Rising Euro-Zone angst is front and centre of the market radar, resulting in the Euro making a fresh four month low of 1.2750 and Euro peripheral 10 Year Bond yields smartly higher – Italy +21 bps, Spain +15 bps and Portugal +16 bps. These are the countries where the risk of deposit flight in the wake of the Cypriot crisis resolution package is seen to run highest. Along side this, speculation is mounting as to who is the next candidate to whom the Cyprus mandate might be applied – Slovenia (with a banking debt ratio of around 20%) and Malta (with banking assets of eight times GDP) are both rating mentions. Along side the unveiling of draconian capital and exchange controls ahead of the re-opening of Cypriot banks today, the apparent failure of Italy’s Centre-Left leader, Bersani, to strike a deal with any other parties to enable a working Government to be formed resulted in very bad Italian Auctions yesterday. This is on top of the very weak Euro-Zone Confidence Numbers for March which are consistent with another quarter of negative growth. It is amazing, in these circumstances, that US Indices have closed virtually flat in New York, having opened sharply lower on European woes before grinding higher all day. Heading into the Easter break and the rising angst for all things European, risk assets should be relatively subdued today.
Today is another busy one on the economic front as this morning we get the GIK Consumer Confidence survey from the UK at 9.30 am, followed by German Retail Sales and Unemployment whilst later in the US, at 12.30 pm, we have the Weekly Jobless Claims followed by the Chicago PMI at 2.00 pm. Even though all markets are closed tomorrow the University of Michigan Survey and Personal Income are released. As London and all European Markets are closed tomorrow and Monday my next update will be on Tuesday.
Finally I would like to thank everyone for their continued support and to wish you all a very Happy Easter.
June S&P 500
The S&P continues to hold up despite the Cypriot affect and the very weak European markets as flight of capital ironically is now flowing into all things American. We are now entering a time window that sports a positive seasonal bias because the waning days of the month and early days of next month as well as a long holiday weekend oftentimes provide a tailwind for stocks. For these reasons it makes it very difficult to short the market until we have a sell extreme followed by another sell off the following day. Shortly after I posted yesterday the market dropped down to my 1556 buy level and I had my stop too tight and I was stopped out at 1551 and I am now flat. This morning, for the above reasons I have bought the S&P at 1553 in small and I will leave a 1545 stop on this position. If the S&P can finally break 1561 I will look for the market to trade up to the 1570/1575 area where I will look to cover any longs and set up a small short position with a 1578 stop.
June DOW
No change as I still want to sell the Dow on any rally to 14550/14580 with a 14620 stop. I will also look to buy the market on any dip to 14380/14410 with a 14350 stop.
Euro/USD
The Euro is very oversold and at the bottom of the Bollinger Band. Today I will look to go long on any dip to 1.2760/1.2785 with a 1.2740 stop. I will also look to go short on any rally to 1.2860/1.2890 with a 1.2910 stop.
June BUND
The Bund keeps making new highs and is not giving traders any opportunity to get long the market. Today the Bund is very overbought and I will look to go short in small on any rally to 145.70/146.00 with a 146.20 stop. I do not want to be long at these levels.
June DAX
The Dax worked very well yesterday as the market finally broke the 7875 level. I went short at 7860 and I took a really nice gain at 7795 and I am now flat. Today I will look to go short on any rally to 7860/7880 with a 7900 stop and I will also look to buy the Dax on any dip to 7750/7770 with a 7735 stop.
Note: If I have any European positions late today I will not hold them over the weekend as the market will be closed until Tuesday morning.
Recent Comments