Shortly after I posted yesterday the the Manufacturing PMI’s released for the Euro-Zone and the UK came in better than expected which helped European Equities rise between 1.5%-2% whilst the possibility of retaliation against Syria on the back burner for at least a week also helped sentiment. The flash Manufacturing PMIs for the Euro-Zone and Germany, released last week, had shown top-line zone improvement however yesterday’s data revealed that PMI’s for Ireland (52.0), Spain (52.0) and Italy (51.3) were also improved. Even Greece at 48.7 was the best for three years!
The UK’s Manufacturing Index jumped to a healthy 57.2 and helped sustain the uptrend in Sterling that was already boosted from the announcement effect of news of a $130 billion deal between Verizon and Vodaphone whereby Verizon will buy Vodaphone’s 45% share in mobile phone carrier, Verizon wireless.
The US markets will be back open today after they were closed for Labor Day yesterday. On the economic front this morning we have UK BRC Sales whilst later from the US we have Construction Spending and ISM Manufacturing.
September S&P 500
At least today should see the start of proper trading again as Hedge Funds and Banks get back after the summer break. August was one of the lowest volume trading months on the NYSE for a number of years and of course September is traditionally the weakest month of the year. September this year has the potential for a lot of volatility starting with the Non Farm Payrolls due on Friday which will be closely monitored by the Fed ahead of their meeting on September 17 which will determine when QE tapering will begin. The S&P is trading into the 1645/1654 Gap that has been outstanding for the last 10 days with a 1649.25 high so far. Today is going to be interesting as the market closed on Friday at 1632 and we now have a huge Gap to the upside and the big question today is ‘will the US sell the open and close this ‘Up Gap’ before trading higher?’.
Today I will leave my guidelines the same as yesterday, I am a seller on any rally to 1653/1657 with a 1661 stop and I will also be a buyer on any dip to 1634/1638 with a 1631 stop. The market needs to break and close below the important 1620/1625 support zone for me to turn bearish.
Euro/USD
The market that I find the most difficult to trade at the moment is the Euro as there are so many variables which effect this exchange rate. The Euro is very oversold and at the very bottom of the Williams Index. I was stopped out of my small 1.3190 long position at 1.3165 this morning and I am still flat. If the Euro closes below 1.3200 today it will be a confirmed break of this important support. Today, given how oversold the Euro is, I will be a small buyer on any dip to 1.3120/1.3150 with a 1.3095 stop.
September DAX
The Dax traded up to my 8260 sell level and after a small sell off near the close I was able to cover this position at 8232 and I am now flat. The Dax is approaching very important resistance at 8260/8290 and we need a break of 8300 for me to turn bullish. Today I will still be a seller from 8255/8280 with a 8310 stop. I will also be a small buyer on any dip to 8120/8150 with a 8095 stop.
September FTSE
The FTSE also traded up to my 6515 sell level after the UK PMI was released yesterday. I am still short and I will use a 6540 stop on this position. I will also be a buyer on any dip to 6440/6470 with a 6425 stop.
December 10 Year Futures Contract
The market dropped down to my 123.40 buy level and I am still long with the same 122.95 stop. As you know I am looking for the market to bottom somewhere in this 122.50/124.00 support zone over the next two weeks.
Gold Rolling Contract
No Change as I am still a small buyer on any dip to 1370/1380 with a 1365 stop.
Silver Rolling Contract
No change also as I am still short Silver at 24.20. I will leave my stop the same at 24.50.
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