US Stock markets rebounded yesterday easing this week’s losses for the S&P 500 Index, as earnings from Facebook beat estimates whilst Consumer Spending picked up. Facebook jumped 14% as the World’s largest social network said that more than half its advertising revenue came from mobile devices in the last quarter. The S&P gained 1.1% to 1794 for its biggest advance since December 18.
Stocks were not helped initially by the weaker than expected Weekly Jobless Claims which rose 18K to 348K, versus 330K, expected whilst Pending Home Sales slumped 8.7% in December which is the biggest decline since May 2010. The decline in Home Sales was put down to bad weather. However Consumer Spending rose at the fastest pace in 3 years which helped the US Economy to grow 3.2% in the 4th quarter following a 4.1% increase in the previous three months.
On the currency markets the Euro finally broke to the downside as the market traded through the 100 Day Moving Average at 1.3600 to close at 1.3550 whilst the Euro did not get any respite from the better Unemployment figures from Germany.
This morning, markets are again on the defensive after Amazon the World’s largest Web Retailer reported 4th quarter profits that trailed analysts estimates after a surge in costs to ship gifts over the festive season. Amazon shares slumped over 10% after the New York close having risen over 4% ahead of the announcement in normal trading.
Today, we have already had the GIK Consumer Confidence Numbers from the UK which showed a rise of 6 points to -7 versus -12 expected. This is the best reading since the Northern Rock crisis in 2007. At 10.00 am we have Euro-Zone Unemployment and CPI. We have no data of note from the US today.
March S&P 500
The S&P had its best day since December 18 yesterday as the market closed the open gap from 1785/1793 that occurred from the close on Tuesday night to the open on Wednesday. The S&P traded up to my 1790 sell level and having stayed near this price level for the rest of the trading session finally sold off after the close on the Amazon Earnings Report enabling me to cover this position overnight at 1782 and I am now flat. All eyes this evening will be on the close of the S&P as we wait to see if the market can hold the 1760/1767 support zone. A break and close below 1760 will be a Key Month Reversal. This looks unlikely at this stage but given the volatility that has happened over the last 8 days anything is possible. Today I will still be a very small buyer on any dip to 1769/1774 with a wider 1758 stop. I have to use a much wider stop than normal given the volatility and the importance of this 1760/1767 support zone. I will still be a seller on any rally back to 1788/1793 with the same 1795 stop. Again if I am taken short and subsequently stopped out I will be a more aggressive seller on any rally to 1804/1810 with a 1813 stop.
Euro/USD
The Euro finally broke its 100 Day Moving Average at 1.3600 to close at 1.3550. By the time I posted yesterday morning the Euro was trading through the bottom of my 1.3590 buy level at 1.3580 before the market rallied back to 1.3620 and then finally broke this key support level at 1.3600. Technically if the Euro cannot break back above this 1.3600 level over the next few days we could see an acceleration lower. Today I will be a small seller on any rally back to 1.3585/1.3610 with a 1.3630 stop which is just above yesterday’s rebound high. For a change I do not want to be long the Euro at this time.
US Dollar Index
Finally the US Dollar Index is starting to trade higher as the Index closed over its first resistance at 81.00. The Index needs to break and close over 81.50 for me to look to increase my position. Today I will raise my stop on my 80.50 long position to 80.40.
March DAX
I was very unlucky with my Dax calls yesterday as both the buy and sell levels just missed being executed by a few points as the market, having been down hard early in the morning, reversed course later to rally 150 points off the low. I am still flat and the Dax is back trading lower on the Amazon news. Today I will leave my buy level the same at 9245/9275 with a 9225 stop. If I am taken long and subsequently stopped out I will be a more aggressive buyer on any further dip to 9140/9180 with a 9095 stop. I will also lower my sell level to 9410/9440 with a 9460 stop.
March FTSE
The FTSE is back on the defensive this morning as it looks to test the key 6450 support level. The FTSE is still trading oversold on a daily basis and I will leave my buy level the same at 6420/6440 with the same 6395 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
The Dow having had a nice rally yesterday is back trading near the lows of Wednesday night. It is trading at the bottom of the Bollinger Band but not the Williams Index and today I will lower my buy level to 15640/15680 in small size with a 15595 stop.
March BUND
After I posted yesterday the Bund traded up to my 143.40 sell level. Given how overbought the Bund is trading on a daily basis I am going to raise my stop on this short position to 143.70.
Gold Rolling Contract
After I posted yesterday morning Gold traded down to my 1239 buy level. I do not like the way it is trading and for this reason I have decided to cover this position this morning at 1240 and I am now flat. Today I will lower my sell level to 1262/1270 with a 1276 stop. My only interest in buying Gold is on a dip to 1212/1220 with a 1206 stop.
Silver Rolling Contract
After I posted yesterday morning Silver traded down to my 19.25 buy level and I opened a long position. It is because I am long Silver that I covered my Gold position as I do not want to be long both metals at this time. I will leave my stop the same at 18.80 on this position.
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