After last weeks contuinued volatility European Equities finished the week on their lows whilst the US market, having also been down for most of Friday, managed to stabilise and eek out a small gain. Commodities were mixed whilst US Treasury Yields continued to rise with the 10 Year Bond now approaching 2.6%.
There was no economic data to speak of on Friday but Fed member, James Bullard did say, in an interview, that he was not in favour of outlining the plan toward tapering of QE. Bullard said that the decision to do so was badly timed and, in his view, the Fed should have waited for more tangible signs of economic improvement and a halt in the recent downward inflation trend.
In Europe, EU Finance Ministers gave Ireland and Portugal another seven years to pay their bailout loans.
Today on the economic front we have the German IFO Survey and UK Nationwide House Price Index, this morning, followed in the US by the Chicago Fed National Activity Index, Consumer Confidence and New Home Sales.
September S&P 500
Last Friday was another wild day for S&P trading as all of the Futures and Options for June expired. The S&P just missed my 1602 sell level with a 1598 high before getting slammed to make a new low at 1570 before buyers returned, after comments from Fed member Bullard which helped rally the market into the close.
This continues to be the most volatile trading that I have seen in the last 5 years so caution is so important! As if to illustrate the point, after I missed the planned short position, the market dropped down to my 1580 buy level before quickly stopping me out at 1575 before making its low and then traded back to the 1588 level leaving me very frustrated in the process.
The next big support is from 1560/1570 and I think it will take alot for the market to break these levels without major news and as a result I have bought the S&P this morning at 1574 in small with a 1568 stop. If I am stopped out I will be a more aggressive buyer at the 1560 level with a 1554 stop. My only interest in selling the market is if we rally back to 1600 with a 1607 stop.
Euro/USD
The Euro has continued to trade lower after making its 1.3420 high last week. It looks more and more likely that it has now put in a significant top, especially with the close below the previous 1.3150/1.3180 support zone. I bought the Euro at 1.3180 on Friday and I was stopped out at 1.3155 for a small loss and I am now flat. The market is oversold here and I will use any rally back to 1.3160/1.3190 with a 1.3220 to reset shorts. I think, for me to turn really bearish of the Euro, we need a closing break of 1.2750.
September Dax
European Equities continue to be it the hardest and most of the indices are now flat to down, for the year, after the 10-12% sell off over the last two weeks. I bought the Dax in small at 7890 on Friday and I was quickly stopped out at 7850 and I am now flat. The Dax is now approaching long term support at 7680/7730 and I will be a more aggressive buyer here with a 7630 stop. It is extremely oversold and I would look for the market to rally back to the 7850/7900 resistance zone. I do not want to be short the market at this time.
September FTSE
The FTSE plan worked well on Friday as after I posted the market traded up to my 6180 sell level with a 6195 high. I took profit on this position at 6105 and then the market dropped down to my 6060 buy level and I am still long. I will leave my stop on this position at 6020. The FTSE, like the Dax, is very oversold and the bottom of the Bollinger Band and Williams Index. I will look to take profit on any rally back to 6120 on this position and I will also look to reset my short position on any further rally to 6160/6190 with a 6220 stop.
September Bund
The Bund continues to follow US Treasuries lower and, in the process, quickly stopped me out of my 141.85 long position at 141.55 and I am now flat. This market is extremely oversold and my only interest in buying the Bund is if we trade back to 140.30/140.60 with a 140.10 stop.
Silver Rolling Contract
The Daily Sentiment Index for Silver, released on Friday, shows that this Index has fallen to just 4% bulls, the lowest reeading since April 11th last when we hit 2% bulls and this quickly led to a 15% rally! I am still long at 19.60 and I will leave my stop the same at 19.20. Given the above sentiment readings if I am stopped out of ths position I will be a more aggressive buyer on any further drop to 18.80/19.10 with a 18.50 stop.
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