Although markets globally are trading with more noise than signal in recent days there is something of a schizophrenic edge to markets at this time. Yesterday in the early New York session US Equities were trading above previous recent closes aided by unexpectedly strong Home Sales data (+9.9% month on month) yet emerging markets are under fresh pressure centred on Russia, Ukraine and Turkey. The latter means that the US Dollar is bid across the board as are US Treasuries which were aided by a very strong 5 Year Note Auction which produced the highest bid-cover ratio since September 2012. This resulted in US Equity markets selling off into the close and basically ending the day unchanged.
News that Russia had put armed forces on alert in the Western part of the country has prompted some observers to draw parallels with the 2008 invasion of Georgia and this has seen the Rouble lose about 1%.
This morning on the economic front we have a platter of data out of Europe. We have the Euro-Zone Business Climate and Consumer Confidence along with the EU Wider Economic Forecasts. This is followed by German CPI, Retail Sales and Unemployment. Later at 1.30 pm we have the US Weekly Jobless Claims and, the always volatile, Durable Goods Orders. I made a mistake yesterday in that I thought Fed Chair Janet Yellen was having her postponed testimony to the Senate but it is today instead at 3 pm. As I mentioned yesterday it will be interesting to see what she has to say about how the weather affected data over the last two months. ECB President Mario Dragi is also due to speak on the economy in Frankfurt.
March S&P 500
The S&P traded in a very choppy fashion yesterday as the market gets ready for Fed Chair Yellen’s long awaited testimony to the Senate this afternoon. After I posted, the S&P traded down to my 1845 buy level before having a quick rally enabling me to cover this position at 1850 and I am now flat. As long as the S&P stays over 1836 the market is fine but a break and close below 1836 will be the first sign that the S&P is running out of steam. As I mentioned yesterday I still expect the S&P to take out the recent 1856.5 contract high posted last Monday and I would not rule out a move to 1950 over the next couple of months before we move into what I expect to be a very difficult trading period over the summer months. Today I will again be a small buyer on any dip to 1840/1844 with a 1834 stop. My only interest in selling the market is on a rally to 1865/1870 with a 1873 stop.
Euro/USD
After I posted, the Euro started to sell off as the US Dollar strengthened across the board on the news that Russia had put its military on alert. The Euro dropped down to my 1.3700 buy level before unfortunately stopping me out near the lows of the day at 1.3670 and I am now flat. As long as the Euro can stay over 1.3600 the market is fine but a break and close below 1.3600 will the first warning sign that it is starting to falter. Today I will be a small buyer on any dip to 1.3600/1.3630 with a 1.3580 stop. I will also move my sell level lower to 1.3750/1.3780 with a 1.3810 stop.
US Dollar Index
Finally after a week of doing nothing the US Dollar is starting to trade higher. I am still long from 80.20 and today I will move my stop higher to 79.85. We still need the Dollar Index to break the key 81.50 resistance level for me to turn really bullish.
March DAX
The news that Russia was putting its armed forces on military alert hit the Dax hard yesterday. The Dax is finding it really difficult to break the key 9660/9700 resistance level as everytime we break 9700 we are seeing a lot of selling come into the market. After I posted the market traded down to my 9650 buy level before quickly stopping me out near the lows of the day at 9620 and I am now flat. Today I will be a small buyer on any dip to 9590/9615 with a 9570 stop. I will also move my sell level lower to 9760/9790 with a 9805 stop.
March FTSE
The FTSE continues to struggle versus the other major indices and was not helped yesterday by the fall in Gold. After I posted the market was trading at the lower end of my buy level at 6770. I am still long and I will not risk to much on this trade so I will leave a 6745 stop on this position.
Dow Rolling Contract
The Dow plan worked very well yesterday as after I posted it traded down to my 16160 buy level before again having a very nice rally from this now reasonable support and I was able to cover this position at 16210 and I am now flat. Today I will again be a buyer on any dip to 16120/16160 with the same 16090 stop on any long position. I still do not want to be short the Dow at this time.
March BUND
As expected, the Bund has continued to trade higher but unfortunately it just missed my 143.90 buy level with a low of 143.94 after I posted before exploding higher on the very well supported 5 Year Note Auction in the US. I am still flat and today I will raise my buy level to 144.10/144.40 with a 143.89 low which is just below yesterday’s low. Even though the Bund is overbought this morning I do not want to be short at this time.
Gold Rolling Contract
Again the importance of looking at a chart before deciding to make any new trade was evident again in Gold yesterday. Gold was trading at the top of the Bollinger Band and Williams Index and this was why I decided to go short the market at 1345. After a nice sell off I was able to cover this position at 1327 and I am now flat. Today I will be a small seller on any rally to 1340/1346 with a 1352 stop. I will also be a small buyer on any dip to 1307/1314 with a 1299 stop.
Silver Rolling Contract
My Silver position, having looked fine yesterday morning, soon turned sour as the market followed Gold lower and stopped me out of my long 21.70 position for a small loss at 21.25 and I am now flat. The key support for Silver comes in at 20.65/20.95 and today I will be a buyer in this area with a 20.40 stop.
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