European Equity markets ended yesterday mostly higher and this theme has continued this morning after the Bank of Japan maintained its unprecedented programme of asset purchases at it latest meeting. The BoJ, in its latest statement release, also announced that it was boosting its lending programme to 7 trillion yen ($68 billion) as the Central bank tries to support a recovery and stamp out 15 years of deflation. The Yen has weakened across the board on this news.
The only economic data yesterday was the Rightmove House Price Index in the UK which accelerated to 6.9% year on year in January, boosting Sterling which is now trading comfortably over 1.67 versus the US Dollar. Otherwise yesterday was extremely quiet with the US markets closed for the President’s Day Holiday.
This morning on the economic front we have UK CPI and PPI along with the ONS House Price Index. Later at 10.00 am we have the German ZEW Survey and this will be closely watched by the markets. At 1.30 pm we have the US Empire Manufacturing and the NAHB Housing Market Index and it will be interesting to see how much these numbers have been affected by the weather.
March S&P 500
With the cash markets closed yesterday for the President’s Day Holiday markets should get back to normal trading today after yesterday’s non event. The S&P just missed my 1834 buy level before trading higher and I am still flat. I am going to leave my buy level the same as yesterday from 1830/1834 with a 1827 stop. I will still be a small seller on any rally to 1846/1850 with a 1852 stop. Remember 1846 is the contract high and should provide some resistance especially after last month sell-off from this level.
Euro/USD
No change as I am still a small buyer on any dip to 1.3645/1.3675 with a 1.3620 stop. If the Euro can break and close over 1.3850 it will be very bullish and this is why today’s ZEW Survey is so important. I still do not want to be short the Euro at this time.
US Dollar Index
The US Dollar Index is firmer this morning on the back of the weaker Yen. I will raise my buy level to 79.70/80.00 with the same 79.30 stop.
March DAX
No change as I am still a small buyer on any dip to 9595/9625 with a 9570 stop. As I mentioned yesterday I do not want to set up a short position until I see a sell extreme first.
March FTSE
Just after I posted yesterday the FTSE started to rally as it tries to play catch up with the other major indices. I went short in small size at 6690 but I was stopped out of this position for a small loss at 6710 and I am now flat. I am impressed that the FTSE has finally broken the key 6700 resistance level and today I will be a small buyer from 6690/6705 with a 6675 stop. I do not want to be short the FTSE at this time.
Dow Rolling Contract
With the cash market closed in the US yesterday this market was also a non event. I am still short from last Friday in very small at 16160 with the same 16240 stop. The reason I have the wider stop is that I want to see how the market trades into the key 16210, 14 year trend line resistance level. A break and close over 16240 will be very constructive.
March BUND
The Bund has traded in a very narrow range ahead of today’s ZEW Survey. I have decided to cover my 143.70 short position at 143.53 this morning ahead of this news as I want to be flat into the announcement. If the Bund rallies after ZEW I will be a small seller on any rally to 144.00/144.20 with a 144.30 stop. I will also be a small buyer on any dip to 142.80/143.05 with a 142.65 stop.
Gold Rolling Contract
Gold just missed my 1335 sell level yesterday before trading lower. I will still be a small buyer on any dip to 1304/1311 with a 1299 stop. I will also leave my sell level the same at 1335/1342 with a 1350 stop. It will be interesting to see how the US traders react to the breakout in Gold as the market reopens today after their long weekend.
Silver Rolling Contract
Silver having made a high at 22.00 yesterday is now back trading at 21.55 as I create this plan. Silver is still trading ‘overbought’ and I will leave my stop the same at 21.20 on my long 20.10 position from earlier this month. If I am stopped out I will be a more aggressive buyer on any dip to 20.70/21.00 with a 20.40 stop.
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