European Equity markets fell between 0.1% and 0.9% yesterday whilst US Indices suffered smaller losses. This despite having been up earlier on solid Factory Orders data, which rose 2.1% in May, and comments from Fed President Dudley who said that the Fed may prolong bond purchases if the economy turns out weaker than expected. Stocks reversed mid-session after an escalation in concerns about Egypt causing oil prices to rise with West Texas Oil rising 1.9% to 99.80 to its highest level since May 2012. Overnight it has continued to rise, up another $2 to 102.00 thus putting more pressure on stock markets.
In currency markets Egyptian concerns led to broad US Dollar strength in particular against the Yen, Aussi Dollar (its lowest level since September 2010) and Sterling. The German Dax was the worst performing market yesterday on weakening Euro-Zone PMI which fell 0.3% last month.
Today on the economic front we have a lot of data, all of which has the potential to be market moving. This morning we have PMI Services from the Euro-Zone, Germany and the UK followed by Retail Sales from the Euro-Zone. This is followed at 1.30 pm by the US ADP Employment Data (important ahead of Non Farm Payrolls on Friday), Trade Balance, MBA Mortgage Applications and ISM Non Manufacturing Composite. As the US markets close for a half day and do not reopen until Friday we also have the Weekly Jobless Claims data today instead of its usual Thursday slot.
September S&P 500
Some days you get lucky breaks trading the S&P and yesterday was one of those as both my sell levels and buy levels both got hit in the same trading session. After the American markets opened the S&P traded up to my 1618 sell level before subsequently falling on the escalating concerns out of Egypt and I was able to cover this position at 1609 before the market dropped down to my 1603 buy level with a 1600.50 low. The market had a late rally off this low and I was able to cover this position at 1608 and I am now flat. Today is a shortened trading day due to the 4th July celebrations tomorrow with the cash market closing at 6 pm and the futures market closing 15 minutes later. The cash markets for US Stock Indices are all closed tomorrow whilst the Futures markets are open for a limited time. Today we also have a huge amount of economic data due and I am going to stay flat until we get this news out of the way. If the market sells off after the economic releases I will be a small buyer on any dip to 1592/1597 with a 1589 stop, whilst if the market rallies after the data is released I will be a small seller on any rally to 1610/1614 with a 1619 stop.
Euro/USD
The Euro traded down to my 1.3020 buy level and the market held the important 1.3000 support zone until oil started to rise and then the US Dollar subsequently broke higher against all major currencies stopping me out of my long position at 1.2990 – I am now flat.The fact that we closed below 1.2980 is bearish and today I will be a small seller on any rally to 1.2970/1.3000 with a 1.3020 stop. My only interest in buying the Euro is if we dip to 1.2850/1.2870 with a 1.2820 stop.
September DAX
Yesterday was another great example of how important it is to have stops in the market. The Dax traded down to my 7910 buy level on the weak PMI data and I was subsequently stopped out at 7880. The fact that we have broken the important 7860 support zone so easily this morning is bearish and today I will be a small seller on any rally to 7830/7860 with a 7885 stop which is just above the high made earlier this morning after the Dax opened. My only interest in buying the Dax is if the market continues to sell off to 7710/7740 with a 7685 stop.
September FTSE
The FTSE just missed my 6280 sell level with a 6266 high and my position of not being long this market worked well, as we are trading 100 points lower as I write this commentary. Today I will be a small buyer on any dip to 6110/6140 with a 6095 stop and I will also be a small seller on any rally to 6210/6230 with a 6245 stop which is just above the highs made overnight.
Gold Rolling Contract
No change as I am still a small buyer on any dip to 1220/1230 with a 1208 stop and I will also be a seller on any rally to 1290/1305 with a 1312 stop.
September BUND
The Bund has continued to rally off the 139.90 low made two weeks ago and this morning we are approaching levels where I want to go short. Today I will be a small seller on any further rally to 142.50/142.80 with a 143.05 stop.
Silver Rolling Contract
I was stopped out of my 19.50 long position for breakeven yesterday afternoon and I am now flat. Today I will be a small buyer on any dip to 19.00/19.25 with a 18.80 stop.
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