The Equity markets had one of their worst days of the year yesterday as the fall out from US Secretary of State John Kerry’s comments on Syria, late on Monday, took its toll on financial markets. The Indian Rupee was hit by another 3% overnight and is now down by 20% since May putting the emerging markets back in the spotlight. Whilst equities have taken a bath, Oil and Gold prices have surged upwards with Oil up $9.00 since last Friday and Gold up nearly 4% since yesterday morning. With investors switching to the safer haven of bonds, yields have fallen, with US 10 Year Treasuries now back to 2.7% from 2.9% last Friday. In the world of currencies and despite the safe-haven sentiment, the US Dollar has not benefited, with the US Dollar Index in fact falling by 0.2% yesterday.
Whilst the market was focused on Syria and political statements, the data out of Germany and the US, yesterday, was all growth-friendly . The German IFO Survey points to further economic growth in Q3 whilst US Consumer Confidence came in better than expected.
This morning we have UK CBI Reported Sales whilst later from the US we have Pending Home Sales and MBA Mortgage Applications. Later today Governor Carney from the Bank of England will speak on the economy in Nottingham.
September S&P 500
The S&P had one of its worst days of the year yesterday as the fall out from Syria hit the with a vengeance knocking the market down 40 handles since Monday afternoon and in the process the S&P has left another unfilled Gap fro 1645/1654 to go with the other unfilled Gap from 1669/1682 from August 14th.
In yesterday’s trading I was quickly stopped out of my 1645 long position that I entered yesterday morning. Later the market traded down to my 1632 buy level, which I entered, however I decided to cover this position for a break-even and I am now flat. Today I will be a more aggressive buyer from 1620/1624 with a 1617 stop and if I am stopped out of this position I will look to re-buy the market on any dip to 1610 with a 1599 stop. The market is very oversold and we are now approaching month end and the US Labor Holiday weekend which is traditionally a seasonally strong time for the S&P. For these reasons I do not want to be short the market as well as if the Syrian situation gets resolved the market will fly to the upside.
Euro/USD
Ironically when everybody expected the US Dollar to gain strength on the back of the expected conflict in Syria it was the Euro that traders bought. The Euro was trading at my 1.3335 buy level when I posted and after a nice rally I was able to cover this position at 1.3390 and I am now flat. I still like the Euro and I will use any dip to 1.3320/1.3340 to buy the market with the same 1.3295 stop. I still do not want to be short the Euro at this time.
September DAX
The Dax hit my 8290 buy level after I posted yesterday morning and tried to rally on the stronger IFO Survey Report but failed miserably and I was stopped out of this position at 8250 and I am now flat. Technically the Dax had a very bad close especially as we closed below the key 8262 support level. Today I will be a small seller on any rally to 8235/8270 with a 8285 stop. My only interest in buying the Dax is on a dip to 8110/8140 with a 8095 stop.
September FTSE
The FTSE worked well yesterday as after I posted I entered a position at my 6425 buy level and after a small rally I was able to cover this position at 6450 and I am now flat. Today I will be a small buyer on any dip to 6360/6380 with a 6345 stop. I am still a seller on any rally to 6460/6490 with the same 6510 stop.
September 10 Year Treasury Bonds
Having correctly called for a rally in this market over the last week the market has obliged but unfortunately it did not hit my buy level before having this rally and I am still flat. In the process this market has now rallied over 200 points form its low made late last week. Today I will raise my buy level to 125.00/125.20 with a 124.75 stop.
September BUND
I have not traded the Bund for the past couple of weeks but yesterday the market broke and closed over the important 140.40 resistance level. Today I will be a buyer in small on any dip to 140.40/140.60 with a 140.30 stop.
Gold Rolling Contract
Gold continues its amazing run off its 1180 low made in June as its role as a safe haven continues. Gold is now extremely overbought and I will be a very small seller on any further rally to 1440/1450 with a 1460 stop.
Silver Rolling Contract
Silver is now up nearly 40% off its June low and the Daily Sentiment Index, having been at just 4% bulls when Silver made its low price, is now at over 90% bullish. Overnight the market hit my 24.80 sell level and subsequently stopped me out of this position at 25.10. Given the spike higher in Silver and looking how overbought the market is on the charts I have sold Silver again this morning at 25.00. I will leave a 25.40 stop on this position.
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