An attempted agreement to end the US Fiscal impasse has broken down yet again. There were reports last night that the Senate were close to a Budget agreement that would keep the Government spending levels until January 15th 2014 and extend the debt ceiling until early February 2014. However during the US session it became clear that the Democrats would not agree to a deal after House Republicans tried to negotiate Health Care clauses into the agreement. Democrat Senator Dianne Feinstein’s comment that it had all fallen apart saw the Dow extend its losses and closing down nearly 1%. European Equity markets closed up an average of 0.8% benefiting from the late-afternoon optimism that a US deal was close.
Gold strengthened late on having been lower all morning whilst the US Dollar strengthened against the Euro after a disappointing German Investor Confidence reading. The ZEW reading fell to 29.7 versus 31.3 expected, overshadowing the 31/2 year high in the forward looking expectations component to 52.8 in October from 49.6 in September.
This morning on the economic front we have UK Unemployment at 9.30 am followed at 10.00 am by Euro-Zone CPI and Trade Balance. Later from the US we have the NAHB Housing Market Index for October followed by the US Fed releasing its Beige Book. The Beige Book will asses economic conditions through September and early October capturing some impact of the Government shutdown. We will also have lots of headlines about the debt ceiling as the Thursday midnight deadline draws ever closer.
December S&P 500
Yesterday’s S&P action was wild as headline after headline hit the wires leading to lots of volatility in both directions for the stock market. The S&P finally hit my 1694 buy level late in the session and after a nice rally overnight I was able to cover this position at 1703 and I am now flat. Overnight US Senate leaders were rushing to lock down an agreement to end this Fiscal impasse as they stepped in after House Republicans last minute plan to avert a default collapsed. The emerging Senate accord may be announced as early as this morning,though passage through the Republican led House is far from assured as one ratings agency yesterday placed the US’s AAA credit rating on negative watch.
Today I will still be a small buyer on any dip to 1689/1693 with the same 1684 stop while I will also be a seller on any rally to 1716/1721 with a 1726 stop.
Euro/USD
The Euro worked well as shortly after I posted the market was trading at my 1.3490 buy level and after a nice rally late in in the US session. I was able to cover this position at 1.3525 and I am now flat. Today I will lower my sell level to 1.3570/1.3600 with a 1.3620 stop whilst I will still be a small buyer on any dip to 1.3470/1.3490 with a 1.3455 stop.
December DAX
The Dax still continues to outperform the other major indices. It rose yesterday despite the weaker than expected ZEW Survey. The Dax traded up to my 8815 sell level and after a nice sell off near the New York close I was able to cover this position at 8785 and I am now flat. It is overbought on a Daily basis and is trading at the top of the Bollinger Band but not yet at the top of the Williams Index. Today I will raise my sell level to 8830/8850 with a 8865 stop. I will leave my buy level the same at 8670/8700 as I do not want to chase this market higher.
December FTSE
No change as I am still a buyer on any dip to 6440/6470 with the same 6420 stop. Today I will lower my sell level to 6530/6550 with a 6572 stop.
Dow Rolling Contract
The Dow worked well yesterday as the market eventually traded down to my 15160 buy level and, after a nice rally overnight, I was able to cover this position at 15230 and I am now flat. Today I will still be a small buyer on any dip to 15120/15150 with a 15095 stop. I will also be a seller on any rally to 15310/15340 with a 15360 stop.
December BUND
No change as I am still long from 139.40 with the same 138.95 stop. I will give the Bund one more day to rally or else I will cut my position and stand aside.
Gold Rolling Contract
Gold had a wild day yesterday as the market having been very weak in the morning then rallied hard in the afternoon to trade up to my 1285 sell level. After a nice sell off overnight I have covered my position at 1275 and I am now flat. Today I will be a small seller on any rally to 1295/1302 with a 1305 stop. I will also be a small buyer on any dip to 1255/1262 with a 1248 stop which is just below yesterdays low.
Silver Rolling Contract
Silver worked well yesterday as shortly after I posted it traded down to my 20.50 buy level before following the Gold market higher and I was able to cover my position at 21.20 and I am now flat. I still like Silver and today I will be a small buyer on any dip to 20.70/21.00 with a 20.47 stop which is just below yesterdays low.
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