Markets ended the week on a slightly better tone after a wild last hour of trading for the US Stock markets. The Dow and S&P both closed up 0.3%, Gold lower, Oil prices higher with both the Dollar and Vix ending the week on the soft side. The Euro was supported by a surprising upside report for Euro-Zone inflation.
However the mood this morning is of extreme nervousness as Russia voted to allow its troops into the Ukraine after they were placed on the Crimean Peninsula. The UN security Council is meeting on the issue but the outcome at this point is unknown. The US has told Russia that they should refrain from interference. The escalating geopolitical risk is likely to raise risk aversion in markets until tensions ease This morning European Equity markets are opening very soft with the German DAX down over 250 points for a 2.75% fall.
Over the weekend the Chinese PMI came in at 50.2 versus 50.1 expected. The details were soft with Orders Output and Employment lower. The US GDP revision was on the low side and raises questions about the momentum in Q1 but as most analysts are confused about the full sum of weather effects we may be waiting for clean March data for some guidance. On the bright side the Chicago PMI was above expectations and Employment was higher but Pending Home Sales disappointed amidst revisions.
This morning on the economic front we have UK PMI Manufacturing and Mortgage Approvals. This is followed at 10.00 am by Euro-Zone and German PMI Manufacturing. The US moved their clocks forward by 1 hour over the weekend so the data releases will be out an hour earlier for us over the next few weeks until we change our own clocks. At 2 pm we have the US ISM Manufacturing.
March S&P 500
Last Friday was one of the wildest trading sessions of the year, so far, especially the last hour when literally the market went nuts in both directions on rumours about Russia Invading the Ukraine. After the Chicago PMI was released the S&P, as expected, made a new high and traded up to my 1865 sell level before staying at this level for a few hours and then getting hit on military tensions and I was able to cover this position at 1856. The S&P then traded down to my 1849 buy level before having a nice rally into the close enabling me to cover this position at 1855 and I am now flat. The S&P futures contract for March closed at 1857 and we have a large Gap down this morning as the market currently trades at 1841. Remember the key support comes in at 1836 and today given the volatility I will be a smaller buyer than normal from 1834/1838 with a 1830 stop. If I am taken long and subsequently stopped out I will use my 5 handle rule to reset my long position again (New Members please click on the education tab for an explanation of the 5 handle rule) My only interest in selling the S&P today is on a rally to 1858/1863 with a 1869 stop which is just above last Friday’s high.
Remember the clocks changed in the US over the weekend and the stock market will now open at 1.30 pm GMT and close an hour earlier at 8.15 pm.
Euro/USD
The Euro worked well on Friday as the market spiked up to my 1.3820 sell level before having a nice sell-off last night and I was able to cover this position at 1.3780. I am now flat the Euro and today I will still be a seller on any rally to 1.3820/1.3850 with a 1.3870 stop. Given the military tensions currently existing in the Ukraine I do not want to be long the Euro at this time.
US Dollar Index
Unfortunately I was stopped out of my long 80.20 position on Friday at 79.85 and I am now flat. I still like the Dollar Index and today I will be a small buyer from 79.50/79.80 with a 79.20 stop.
March DAX
As I have mentioned over the last two weeks the 9660/9700 is key resistance for the DAX and this certainly was the case again on Friday as the DAX traded up to my 9660 sell level. Unfortunately I covered this position near the close on Friday night at 9610 and I am now flat. Germany has the biggest exposure of all the European Countries to Russia and therefore the DAX will react the most on any negative news. Today is going to very difficult to trade the Dax with the market now trading at 9450. The next big support comes in around 9360/9400 and I will be a very small buyer in this region with a 9330 stop. Given the large gap down this morning in the Dax I do not want to be short the market at this time.
March FTSE
The FTSE worked well on Friday as the market traded down to my 6760 buy level before having a small rally enabling me to cover this position before the close at 6780 and I am now flat. The FTSE is trading a lot lower this morning and is testing the key 6690 support level. This morning I have bought the market at 6700 with a tight 6665 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
The Dow also worked really well on Friday as the market traded down to my 16240 buy level before having a nice rally into the close and I was able to cover this position at 16300 and I am now flat. Overnight the Dow again tested the key 16160 support level before so far having a nice rally off this key support. Today I will be a small buyer from 16140/16180 with a 16110 stop. I still do not want to be short the Dow at this time.
March BUND
The Bund traded down to my 144.50 buy level after I posted on Friday and after a nice rally this morning I have covered this position at 144.90 and I am now flat. I still believe the Bund is a buy on dips and today I will be a small buyer from 144.40/144.60 with a 14425 stop. I still do not want to be short the Bund at this time.
Gold Rolling Contract
This morning on the nervousness in the Equity markets Gold is testing the key resistance at 1350. I have gone short in very small size at 1348 with a tight stop at 1358.
Silver Rolling Contract
Very frustrating as Silver just missed my 20.95 buy level on Friday with a 21.01 low before trading a lot higher this morning on the military tensions out of Russia. I still like Silver and today I will raise my buy level to 20.90/21.20 with a 20.55 stop.
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