The mantra of not to be short the Euro on ECB Policy Meeting Day continued yesterday as the US Dollar got hit hard against all major currencies following Dragi’s press conference. This press conference came on the back of the news that the ECB was leaving rates unchanged and after Germany had released its Factory Orders which fell 2.2% for May, much worse than the -1% expected. Dragi discussed potential non standard measures including negative interest rates but said there was no need to act at this time. He also said he wanted to keep policy options on the shelf for the moment and has down played Euro-Zone growth. After he finished speaking the Euro went from 1.3085 to over 1.3300 as everybody who was short the Euro ran for cover.
In the US, the Weekly Jobless Claims came in better than expected at 343k and after an initial sell off in US Equities, after the open, the market reversed aggressively with the S&P closing up over 1% after a 25 handle rally off the lows. The Yen had its biggest one day rise against the US Dollar in over two years with US Dollar/Yen trading down to just over 95 from 99.20 yesterday morning. Overnight George Soros, who cut his Equity exposure in Japan in early May before the market fell 20%, has apparently bought back into the Japanese Equity market over the last two days as Japan looks to change its pension rules for holding Equities and this has so far helped stabilize the market. The Bank Of England also left their rates unchanged in what was their Governor Mr King’s last meeting in charge.
Today is another very important day for economic releases. This morning we have German Industrial Production and UK Trade Balances ahead of the Non Farm Payrolls from the US, at 1.30 pm, followed by US Consumer Credit.
June S&P 500
The S&P plan worked well yesterday in what was one of the wildest days of trading that I have seen in a few years and this volatility looks like it is here to stay. One of the most important criteria that I look at when trading the S&P is the McClellan Oscillator and this indicator may only give a signal once every few months but when it does, like yesterday, it can be very rewarding. If the McCllellan Oscillator has a reading of +/- 250 the market is overbought or oversold and after Wednesday’s sell off in the US stock market it had a reading of -330 This reading coupled with the S&P trading down to the Gap left from the May Payroll data was why I said I would get aggressive in the 1595/1602 buy level. Before this happened I covered my 1610 long position at 1614 ahead of the Weekly Jobless Claims and then I had to be patient as I waited for the market to trade down to my buy level. I bought the S&P at 1602,1600, and 1598 and covered these positions at 1610,1615 and 1620 and I am now flat.
As today is Non Farm Payroll Day I am going to stay flat until these numbers are released in what promises to be another wild day. If the data is good I will be a small seller on any rally to 1630/1635 in small with a 1640 stop. I will also be a buyer on any bad news if we drop to 1603/1608 with a 1594 stop which is just below yesterday’s low.
Euro/USD
Very unlucky yesterday in the Euro as the market just missed my 1.3080 buy level with a 1.3085 low before trading up to 1.3310 as every short in the market is getting killed. I sold the Euro in small at 1.3250 and I was quickly stopped out of this position at 1.3280 and I am now flat. Even though it is overbought I don’t think all the shorts have gotten out of the market yet and today I will be a small buyer on any dip to 1.3160/1.3190 with a 1.3140 stop. My main level to go short the Euro is from 1.3350/1.3380 with a 1.3410 stop.
June FTSE
What a day for the FTSE as the market is down almost 10% from the highs made two weeks ago. I was quickly stopped out of my 6402 long position at 6374 and it shows again how important it is to have stops in the market as the FTSE proceeded to make a new low of 6271 before having a small rally. It is extremely oversold and this morning I have bought the market again at 6305 in small with a 6260 stop which is just below yesterday’s low If I am stopped out I will be a more aggressive buyer in front of 6220 with a 6195 stop.
June DAX
The Dax continues to follow the other markets lower and I am still flat. Today I will be a small seller on any rally to 8170/8210 with a 8240 stop which is just above yesterday’s high. I do not want to be long the Dax at this time.
September BUND
Apologies but I only realised after I posted yesterday that the June Bund expired yesterday morning and we have now rolled to the September Contract. Today I will be a small buyer on any dip to 143.10/143.40 with a 142.95 stop. I still do not want to be short the Bund at this time.
June Nasdaq 100
The Nasdaq plan worked out yesterday as the 2911 Gap left open from early May was filled. I bought the market at 2920 and I have taken profit on this position at 2950 and I am now flat. Today I will still look to buy the market on any dip to 2910/2920 with the same 2895 stop.
Silver Rolling Contract
Silver keeps missing my 22.20 buy level and this morning I will raise my buy level to 22.30/22.50 with a 22.10 stop.
June Nikkei
Unfortunately when USD/YEN started to fall hard yesterday afternoon I got stopped out of my 12900 long position at 12650 and I am now flat. The Nikkei made a low of 12300 before trading up to 13120 this morning for an incredible 800 point range. I read this morning that George Soros has bought the market over the last couple of days and I still like the Nikkei as we are extremely oversold and the BOJ will not want the Nikkei to fall much further as it will impact their recovery. For this reason I have bought the market again this morning in very small size due to the enormous volatility at 12680 with a 12290 stop which is just below yesterday’s low. If the Nikkei can break and close over 13200 it will be very positive.
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