US New Homes Sales data released last Friday asks some serious questions about the veracity of the housing market recovery. Not only did sales in July plunge by 13.4%, their lowest level since October 2012, but April to June were also revised substantially downwards. The data had quite a profound effect on Treasury Yields with 10 Year Bonds down by 7 basis points. In equities, building companies took an obvious hit but the broader indices all finished higher as the ‘bad news is good for the market syndrome’ continued as traders are betting that the Fed might not introduce tapering after this latest data release. Equities were also helped higher by the 7% increase in Microsoft shares after the resignation of CEO Steve Balmer.
Today will be a quiet day for European trading with the London market closed for the UK Bank Holiday. We have no economic data out this morning whilst later in the US we have Durable Goods and the Dallas Fed Manufacturing Activity.
September S&P 500
After I posted on Friday the S&P was already trading in my sell level and I went short the market at 1657. After the very weak US Home Sales data were released I covered my short position for a small gain at 1653 and I am now flat. The S&P is caught between the weakness of the Dow which ended the week down 0.5% and the strength of the Nasdaq which ended up 1.5%. However it managed to close above the important resistance level of 1660 which is encouraging for the bulls. We still have an open Gap on the upside from 1669/1682 and I am looking for it to close quickly as this week is generally seasonally strong as we have the end of the month buying combined with the US Labor Bank Holiday weekend on Friday. Today I will be a small buyer from 1657/1661 with a 1654 stop. I do not want to be short the market today.
Euro/USD
Very unlucky on Friday as the Euro just missed my 1.3310 buy level before having a nice rally and I am still flat. I will raise my buy level to 1.3340/1.3370 with a 1.3310 stop. I still do not want to be short the Euro at this time.
September DAX
The Dax continues to outperform all the other major indices as every dip is been bought by the market. On Friday it just missed my 8340 buy level with a 8358 low before spending the rest of the day trading higher and closed again over the important 8400 resistance zone. Today I will raise my buy level to 8370/8390 with a 8350 stop.
September FTSE
The FTSE had a wild day on Friday as the market, having been very weak early on, then turned round and traded back over the important 6500 resistance level. I went short at 6480 and I was quickly stopped out of this position at 6510 and I am now flat. The market is closed for the UK Bank Holiday today and I will take a look again in the morning before I do my next trade.
September 10 Year Treasury Note
The market just missed my buy level on Friday before spending the rest of the day trading higher on the weak Home Sales data. Today I will raise my buy level to 124.50/124.80 with a 124.30 stop.
Gold Rolling Contract
Gold opened higher on Friday and spent the rest of the day trading upwards as the market put the important 1400 resistance level to the test. As I have been saying over the last week, as long as Gold can stay over 1350 the market is bullish and especially if we can break and close over 1400 for a few days it will confirm this stance. Today I will raise my buy level to 1380/1390 in small with a 1365 low which is just below last Friday”s low.
Silver Rolling Contract
Silver had a huge rally on Friday and amazingly the market is now up over 33% from it’s June low. Silver is approaching important resistance at 24.50/24.80 and I will be a small seller in this range with a 25.10 stop.
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