Well all changed yesterday for market volatility after Monday’s very quiet session, with the VIX rising over 9%. This came in the wake of Japan leaving it’s asset purchase programme unchanged and the unrest in Turkey, which has led to a fall of over 20% in the Turkish Stock market with Bond Yields rising over 200 basis points.The main European and US Equity markets all lost between 0.8-1.5% in very volatile trading. Overnight the markets have stabilized somewhat after comments from Bank of Japan Governor Kuroda that his April plans to double the nations monetary base will be enough to end deflation despite the negative reaction from the markets.The USD/JPY is back near .9700 having been under .9600 earlier and the Nikkei is more or less unchanged from yesterday having been down earlier.

In Australia the latest consumer confidence reading for June was released and it rose back to near it’s long term average indicatingthat consumers are responding positively to the rate cuts to date and has helped stabilize the Aussi Currency which has lost over 15% this year against the US Dollar. The UK Industrial Production and the US NFIB Small Business Survey both came in stronger than expected.

Today on the economic front we have UK Unemployment and Euro-Zone Industrial Production this morning followed by the ECB Monthly Budget Statement. Later from the US  we have the Monthly Budget Statement while the ECB’s Coeure is due to speak later in the day.

June S&P 500

Just as I posted yesterday all the main stock markets got hammered and this continued until the US opened and brought a brief turnaround as the S&P closed the gap only to be hit hard later and markets closing near their lows. Friday week next is the expiration of the June Futures contract and traditionally whatever low is put in the S&P on Thursday/Friday this week leads to a rally ahead of this expiration.

I was quickly stopped out of my 1631 long position at 1627 and I spent the rest of the day observing the market and I am still flat. Given the volatility at the moment it is important to keep the size of my positions small and widen my stops as otherwise the market will stop me out very quickly. If the S&P breaks 1620 it should lead to a test of 1600 and possibly 1580. As I said yesterday a break and close over 1650 will lead to a test of the recent highs at 1685. Today I will be a small buyer on any dip to 1620/1624 l with a 1615 stop and I will be a small seller on any rally to 1640/1644 with a 1652 stop.

Euro/USD

No change in the Euro as I want to sell in small from 1.3340/1.3360 with a 1.3380 stop. I will also look to buy the market on any dip to 1.3195/1.3225 with a 1.3180 stop.

June FTSE

Just like the S&P I was quickly stopped out of my 6360 long position at 6340. I was at a meeting at the time and when I finished the FTSE was trading at 6280 which completely shocked me. I bought the FTSE at this level and I managed to take a small gain at 6310 before it rallied hard into the close and I am now flat. As I write this commentary the market is under pressure again but we are at the bottom of the Bollinger Band but not the Williams Index. The 6230/6270 is key support and a closing break lower would be very bearish and it could lead to an eventual test of 5900. Today I will be a buyer on any dip to 6250/6280 with a 6220 stop. Given that it is expiration week next week I do not want to be short at this time.

June DAX

The Dax just missed my sell level before getting hit hard and I am still flat. I do not like the Dax and I think this is the most vulnerable of all the equity markets especially with the German Elections due in September. Today I will lower my sell level to 8230/8250 with a 8285 stop.

September BUND

The Bund continues to trade heavy but it did have a nice rally off the 142.03 low to trade up to my 142.75 sell level. I am still short and I will leave my stop the same at 143.05 as I look for the market to retest yesterdays low where I will be a small buyer from 142.00/142.25 with a 141.95 stop.

June Nasdaq 100

The Nasdaq worked well yesterday as I was able to cover my 3000 short position at 2960 and I am now flat. Today I will be a seller on any rally back to 2990/3005 with a 3020 stop. I will also look to buy the Nasdaq on any sell off to 2905/2925 with a 2195 stop.

June Nikkei

After I posted yesterday the Nikkei had already traded through my buy level and my stop as I lost 100 points in the process and I am now flat. I still believe the Nikkei is a buy as the BOJ will keep printing money to stave off deflation and this should benefit the Nikkei greatly and for this reason I would rather be long the stock market than short the Yen. Today I will be a small buyer on any dip to 12800/13050 with a 12550 stop.