US Equity markets had another positive session yesterday, with the Dow up 0.3% and the S&P 500 up 0.2%, whilst European markets saw an average increase of 0.2%. Global risk aversion has eased somewhat as buoyant August Service Sector Data enforced the notion that global growth is picking up.
China’s HSBC Services PMI accelerated to 52.8 in August from 51.3 in July, the highest reading since March. In Europe the Services PMI was solid at 50.7 (after 49.9 in July) whilst the UK was once again a stand-out performer with Services sector actually accelerating to 60.5. The Fed’s Beige Book further supported the growth outlook reporting that economic activity continued to expand at a ‘modest to moderate pace’ in July/August with better Manufacturing activity and rising consumer spending on household goods and cars. Equity markets came off their highs late in the session after the US Senate Foreign Relations Committee voted to authorize a limited military operation in Syria.
Today is very busy for economic data with Central Bank Meetings taking centre stage with policy meetings in Europe and the UK, but no change in policy settings expected. The.ECB’s press conference that follows at 1.30 pm will likely see a lot of volatility as Dragi will be grilled on the economy and as to whether a rate cut was discussed. Later from the US we have the Weekly Jobless Claims plus the ADP Employment data which will be closely watched ahead of tomorrow’s Non Farm Payroll data. The US also releases Factory Orders and ISM Non Manufacturing Composite Index.
September S&P 500
The S&P, having been down all morning, turned around in the afternoon on the better economic data and spent the rest of the day trading higher. The market traded up to my 1642 sell level before quickly stopping me out of this position at 1647 and I am now flat. Today is the Jewish New Year Holiday so trading volume could be somewhat muted and volatile as the market awaits today’s ADP Employment data and tomorrow’s Non Farm Payrolls. The S&P did indeed close the 1645/1654 Gap yesterday and the next target is the 1669/1682 open Gap from August 14th. I am impressed at how well the market closed yesterday and today I will be a small buyer on any dip to 1650/1654 with a 1647 stop. My only interest in selling the market is on a rally to 1675/1680 with a 1684 stop.
Euro/USD
The Euro had a nice rally yesterday and I was able to cover my 1.3140 long position at 1.3205 and I am now flat. Today the Euro will be volatile especially after Dragi’s press conference at 1.30 pm. As long as the Euro can stay over 1.3140 the market is bullish and today, given how oversold the Euro is, I will be a small buyer form 1.3130/1.3160 with a 1.3095 stop. I still do not want to be short the Euro at this time.
September DAX
The Dax plan worked well yesterday as the market dropped down to my 8010 buy level with a 8095 low before having a nice rally and I was able to cover this position at 8180 and I am now flat. I am going to stay flat until after Dragi’s press conference is out of the way as I am expecting a lot of volatility as he speaks. I am also impressed at how easily the Dax was able to break 8220 this morning and today I will be a small buyer on any dip to 8180/8210 with a 8160 stop. My only interest in selling the Dax is on a rally to 8310/8340 with a 8350 stop.
September FTSE
Shortly after I posted yesterday the FTSE broke my 6440 sell level and I went short the market. This trade looked good for a few hours before the market turned in the afternoon and followed the S&P higher and I was stopped out of this position at 6475 and I am now flat. Just like the Dax above I am impressed how easily the FTSE was able to break the 6500/6520 resistance zone this morning and I will be a small buyer on any dip to 6510/6525 with a tight 6490 stop.
December 10 Year Treasury Bond
My long 123.40 position in this contract also looked good for a while yesterday but unfortunately I was stopped out of this position overnight at 122.95 and I am now flat. I still believe that this market is trying to put in a bottom as it is very oversold on the daily charts. Today I will be a small buyer on any further dip to 122.10/122.40 with a 121.90 stop.
Gold Rolling Contract
No change as Gold just missed my 1380 buy level overnight with a 1381 low before having a nice rally. Today I will still be a small buyer on any dip to 1370/1380 with a 1365 stop.
Silver Rolling Contract
No change as I do not want to chase this market lower. I am still a seller on any rally to 24.00/24.30 with a 24.50 stop. I will also be a small buyer on any dip to 22.60/22.90 with a 22.45 stop as 22.80 should act as good support for Silver.
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