Last Friday’s US Employment Report came close to ending my view that Fed QE tapering is likely to commence following the September FOMC meeting. With no top tier economic data due for release between now and then the odds of Fed tapering being announced have reduced to no greater than 50%. The 169k rise in payrolls in August was only 11k below expectations but a lot lower than an advance ‘whisper number’ near the 200k mark. In addition, the -58k revision to July means that the Q3 average payroll gain is running at only 136.5k which is down from 182k in Q2 and 207k in Q1. The drop in the Unemployment Rate to 7.3% from 7.4% was thanks to a 0.2% decline in the participation rate.
Complicating a clean market take on the Payrolls Report was the comment from Russian President Putin (about 40 minutes after the Report was released) out of the G20 Meeting that Russia would assist Syria in any case of external attack. This didn’t deter President Obama from saying that he was not ruling out an attack by the US on its own. This led to a crazy half hour in the stock market before prices recovered to close flat on the day whilst 10 Year Treasuries dipped 11 basis points to 2.89%.
This morning we have no economic data of note from the UK or the Euro-Zone whilst later, from the US, we just have Consumer Credit at 1.30 pm. Later this afternoon the Fed’s Williams will speak on the economy.
September S&P 500
Friday was one of the wildest trading days over the last two months with the S&P, having traded as high as 1662 after the payroll data was released on the idea that bad news for the economy is good news for the market, falling to a low of 1639 on the Putin comments on Syria before regaining control and trading back to 1663 before having a late sell off into the close.
The market dropped down to my 1646 buy level after a scary 20 minutes without trading through my 1639 stop level the market had a nice rally and I was able to cover this position at 1655 and I am now flat. We still have the outstanding Gap from 1669/1682 and I feel we will close this Gap ahead of the FOMC Meeting next week. Today I will be a small buyer from 1650/1654 with a 1648 stop. My only interest in selling the S&P is from 1670/1675 with a 1678 stop.
Euro/USD
After the payroll data was released on Friday the Euro had nice rally and I was able to cover my 1.3145 long position at 1.3185 and I am now flat. I still like the Euro as long as we can hold the 1.3100/1.3140 support zone and I will look to reset my long position on any dip into this support with the same 1.3095 stop.
September FTSE
This morning the FTSE is back above the 6550 level thet I wrote about on Friday and I have bought the market at 6552. I will leave a 6515 stop on this position as I look for the FTSE to trade back to 6625/6650 which is the next important resistance. I do not want to be short the FTSE at this time.
September DAX
The Dax plan worked well on Friday as the market traded down to my 8190 buy level on Putin’s comments and after a nice rally I was able to cover this position at 8245. This morning the Dax is back above the key 8250 resistance level and I will be a small buyer from 8245/8270 with a 8230 stop.
December 10 year Treasury Bond
The market had a nice buy extreme off the 122.00 key support zone after Friday”s Payroll data was released and I was able to cover my 122.30 long position at 123.30 and I am now flat. I still like this market and I will use any dip to 122.60/122.90 to rest my long position in small size with a 1.2195 stop.
December BUND
The Bund managed to close over the key 137.50 support level on Friday and I bought the market after the payroll data was released at 137.40. I will leave a 136.95 stop on this position as I will try to give the Bund some room here as we are in a very significant support zone for the Bund going forward.
Gold Rolling Contract
Gold had a nice rally off the key 1350 /1360 support zone on Friday. I still like Gold as long as we can hold over this level and today I will be a small buyer from 1360/1370 with a 1349 stop.
Silver Rolling Contract
Silver just missed my 22.90 buy level on Friday before having a nice rally and I am still flat. Today I will raise my buy level to 23.30/23.60 with a 22.95 stop which is just below the low made on Thursday. I do not want to be short Silver at this time.
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