After Monday’s rout Equity markets showed some resilience yesterday with the Dow and S&P closing up 0.5% and 0.75% respectively. Some solid earnings from Michael Kors and Gap helped to underpin the gains whilst the economic calendar was light with the only release of note being US Factory Orders which fell by 1.5% in December, slightly better than the -1.8% expected.

No surprises from the Fed speakers yesterday as Evans and Lacker both said they expect the Fed to continue with the tapering at the upcoming meetings and that the hurdle is high for any taper pause.

In Europe there were small losses in most equity markets despite better news in the Banking sector (led by UBS) and the bounce back in US stocks. The Nikkei closed up over 1% this morning following the 4.25% loss yesterday. The main mover on the currency markets was the Aussi Dollar which continued to power ahead after the RBA left rates unchanged at 2.5% and is now trading back over 89 having been as low as 87 last week.

Today is a very busy day for economic data. This morning at 9.30 am we have UK PMI Services, followed at 10.00 am by Euro-Zone Retail Sales. The Euro-Zone and Germany also release their PMI Services and these numbers will be closely watched by the market. At 1.30 pm we have the US ADP Employment Change which should act as a guidance to Friday’s Non Farm Payrolls. At 3 pm we have the US Non Manufacturing Composite ISM and later this afternoon, the Fed’s Plosser and Lockhart are both speaking on the economy at different venues.

March S&P 500

As expected, we got the ‘Tuesday Turnaround’ in the US stock markets yesterday but unfortunately the market just missed my 1733 buy level before starting this rally. I did not have much luck yesterday as the S&P also just missed my 1754 sell level with a 1753.50 high before selling off aggressively after the cash market closed and is now trading at 1740. The ADP Employment change release at 1.30 pm will be very closely watched by the markets and we should expect a volatile reaction.

As I mentioned yesterday the next key support is from 1725/1730 whilst resistance is still from 1753/1758. Today I will leave my buy level the same at 1728/1733 with a 1724 stop. If I am taken long and subsequently stopped out I will be a more aggressive buyer on any dip to 1709/1713 with a 1704 stop. I will also be a small seller on any rally to 1753/1757 with a 1761 stop.

Euro/USD

After I posted yesterday morning the Euro traded down to my 1.3505 buy level. I am still long and I will leave my stop the same at 1.3470. If I am stopped out I will be a more aggressive buyer on any subsequent drop to 1.3410/1.3430 with a 1.3390 stop. My only interest in selling the Euro is on a rally to 1.3580/1.3610 with a tight 1.3625 stop.

US Dollar Index

The US Dollar Index continues to trade in a very tight range. I have decided to cover my 8050 long position that I have had for the last two weeks at 8120 this morning as I am concerned by the strength of the Aussi Dollar and Canadian Dollar over the last two days. Today I will be a buyer of the Dollar Index if we drop back to 80.50/80.70 with a 80.25 stop. The Dollar Index really needs to break 81.50 for me to turn bullish.

March DAX

The Bollinger Band and Williams Index worked really well yesterday for the Dax as shortly after I posted it traded down to my 9085 buy level before having a nice rally and I was able to cover this position at 9140 and I am now flat. The Dax is opening lower again this morning and is still oversold on a Daily Basis. As I mentioned yesterday the 8980/9000 is key support for this market as a break and close below 8960 will be very bearish.. Today I will be a small buyer from 9010/9035 with a 8975 stop. Given how oversold the Dax is trading I do not want to be short at this time especially with the ECB Meeting tomorrow.

March FTSE

The FTSE just missed my buy level yesterday before having a nice rally. The market is following the other indices lower this morning and today I will still be a buyer on any dip to 6320/6340 with a 6295 stop. My only interest in selling the FTSE is on a rally to 6450/6480 with a 6505 stop.

Dow Rolling Contract

Yesterday the Dow was still trading the heaviest of the US Indices as it again underperformed the S&P and NASDAQ. The Dow continues to trade at the bottom of the Bollinger Band and Williams Index. As we have the ADP Employment Change at 1.30 pm I will lower my buy level to 15270/15300 with a 15240 stop. I will also be a small seller on any rally to 15500/15530 with a 15560 stop.

March BUND

The Bund worked well yesterday as, shortly after I posted, the market traded up to my 144.15 sell level before selling off and I was able to cover this position at 143.90 and I am now flat. The two key levels for the Bund going forward are 143.50 and 144.30 as a closing break of either of these levels should lead to a good move. Today I will be a small buyer on any dip to 143.50/143.70 with a 143.35 stop. I do not want to be short the Bund today ahead of the ECB Meeting tomorrow.

Gold Rolling Contract

My short 1262 Gold position worked well yesterday as after I posted it sold off enabling me to cover this position at 1250 and I am now flat. One of the reasons that I covered my position was when I saw the move higher in the Aussi Dollar. Today I will be a buyer of Gold on any dip to 1244/1250 with a 1239 stop. I do not want to be short Gold at this time.

Silver Rolling Contract

Silver is finally beginning to find support. I am still long from last week at 19.25 and today I will raise my stop to 19.00 am. If I am stopped out I will be a more aggressive buyer on any dip to 18.40/18.70 with a 18.20 stop.