Equity markets are opening higher this morning after China reported its official Manufacturing PMI which came in no worse than expected at 50.5, down from 51.0 last month. US Stock markets in January had their worst month in well over a year.
Ahead of this week’s ECB meeting on Thursday, Euro-Zone inflation fell to 0.7% from 0.8% and against expectations of a rise to 0.9%. This result has some analysts now anticipating further easing action from the ECB and this why the Euro fell to 1.3480 on Friday versus 1.3550 the previous day. I think they will probably wait until March when the latest economic predictions are available but the Dragi press conference following the announcement will be very interesting.
This morning on the economic front we have the UK Hometrack Housing Survey and PMI Manufacturing. This is followed at 10.00am by German and Euro-Zone PMI and this data will be a key component towards the ECB decision this week. At 1.30pm we have US Construction Spending whilst later this afternoon Janet Yellen is officially sworn in as Fed Chair.
March S&P 500
Shortly after I wrote my commentary last Friday and just before I posted, the S&P was hit hard as a result of more Emerging Market woes. The volatility was again incredible as the S&P made a low at 1761 before rallying all the way back to 1788.25 before again selling off into the close. At least the S&P avoided the key month reversal by not closing below 1760 which would technically have been very bearish.
On Friday, the S&P traded down to my 1772 buy level and having sweated on this position for a few hours the market turned enabling me to cover this long position at 1780. The S&P then traded up to my sell level at 1788 and after a nice sell off into the close I was able to cover this short position at 1781 and I am now flat. Resistance comes in at 1782/1787 and today I will be a small seller in this region with a 1791 stop. I do not like the fact that the market keeps selling off into the close for the past few evenings. My only interest in buying the market today will be on a dip to 1759/1763 with a 1755 stop.
Euro/USD
The Euro fell hard on Friday after the Inflation data was released. At least I had no buy levels in the Euro as my long US Dollar Index position is finally beginning to work. As I previously mentioned, the close below the 100 Moving Average was very bearish and today I will lower my sell level to 1.3540/1.3570 with a 1.3590 stop. My only interest in buying the Euro is on a dip to 1.3410/1.3440 with a 1.3390 stop.
US Dollar Index
No change as I am still long from two weeks ago at 80.50. Today I will raise my stop to 80.85 as I look for the Index to finally break the key 81.50 resistance level over the coming days.
March DAX
The Dax had yet another wild trading session on Friday. Just as I posted the market was falling hard and after I bought at 9255 I was quickly stopped out of this position for a small loss at 9225. It then proceeded to trade down to my aggressive buy level at 9180 and having gone long here it then had a huge rally enabling me to cover this position at 9300 and I am now flat. The key support level for the Dax is still from 9160/9200 and today I will again be a buyer on any dip to this this level with a 9145 stop. My only interest in selling the market is on a rally to 9375/9400 with a 9425 stop.
March FTSE
After I posted on Friday the FTSE traded down to my 6430 buy level before unfortunately stopping me out of this position at 6395. It then turned around in a violent fashion but I am still flat. The FTSE is having real problems regaining the key 6500 resistance level and today I will be a small seller on any rally to 6480/6520 with a tight 6535 stop. My only interest in buying the FTSE is on a dip to 6360/6390 with a 6348 stop.
Dow Rolling Contract
The Dow worked really well on Friday, as after I posted, it traded down to my 15670 buy level. Just like the S&P I had to sweat on this position for a couple of hours before the market dramatically turned and I was able to cover this position at 15760 and I am now flat. Today I will be a small buyer on any dip to 15595/15625 with a 15570 stop.
March BUND
After the Equity markets sold off on Friday I was stopped out of my 143.40 short position for a small loss at 143.70 and I am now flat. I am going to stay flat as I want to observe the price action in the Bund over the next 24 hours before committing to a new position.
Gold Rolling Contract
Gold just missed my 1262 sell level on Friday before trading lower. Today I will lower my sell level slightly to 1258/1265 with a 1272 stop. I will leave my buy level the same at 1212/1220 with a 1206 stop.
Silver Rolling Contract
No change as I am still long at 19.25 with the same 18.80 stop.
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