US Stock markets declined yesterday following two days of gains that sent the S&P 500 Index to within 5 points of a record high as investors await this weeks data on economic growth and employment. The S&P closed down 0.3% whilst the Dow closed just 0.1% lower. About 6.2 billion shares traded on the US Exchanges, 5% above the 3 month average. Investors are watching data to gauge the health of the US economy after the Fed said last week that it needs to see more evidence of sustained improvement before slowing the pace of its $85 billion monthly bond purchases.
The ECB cut its forecast for Euro-Zone growth next year and raised its unemployment estimate as the economy is struggling to regain momentum after a record-length recession. This is fueling expectation that the ECB will cut rates again at it’s meeting tomorrow.
This morning is a very busy day for economic releases. First up at 9.30 am we have UK Industrial and Manufacturing Production. Later at 10.00 am we have Euro-Zone Retail Sales and Services PMI. This is followed by German Factory Orders. Germany is due to have a 5-Year Bond Auction this morning and it will be interesting to see how it goes after the pick up in yields over the last two days. Later the US has its latest Challenger Job Cuts and the CB Leading Indicator.
December S&P 500
The S&P plan worked well yesterday as the market had a nice sell off in the morning and I was able to cover my short 1763 position from Monday at 1756. The market subsequently traded down to my 1754 buy level before having a nice rally and I was able to cover this position at 1760 and I am now flat. Today I will be a seller on any rally to 1762/1767 with a 1770 stop whilst I will also be a buyer on any dip to 1750/1754 with the same 1748 stop as yesterday.
Euro/USD
Shortly after I posted yesterday morning the Euro traded down to my 1.3460 buy level. I am still long and I will leave a 1.3435 stop on this position. The Euro is oversold and at the bottom of the Williams Index and Bollinger Band. If I am stopped out of my long position I will be a more aggressive buyer on any dip to 1.3390/1.3410 with a 1.3370 stop. I will still be a small seller on any rally to 1.3550/1.3580 with a 1.3610 stop.
December DAX
I was very unlucky with the Dax yesterday as the market traded down to my 9010 buy level before quickly stopping me out near the lows of the day at 8980. Then it traded up but I missed out and am still flat. I am impressed that the Dax could close back above 9000 having broken 8980 earlier and today I will be a small buyer from 8980/9000 with a 8955 stop. I still do not want to be short the Dax at this time.
December FTSE
The FTSE worked well yesterday as the market traded down to my 6700 buy level before having a nice rally and I was able to cover this position at 6730 and I am now flat. I will leave my buy level the same at 6690/6710 with a 6675 stop. Just like the Dax above I do not want to be short the FTSE at this time.
Dow Rolling Contract
The Dow continues to trade the heavier of the main US Equity Indices. The market just missed my sell level yesterday before trading lower and I am still flat. I will leave my sell level the same at 15660/15690 with a 15720 stop. I do not want to be long the Dow at this time.
December BUND
The Bund worked really well yesterday as the market had a nice sell off and I was able to cover my 141.95 short position from Monday at 141.45 and I am now flat. I still believe the Bund is a ‘sell on a rallies’ and today I will lower my sell level to 141.60/141.90 with a 142.05 stop. I do not want to be long the Bund at this time.
Gold Rolling Contract
Gold has been trading in a very narrow range over the last few days. I will leave my buy level the same at 1295/1302 with a 1288 stop. However will lower my sell level to 1323/1330 with a 1334 stop.
Silver Rolling Contract
No change as I am still a buyer from 21.20/21.50 with a 20.95 stop.
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