Yesterdays markets were relatively quiet and ended the day somewhat unchanged to mixed. There was a relatively muted response to the positive US data most likely in anticipation of Friday’s US Non-Farm Payrolls Report. US Equities ended the day little changed from Tuesday, Bond Yields were higher as was Gold and Oil prices and the US Dollar ended lower.
There was generally better news in the US with Non-Farm Manufacturing ISM beating expectations and overcoming some of the unease from the Manufacturing ISM seen last Monday. Within the report, the Employment Index Component was stronger which bodes well for tomorrow’s official payrolls data. The other indicator of payrolls, the ADP Employment Report was a little weaker than expected but still suggesting a catch-up in the official data from last month’s shocker.
The Fed speakers were generally positive noting that the data can, at times, be volatile. Both Plosser and Lockhart discussed continued tapering of the QE programme along the prescribed path.
The data in Europe was a little less rosy with the Services PMI as a whole in the EU a fraction lower than expected. Retail Sales were very weak coming in at -1.4% versus -0.7 expected.
Today, on the economic front, the focus will shift from the US to Europe as we have the Bank of England and ECB Meetings followed by the all important press conference from ECB President Mario Dragi at 1.30 pm. Before these announcements we have German Factory Orders at 10.00 am. Later at 1.30 pm we have the Weekly Jobless Claims from the US along with Non-Farm Productivity and the Trade Balance.
March S&P 500
The S&P worked really well yesterday in what turned out to be a reasonably volatile trading session. After lunch it traded down my 1733 buy level as the market again tested this now key support at 1730 and after a nice rally I covered my position too early at 1741 and I am now flat. Traders are trying to position themselves for tomorrow’s key Non Farm Payrolls Report and today I will raise my buy level to 1739/1743 in small with a 1735 stop. If I am taken long and subsequently stopped out I will use my ‘5 handle rule’ to reset my long position. Given that tomorrow is such a key day I do not want to have a short position as I expect the market to have more squaring of positions ahead of this important number.
Euro/USD
The Euro also worked well yesterday as the US Dollar weakened initially on the ADP Employment data and I was able to cover my long 1.3510 position from Tuesday at 1.3550 and I am now flat. I am going to stay flat ahead of the ECB announcement and the Dragi press conference that follows. If the Euro subsequently falls I will be a buyer on any dip to 1.3410/1.3430 with a 1.3390 stop My only interest in selling the Euro is on a rally to 1.3600/1.3630 with a 1.3650 stop.
US Dollar Index
No change as I am still flat having covered my long 80.50 position yesterday morning at 81.20. Today I will be a buyer on any dip to 80.55/80.75 with a 80.40 stop.
March DAX
The March Dax rallied as expected into today’s ECB Meeting but unfortunately I didn’t have a long position and I am still flat. The 9050/9080 continues to be key support for the DAX and if this support gives way then the 8980/9000 is the next big support. Today I will be a small buyer on any dip to 9090/9120 with a 9070 stop which is just below yesterday’s low. Given how oversold the Dax is trading I still do not want to be short the market at this time.
March FTSE
The FTSE opened higher yesterday morning but just missed my 6450 sell level before trading lower and I am still flat. Given that today we have the Bank of England rate decision at 12.00 noon I am going to move my sell level higher to 6470/6490 with a tight 6505 stop. I will also move my buy level higher to 6355/6375 with a 6340 stop which is just below last Monday’s low.
Dow Rolling Contract
The Dow just missed both my buy and sell levels yesterday and I am still flat. It is still oversold despite the rally over the last 48 hours as the market is still down over 1100 points from its Dec 31 high. Today I will raise my sell level to 15530/15560 with a 15585 stop. I will also be a small buyer on any dip to 15350/15380 with a 15325 stop which is just below yesterday’s low.
March BUND
No change as I am still a small buyer on any dip to 143.40/143.60 with a 143.25 stop. I will also be a small seller on any rally to 144.40/144.60 with a 144.75 stop.
Gold Rolling Contract
Gold struggled yesterday despite the big move higher in Silver. I am still flat and given the expected volatility surrounding the BoE and the ECB I am going to lower my buy level to 1240/1248 with a 1235 stop. I still do not want to be short Gold at this time.
Silver Rolling Contract
Silver had a nice move up yesterday and I am still long from 19.25. Silver really needs to break and close over 20.50 for the market to turn bullish. Today I will raise my stop to 19.50.
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