Equity markets continued their strong gains made this week helped yesterday by strong corporate earnings, heightened expectations for further ECB policy easing next week and better than expected UK GDP data. The Weekly Jobless Claims fell to 339k. The better than expected UK GDP figures showing that a dreaded triple dip recession was avoided at least on the preliminary estimate that showed 0.3% growth in Q1. This has given Sterling a big boost with the UK Currency gaining 1% against the US Dollar and similar gains against other currencies. Elsewhere, Gold posted a $45 gain on news that Central Banks bought 524.6 million tonnes of the yellow metal last year and are expected to buy 450-500 tonnes in 2013. Commodities in general are higher, led by a 2.3% jump in Copper. Unemployment in Spain rose to 27.16% from 26.02%, the previous month, but the mantra of ‘bad news is good news’ continued for European equities with the German Dax now up 400 points since Tuesday morning.
This morning on the economic front we have the Euro-Zone releasing its M3 and the ECB will announce its three year LTRO repayment. Later at 1.30 pm, in the US, we have GDP which will have a big impact on markets, followed by the University of Michigan Consumer Confidence Index.
June S&P 500
The S&P worked really well as we traded up to my 1587 sell level. I went short here and I took profit at 1580 before the close and I am now flat. Today is very important economically with GDP and the University of Michigan Survey due and both of these have the potential to move the market. I am still convinced that the market is trying to put in a top but the bears are getting more and more frustrated as every sell off is met by strong buyers and we still have to wait for the market to sell off hard for two days in a row. I am going to stay flat ahead of the GDP Report and if we get a strong reading I will look to sell the S&P on any rally to 1585/1590 with the same 1594 stop. I will also look to buy the S&P on a weak number if we trade down to 1567/1571 with a 1564 stop.
Euro/USD
The Euro also worked really well as after I posted yesterday morning it traded up to my 1.3090 sell level, with a 1.3100 high, before falling 100 points. I went short at 1.3090 and I took profit at 1.3020 and I am now flat. Yet again the market has bounced off the critical 1.2980 support zone. If and when the Euro can finally break this level we should have an accelerated move lower. Today I will look to reset my short position on any move back to 1.3080/1.3100. If I am taken short I will leave a tight 1.3120 stop on this position. I still do not want to be long the market at this time.
June DAX
The Dax worked well yesterday as the market moved nicely higher and I went short at 7830. I took profit at 7790 yesterday afternoon and I am still flat the market. Next Thursday is going to be a big day for the Dax as the market has priced in an awful lot of good news from the ECB and if they do not cut rates then it could have a nasty fall. Today I will look to sell the Dax on any rally to 7870/7900 in small size with a 7920 stop. I will also look to buy on any sell off to 7740/7760 with a 7720 stop. If I am taken long and subsequently stopped out I will be an aggressive buyer on any further dip to 7660/7680 with a 7645 stop.
June FTSE
The FTSE just missed my buy level yesterday before having a nice rally and I am still flat. Today I will leave my buy level the same at 6340/6360 with a 6315 stop. I do not want to be short at this time.
June BUND
The Bund traded up to my sell level yesterday and I am short the market at 146.30 in small size. The reason I have a small position is because I have to leave a bigger stop at 146.80 which is just above the highs made last Tuesday. If I am stopped out I will be a more aggressive seller on any further rally to 147.20/147.40 with a 147.60 stop. If the Bund can break and close below 145.80 the market should move lower.
Gold Rolling Contract
Gold has had a massive rally off the 1321 low made last week as we have traded up to 1488 overnight. I went short Gold at 1475 and I will reduce my stop to 1490 which is just above the overnight highs. This 1470/1490 is key resistance and I believe it will take a lot for Gold to break this level. I will look to take profit on any dip to 1430/1450. If it drops to my profit target and subsequently rallies I will look to sell Gold again from 1475/1490 with a 1500 stop.
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