The ‘softer equities, stronger bonds, weaker US Dollar’ theme that has been evident since last Tuesday persisted into the weekend. The main US Indices ended with losses of between 0.25% and 0.5% with 10 year Bond Yields down 2 basis points to 2.58%. There was little by way of news driving markets in Europe and North America making for a typically quiet mid/late summer session. Chinese Money Supply released on Friday morning showed further evidence that the earlier liquidity squeeze on second tier banks has succeeded in curbing excessive credit creation. After Friday’s close the IMM data showed a slight pairing of US Dollar longs compared to the previous week but otherwise showing no major changes.
On the economic front we have very little data out today with no news of note from the UK or the Euro-zone whilst later from the US at 1.30 pm we have the Monthly Budget Statement.
September S&P 500
It is noticeable that the S&P has begun to under-perform the European Indices over the last few days as so much is now priced into the US market with the main indices up nearly 20% year to date and with the threat of tapering to happen after the Fed meeting in September. Last Friday the S&P dropped down to my 1685 buy level before having a small rally and I was able to cover this position at 1691 and I am now flat At the moment the market is trading between 1680 and 1700 and today I will be a small buyer on any dip to 1679/1683 with a 1677 stop. I will also be a seller on any rally to 1693/1698 with a 1702 stop.
Euro/USD
Having watched myself been off side on the Euro for the last few days, I have covered my 1.3340 short position last night at 1.3330 and I am now flat. Today I will be a seller on any rally to 1.3370/1.3400 with the same 1.3420 stop as I am trying to get short the market at a better level. My only interest in buying the Euro is on a dip to 1.3250/1.3275 with a 1.3235 stop.
September FTSE
Unfortunately I was stopped out of my 6535 short position taken on Friday morning at 6565 and I am now flat. If the FTSE can break 6570 I will be a small buyer with a 6540 stop, otherwise I am going to stay flat and see how the markets trades for the day.
September DAX
The DAX worked well on Friday as the market traded up to my 8355 before having a small sell off and I was able to cover this position at 8330 and I am now flat. Today I am a seller on any rally to 8370/8400 with a 8420 stop and I will also be a small buyer on any dip to 8235/8265 with a 8220 stop.
September Bund
The Bund traded up to my 142.50 sell level and I am still short. I will use 142.85 as my stop on this position. If I am stopped out I will be a more aggressive seller in front of 143.30 with a 143.50 stop. I do not want to be long the Bund at this time.
Gold Rolling Contract
Gold worked well on Friday as the market traded down to my 1305 buy level before having a nice rally last night and I was able to cover this position at 1317 and I am now flat.. Today I will be a small buyer on any dip to 1305/1310 with a 1299 stop which is just below the low made last Friday. A break and close over 1350 will be very bullish.
Silver Rolling Contract
Silver just missed my 20.00 buy level with a 20.07 low before having a nice rally however last night it broke my key 20.70 resistance level and I bought the market in small size with a 20.35 stop.
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