There were plenty of Fed Speakers offering their views yesterday leading to Treasury yields and equities both ending the day lower whilst the US Dollar was largely unchanged. This tells us the the latest Fed rhetoric has been largely ignored. Industrial equities are each marching to their own drum and may well continue to do so this side of next Friday week’s Non Farm Payroll data.
In Currencies, the Japanese Yen is the strongest performer over the past 24 hours. The Euro is slightly lower despite the impressive victory by Chancellor Merkel in Sunday’s Elections with the realisation that she will have to form a coalition Government with the SPD and following a process that historically has taken many weeks. The ‘sell the news’ response to the German Election also obscured a favourable reaction to better than expected German, French and Euro-Zone PMIs.
We also had ECB President Mario Dragi speaking and said that another Long Term Refinancing Operation (LTRO) is possible. The Fed’s Lockhart said that the focus of the Fed should be on better economic growth. He sees a slowing in payroll growth and a long way to go before maximum employment.
This morning on the economic front we have the very important German IFO Business Climate. The ECB’s Nowotny is speaking on the ‘future of monetary policy’ whilst later from the US we have the House Price Index, Consumer Confidence and the Richmond Fed Manufacturing Index.
December S&P 500
The S&P lost another 0.5% yesterday to close down for the third day in a row as nervousness about QE tapering continues. The market traded down to my 1698 buy level before having a small rally and I was able to cover this position at 1702. This morning the S&P is trading at the lower end of my support zone and I have bought the market at 1692. I will leave a 1685 stop on this position. I do not want to be short the S&P today as the market is at important support and I would expect this support to hold. If I am stopped out of my long 1692 position I will be a more aggressive buyer on any dip to 1677/1681 with a 1674 stop.
Euro/USD
The Euro again traded in a very tight range yesterday. It traded down to my 1.3480 buy level, I went long and after a small rally last night I was able to cover this position at 1.3505 and I am now flat. Today I will still be a buyer on any dip to 1.3460/1.3480 with a 1.3440 stop. As long as the Euro can stay over 1.3450 the market is fine, but a break and close below here will be bearish. My only interest in selling the Euro is on a rally to 1.3570/1.3600 with a 1.3620 stop.
December DAX
The Dax worked well yesterday as it traded down to my 8620 buy level and after a small rally I was able to cover this position at 8650 and I am now flat. I am going to stay flat ahead of this morning’s IFO Survey. My only interest in buying the Dax is on a dip to 8540/8570 in small size with a wider 8495 stop. I will also be a seller on any rally to 8730/8750 with a 8775 stop which is just above last weeks high.
December FTSE
The FTSE also traded down to my 6520 buy level and I opened a long position. I am still long and I will raise my stop to 6495. I still do not want to be short the FTSE at this time.
I am still short the FTSE/DAX spread at 2120 as this market is unchanged from yesterday. I will leave my stop the same at 2150.
December 10 Year Treasury Bond
I will raise my buy level to 124.90/125.20 with a tight 124.60 stop on any long position.
December BUND
The Bund worked really well yesterday as the market traded down to my 138.20 buy level before having a nice rally and I was able to cover this position at 138.75 and I am now flat. Today I will still be a buyer on any dip to 138.20/138.50 with a 137.95 stop which is just below yesterday”s low.
Gold Rolling Contract
No change from yesterday as I am still a buyer on any dip to 1292/1302 with a 1287 stop. I will also be a small seller on any rally to 1338/1348 with a 1352 stop.
Silver Rolling Contract
Silver worked well yesterday as the market traded down to my 21.60 buy level before having a small rally and I was able to cover this position at 21.90 and I am now flat. Today I will be a small buyer from 21.10/21.50 with a 20.95 stop.
Recent Comments