Global Equity markets rose yesterday supported by better than expected US Economic data. US Quarter 2 GDP was revised higher to 2.5% from 1.7% driven higher by a smaller trade gap and higher inventories whilst Jobless Claims fell to 331k from 337k. However the gains in Equity markets were small, with the Dow rising 0.1% and the S&P ending 0.2% higher, because the better data left the market more confident that the Fed’s tapering of QE will begin in September. Next Friday”s Non Farm Payrolls Report now looms as the crucial release that will largely determine the Fed’s action at the September FOMC Meeting. The US Dollar strengthened after the GDP report whilst the EUR/USD was the most obvious under performer, sliding from 1.3340 to a low of 1.3218 after stops were triggered at 1.3280.
Meanwhile Gold and Oil have lost further ground overnight, not helped by UK PM Cameron losing the vote on approval for strikes on Syria.
Today is a really busy day for economic releases and should lead to a lot of volatility especially with the US markets closed on Monday for Labor Day. This morning we have Euro-Zone Consumer Confidence, Business Climate Indicator, Unemployment Rate and CPI. This is followed in the US by Personal Income/Spending, Chicago Purchasing Managers Survey and University of Michigan Consumer Confidence. Later this afternoon the Fed’s Bullard speaks on the economy in Memphis.
September S&P 500
The S&P plan worked well yesterday as shortly after the GDP data was released the market traded down to my 1632 buy level, with a 1628 low, before having a really nice rally and I was able to cover this position at 1640 and I am now flat. It then traded up to 1645 before sellers returned and we still have the open Gap to 1654 which I would expect to be filled over the next few days. As I mentioned previously, the next 5 days is a seasonally very strong time of the year especially with markets closed Monday for the Labor Day weekend.
Today I will be a buyer on any dip to 1635/1639 with a 1627 stop which is just below yesterday’s low. I will also be a small seller on any rally to 1652/1656 with a 1659 stop.
Euro/USD
The Euro had a nasty sell off yesterday as the market continues to be contained by a range of 1.3200 on the downside and by resistance at 1.3400 on the upside – a break of either level should lead to a accelerated move. The Euro is oversold this morning and near the bottom of the Bollinger Band and Williams Index. Yesterday the Euro dropped down to my 1.3220 buy level and I am still long. I am using 1.3190 as my stop. Given how oversold the Euro is at this time I do not want to be short the market today and if I am stopped out of my 1.3220 long position I will be a more aggressive buyer on any dip to 1.3130/1.3160 with a 1.3095 stop.
September DAX
The Dax continues to be the weakest of the major indices as despite the rally in the US and UK Equity markets itx is finding it very hard to trade higher. I was stopped out of my 8175 long position yesterday at 8140 and I am still flat. Today I will be a small buyer on any dip to 8120/8145 with a 8095 stop. I will also be a small seller on any rally to 8245/8270 with a 8290 stop.
September FTSE
The FTSE plan worked very well yesterday as shortly after I posted yesterday the market traded down to my 6450 buy level before having a nice rally and I was able to cover this position at 6490 and I am now flat. Today I will still be a buyer on any dip to 6430/6450 with a 6395 stop. Given that it is month end and the Monday is the beginning of a new month where Fund Managers have to put money into equities I do not want to be short at this time.
December 10 Year Treasury Bond
Very unlucky yesterday as the market just missed my 123.60 buy level with a 123.65 low before having a nice rally and I am still flat. I am not going to chase this market higher and I will leave my buy level the same at 123.40/123.60 with a 122.95 stop.
September Bund
The Bund also just missed my buy level before trading higher. Today I will raise my buy level to 140.10/140.30 with a 139.90 stop.
Gold Rolling Contract
No change as I am still a seller on any rally to 1420/1430 with a 1435 stop which is just above Wednesday’s high. My only interest in buying Gold is on an dip to 1370/1380 with a 1359 stop.
Silver Rolling Contract
Silver worked well yesterday as the market traded up to my 24.30 sell level with a 24.42 high before trading lower and I was able to cover this position at 23.85 and I am now flat. Today I will be a small seller on any rally to 24.00/24.30 with a 24.50 stop.
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