In ForEx, the USD and JPY were the strongest performers over the past 24 hours whilst the Euro bore the brunt of negative sentiment toward the Euro-Zone plus nervousness ahead of this weekend’s Italian elections.
This morning is another busy one for economic data in Europe with German GDP and IFO due which will both be market movers. Later the European Commission releases its economic forecasts. The only data of note in the US, is a speech by Powell of the Fed who speaks later this afternoon in New York. The markets are also likely to be cagey ahead of the Italian Elections on Sunday.
March S&P 500
The S&P worked well, as after the release of the weak Philly Fed the market dropped down to my buy levels with a 1495 low. I bought the S&P at 1498 and I took a nice gain at 1504 and I am now flat. As I have been saying for the last two weeks we need a break and close below 1490 to get bearish and as long as we stay over this level the market is probably okay. Today I will be a buyer again on any dip to 1496/1500 with the same 1488 stop. I am only interested in going short in front of 1520 with a 1531 stop.
GBP/USD (Cable)
Cable finally worked well for me as the oversold indicators kicked in and I was able to take a nice gain at 1.5250 on my 1.5190 long from yesterday morning. Cable is still very oversold and the Williams Index is trying to turn up. Today I will be a buyer again on any dip to 1.5170/1.5200 with a 1.5125 stop which is just below yesterday mornings low. I do not want to be short at this time.
March BUND
The Bund also dropped down to my buy level and I went long at 143.10 and I took a nice gain at 143.50 and I am now flat. I still like the Bund and I reckon we will trade back to the 144.70/145.00 area over the next while. Today I will look to reset my long position on any dip to 143.00/143.25 with a 142.90 stop.
Euro/USD
The Euro also dropped down to my buy level and I have gone long at 1.3175, I will lower my stop to 1.3140 and I will look to take profit in front of 1.3230. I will also look to go short on any rally to 1.3250/1.3280 with a 1.3310 stop.
March FTSE
The FTSE also dropped down to my buy area and I have bought it at 6278. I will leave my stop the same at 6255 as a break and close below 6260 will be short term bearish.
March DAX
The Dax is likely to trade nervously ahead of this mornings IFO and GDP data. The next big support is the 7530/7550 area and I am a small buyer here with a 7510 stop. I do not want to be short the Dax at this time.
Gold Rolling Contract
No change from yesterdays commentary.
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