Markets ended the week on a quiet note with the DOW finishing flat, having recovered from being down 150 points at one stage, whilst the S&P ended up just 0.1%. On the currency markets, following the 3% drop in the Nikkei, the USD/JPY was the only G10 currency mover, down over 1% on the day and having traded briefly below 0.98. The US Stock markets reversed earlier losses after the final University of Michigan Consumer Confidence Survey rose to 65.1 from a 63.9 preliminary reading and against a consensus of 64 – this was the best reading since July 2007.
Also on Friday a third of the Democrat Senators have written to President Obama urging him to nominate Fed Vice Chair, Janet Yellan, to succeed Ben Bernanke. However, the White House said that the President would not be taking a decision on the Fed Presidency before September at the earliest.
Today should be a calm day in the markets ahead of a busy week starting with the Fed two day meeting tomorrow followed by the ECB and BOE on Thursday and then the Non Farm Payrolls on Friday. On the economic news front, in the UK we have Nationwide House Prices, Mortgage Approvals, Net Lending and M4 Money Supply. Later, this is followed in the US by Pending Home Sales and the Dallas Fed Manufacturing Activity.
September S&P 500
On Friday, the S&P managed to have another decent recovery off the now very important 1670 support zone. Unfortunately I had my stop too tight and I was stopped out of my 1683 long position at 1677 and I am now flat. I am impressed with how well the S&P is trading and that all ‘sell-offs’, for the moment, are been met by strong buying which is always a healthy sign. The fact we have the FOMC Meeting tomorrow and Wednesday makes it very difficult to be short the market ahead of this major news event. Today I will be a buyer on any dip to 1680/1685 in small with a 1675 stop. I do not want to be short the market unless we trade up to 1702/1705 with a 1708 stop.
Euro/USD
The Euro plan worked well on Friday as I was able to cover my 1.3290 short position from Thursday at 1.3260 and I am now flat. The market just missed my 1.3250 buy level with a 1.3252 low before having a nice rally. Today I will be a buyer on any dip to 1.3210/1.3240 with a 1.3190 stop. My only interest in being short the Euro is on a rally to 1.3370/1.3400 with a 1.3420 stop.
September FTSE
Just after I posted on Friday, I went long the FTSE as it was trading at my 6525 buy level. I was lucky that I didn’t get stopped out as the market had a low of 6486 before having a nice rally. I am still long and I will leave my stop the same at 6485 as I look for the market to trade back to the important 6570/6600 resistance level. My only interest in going short is on a rally to 6620/6640 with a 6660 stop.
September DAX
For the second day in a row the DAX was already trading through my buy level before I managed to post the commentary and so my plan was void. The Dax is continuing to struggle and the fact we closed below 8330 is not good, however with all the economic and central bank news due this week it makes it very difficult to be short the market. Today I will be a buyer on any dip to 8200/8230 with a 8180 stop and I will also be a buyer on a break of 8330 with a 8290 stop. I still do not want to be short at this time.
September BUND
The Bund plan worked well on Friday as the market traded down to my 142.25 buy level before having a nice rally and I was able to cover this position at 142.60 and I am now flat. As long as the Bund can hold the 142.00/142.30 support zone the market is still bullish but a break and close below 142.00 will be very bearish. Today I will be a buyer on any dip to 142.10/142.40 with a 141.90 stop.
Gold Rolling Contract
Gold worked well on Friday as the market dropped down to my 1320 buy level and I was able to cover this position at 1333 and I am now flat. I still like Gold as long as we can hold the 1310 support zone and today I will be a small buyer again on any dip to 1316/1325 with the same 1308 stop.
Silver Rolling Contract
I am glad I stood aside from Silver on Friday and I was impressed with how well it came back from the important 19.60 support zone into the New York close. Today I plan to be a small buyer on any dip to 19.60/19.90 with a 19.45 stop. If it can break and close over 20.70 it will be very bullish.
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