The US Equity Markets consolidated their Friday gains yesterday on very low volume in light of the absence of any economic news. The Dow finished flat having been up over 50 points at one stage. The markets were up initially on comments from the Fed’s Bullard who wants more reassurance that inflation has stopped falling before starting the tapering of QE. The markets were also helped by Standards & Poors raising US the ratings outlook to stable from negative on the falling deficit and said that the US Reserve Status is helpful to Deficit Funding.
The US Dollar, having been strong for most of the day, started to weaken late on and has continued to weaken overnight especially against the Japanese Yen after the BoJ, this morning, left its policy unchanged. The Yen jumped and the Nikkei is down over 1% having been down nearly 2% at one point. The Bank of Japan refrained from extending the maturity of loans to the lenders that it uses to smooth Bond market volatility, bucking economists predictions and sending the Yen higher against the US Dollar.
Today is another quiet day for economic data. This morning we have UK GDP at 9.30 am followed in the US by the NFIB Small Business Optimism and Wholesale Inventories.
June S&P 500
In the absence of any news yesterday the S&P had a very quiet trading day in comparison to the fireworks that we have seen over the last two weeks and this gave traders time to draw breath before the next onslaught. It traded up to my 1646 sell level with a 1648.5 high and I was able to cover this position at 1640 and I am now flat. This 1646/1650 is key resistance and a closing break above 1650 will be short term bullish and probably lead to a test of the recent highs at 1685. Given that today is Tuesday and, apart from last Tuesday when the market fell, the previous 20 Tuesdays had all been up days and it will be interesting to see if this trend can continue. Today I will be a small seller on any rally to 1646/1650 with the same 1652 stop and I will still look to buy the market on any dip to 1630/1634 with a 1627 stop.
Euro/USD
After I posted yesterday the Euro traded up to my 1.3220 before falling down to the 1.3180/1.3190 support zone where it seemed to trade for hours before it rallied late on. I covered my 1.3220 short position at 1.3190 and I am now flat. Overnight the Euro has continued to rally against the weak Dollar and today I will be a more aggressive seller on any rally to 1.3330/1.3350 with a 1.3380 stop.
June FTSE
The FTSE has dropped down to my 6360 buy level this morning and I have gone long in small with the same 6340 stop. If I am stopped out of this position I will be a more aggressive buyer from 6300/6320 with a 6270 stop which is just below last weeks low.
June Dax
The Dax had already traded through my sell level by the time I posted yesterday and the market, having made a new high at 8359 just after lunch, spent the rest of day trading lower. I don’t like the Dax as I feel this market is overvalued and due for a correction. Today I will be a small seller again on any rally to 8285/8310 with a 8330 stop.
September BUND
The Bund traded down to my 143.10 buy level before stopping me out of this position at 142.85 and I am now flat. Today the Bund is trading below the key 142.60 support zone and a closing break here will be very bearish. I am surprised how weak the Bund is trading but I have to respect the price action and for this reason I will look to go short the Bund from 142.60/142.80 with a 143.05 stop.
June Nasdaq 100
The Nasdaq traded up to my 3000 sell level yesterday and I am still short. I will lower my stop to 3010 which is just above yesterdays high as I look for the market to trade down to 2960/2970 where I will look to take profit.
June Nikkei
The Nikkei after the Bank Of Japan left its policy decision unchanged over night traded down to my 13200 buy level and I have covered this position this morning at 13405 and I am now flat. Today I will still be a small buyer on any dip to 13150/13250 with the same 13050 stop.
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