Equity markets ended lower yesterday after disappointing earnings results from Citigroup, Goldman Sachs and Best Buy. The economic data did little to change the mood and the Dow ended down 0.4% whilst the S&P fell 0.2% and the NASDAQ closed unchanged. US economic data was mixed with the Weekly Jobless Claims improving slightly to 326K from 328K whilst the Philly Fed Headline Index rose to 9.4 in January from 7.0 last month. However the Philly’s New Orders Index fell, perhaps weather related, and the NAHB Housing Market Index also seemed to be affected by the weather, unexpectedly falling to 56 in January from 57 last month. Meanwhile the US CPI for December was as expected with the headline rate rising 0.3%. The US Dollar Index is unchanged at 81.00 despite some volatility around the US data releases. The Aussi Dollar has been the weakest performing currency over the last 24 hours after yesterday’s labour force data showed employment falling 226K in December versus 10K expected.
In Europe, the December CPI was confirmed at 0.6%, year on year, again highlighting the weak price pressures in the Euro-Zone.
This morning on the economic front we have UK Retail Sales at 9.30 am followed by Chinese December Property Prices. Later at 1.30 pm we have the latest US Housing Starts followed by Industrial Production at 2.15 pm and the University of Michigan Consumer Confidence at 2.55 pm. Later this afternoon the Fed’s Lacker will speak on the economic outlook in Richmond.
March S&P 500
After the fireworks that have taken place in the S&P all week the market had a very quiet trading session yesterday. It was interesting that despite the very weak earnings reports from Citigroup and Goldman Sachs that the market did not fall very much thus making it very difficult to short this market especially ahead of Janet Yellen’s first FOMC Meeting as Chair on Jan 28th. Shortly after I posted yesterday morning the S&P traded down to my 1837 buy level and spent the rest of the day trading 2 handles either side of this price. I am still long with a small position and I will leave my stop the same at 1831. If I am stopped out I will be a more aggressive buyer on any dip to 1821/1825 with a 1818 stop. My only interest in selling the S&P is on a rally to 1852/1855 with a 1857 stop.
Euro/USD
The Euro also had a very quiet trading session yesterday and I am still flat. My only interest in buying the Euro is on a dip to 1.3530/1.3550 with a 1.3510 stop.
US Dollar Index
No change as I am still long the market at 80.95 with the same 80.45 stop. As long as the Index can stay over 80.50 I will be looking for the Index to trade back to the key 81.50 resistance level.
March DAX
The Dax worked well yesterday, as shortly after I posted, the Dax traded down to my 9720 buy level before having a small rally into the close enabling me to cover this position at 9745 and I am now flat. I still like the Dax and I was impressed at how well the market held yesterday despite been very overbought. Today I will be a buyer from 9690/9715 with a 9675 stop. My only interest in selling the Dax is on a rally to 9850/9900 with a 9920 stop.
March FTSE
The FTSE continued its recent run higher yesterday but unfortunately just missed my 6745 buy level with a 6757 low. I do not want to chase this market higher and today I will only raise my buy level slightly to 6735/6760 with a 6715 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
The Dow also worked well yesterday as shortly after I posted the Dow traded down to my 16385 buy level before having a small rally. As I was already long the S&P I decided to cover my long position in the Dow at 16420 and I am now flat. The Dow continues to underperform the other major US Indices which is a worry if it cannot play catch up over the next few days. Today I will be a buyer form 16320/16350 in small size with a wider 16285 stop. I still do not want to be short the Dow at this time.
March BUND
The Bund continues to trade higher off the 138.70 lows made last week. Shortly after I posted yesterday morning the Bund traded up to my 140.90 sell level before stopping me out of this position near the close at 141.15 and I am now flat. This 141.10/141.30 area is key as a closing break above this level will be bullish and would target the next resistance at 143.00 I am going to stand aside in the Bund today as I want to see how the market reacts to this very important resistance area and take another look on Monday.
Gold Rolling Contract
No change as I am still a buyer on any break of the key 1255 level with a 1242 stop. I will also be a small buyer on any dip to 1222/1228 with the same 1217 stop.
Silver Rolling Contract
No change as I am still long from earlier this week at 20.20 with the same 19.80 stop. Again if I am stopped out I will be a more aggressive buyer on any dip to 19.30/19.60 with a 19.10 stop.
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