Equity markets ended the day little changed despite some poor US economic data. The US NAHB Homebuilding Index plunged to 46 in February from 56 in January as the severe weather was again blamed for the fall. This index could fall further if the recent Home Sales data are any guide. The Empire Manufacturing Survey was also soft, falling to 4.5 in February from 12.5 in January.
In Europe a mixed German ZEW Survey was reported with the Current Situation Index rising to 50 in February versus 44 expected which is its highest level since August 2011. However there was some disappointment with the Expectations Index which fell to 55.7 from 61.7 last month. Nevertheless the relationship between current conditions and German GDP points to growth of 0.6% in Q1 which is up from 0.4% in Q4, 2013. The Euro has gained steadily on this release trading at 1.3760 this morning.
Surprisingly the Japanese Yen is stronger over night despite the extra stimulus announced by the Bank of Japan early yesterday morning to expand the monetary base by 70 trillion Yen and to double the amount of available cheap lending as well as extending the term of such loans from 1-3 years to 4 years.
This morning on the economic front, at 9.30 am, the UK releases its latest Jobless Claims, Average Earnings and the latest unemployment rate. The Bank of England will also release its latest minutes from last months meeting. At 1.30 pm we have US Housing Starts and PPI. Later this afternoon the Fed’s Lockhart will speak on the economy whilst at 7 pm we have the minutes from last months FOMC Meeting and this will be closely watched by the market given that is was Ben Bernanke’s last meeting as chairman.
March S&P 500
Yesterday was surprisingly a very quiet trading session with the market finding it very hard to get anything going on the downside despite the awful economic data. After I posted yesterday morning the S&P was trading at my 1833 buy level and after a nice rally I was able to cover this position at 1839 and I am now flat. As I have mentioned over the last couple of days the key level for the market going forward is at 1802 and as long as we stay over this price the market is fine but a break and close below 1802 will very bearish. I still expect it to make a new high over 1846 as we are too near this level for the market not to challenge this contract high. Today I will be a small buyer from 1829/1833 with a 1826 stop. If i am taken long and subsequently stopped out I will be a more aggressive buyer in at 1820 with a 1815 stop. I will still be a small seller on any rally to 1846/1850 with a 1853 stop.
Euro/USD
The Euro continues to defy logic and trade higher and my plan to not be short the Euro is proving to be the correct one but unfortunately I have not been able to get a long position on board. The Euro is overbought here and I will be a small seller on any further rally to 1.3810/1.3840 with a 1.3860 stop. Remember a break and close over 1.3850 will be very constructive. I will move my buy level higher to 1.3670/1.3700 with a 1.3650 stop.
US Dollar Index
The US Dollar Index is again trading in a very narrow range. Given how strong the Euro is trading I am going to lower my buy level slightly to 79.55/79.85 with the same 79.30 stop. If I am taken long and subsequently stopped out I will be a more aggressive buyer in front of 78.90 which should offer good support as this was the low made last November.
March DAX
The Dax worked well yesterday as, after I posted, it traded down to my 9625 buy level and after a nice rally I was able to cover this position at 9665 and I am now flat. Yesterday was the first day that we saw some two way price action in the Dax in nearly a week and today I will be a small seller on any rally to 9670/9700 with a 9720 stop. I will also be a small buyer on any dip to 9575/9600 with a 9550 stop. As long as the Dax can hold 9550 the market should trade higher.
March FTSE
The FTSE plan also worked very well as, just after I posted, the market was trading near the low of the day at 6680. I bought at 6685 and after a very nice rally I was able to cover this position at 6740 and I am now flat. The FTSE is finally playing catch up with the other major indices. Today, given that it is now overbought, I will be a small seller on any further rally to 6775/6800 with a 6820 stop. I will also be a small buyer on any dip to 6700/6720 with a 6685 stop.
Dow Rolling Contract
Having been off side on my short 16160 position from last Friday I covered it this morning at 16120 as I want to be flat ahead of tonight’s FOMC Minutes at 7 pm. If the Dow rallies after the release I will still be a seller on any rally to 16190/16220 with the same 16240 stop. I do not want to be long the Dow at this time.
March BUND
The Bund just missed my 144.00 sell level yesterday with a 143.97 high before trading a lot lower. The Bund is back trading higher this morning as this market continues to be a buy on dips. Today I will raise my buy level to 143.50/143.75 with a 143.30 stop. I do not want to be short the Bund at this time.
Gold Rolling Contract
Gold continues to consolidate last week’s gains and is still holding over the key 1300/1310 support zone. I will still be a small buyer on any dip to 1302/1308 with a 1297 stop. My only interest in selling Gold is on a rally to 1335/1342 with a 1349 stop.
Silver Rolling Contract
Silver has again challenged the key 22.00 resistance level and for the second day in a row sellers have been seen at this price level. I am still long from 20.10 from two weeks ago and today I will raise my stop slightly to 21.40. If I am stopped out I will be a more aggressive buyer on any dip to 20.80/21.10 with a 20.60 stop.
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