In the absence of market moving news, out of Europe or North America, global markets have continued to stew on the weekend’s Chinese data. However, as before, the US stock market is taking any negative news in its stride as the Dow only closed down 0.2% having been down 0.75% earlier in the trading session. US Treasury Bond Yields have retraced some of Friday’s spike after the Non Farm Payrolls were released whilst the German DAX continued its recent weak trend as it fell another 0.9% following Friday’s loss of nearly 2%.
On currency markets, Sterling was the weakest performer losing around 0.5% after comments from Bank of England Deputy Governor, Charlie Bean, who said that any further rise in the Pound would not be helpful in terms of re- balancing of growth towards net exports. He also suggested that, as and when rates do start to rise, they are likely to settle at the 2-3% range for some while and materially below their 5% pre-Global Financial Crisis average.
The ECB’s, Noyer said he was not happy with the strength of the Euro which was exerting unwarranted downward pressure on the economy whilst at the same time re-iterating that the ECB has no specific target for the exchange rate.
This morning, on the economic front, we have UK Industrial Production followed by Bank of England Governor, Carney’s, testimony to the Parliament Treasury Committee. Germany will also release its latest Trade Balance this morning. Finally a reminder; With the US having moved its clocks forward by 1 hour over the weekend all US data will be released 1 hour earlier starting with the NFIB Small Business Optimism which will now be released at 12.30 pm
March S&P 500
The S&P plan worked very well yesterday as shortly after the US markets opened it traded down to my 1866 buy level before having a nice rally and I was able to cover this position at 1872 and I am now flat. The market is still a ‘buy on dips’ as no matter how weak the economic news or any bearish event that arises in the world the S&P just absorbs and moves on. We still have this huge Gap below the market from 1844/1862 and if the S&P decides to fill it I would be a very aggressive buyer in front of 1845 with a 1841 stop. Today I will move my buy level higher to 1865/1870 with a 1863 stop on any long position. My only interest in selling the S&P is on a rally to 1885/1890 with a 1893 stop.
Euro/USD
Despite the comments from ECB Member, Noyer that the Euro strength is unwarranted it has not sold off very much. The market traded down to my 1.3850 buy level and I am now long in small with a 1.3810 stop. Technically as long as the Euro can stay over 1.3820 the market is fine but a break and close below here will be short term bearish. One concern for the Euro Bulls is that the Daily Sentiment Index has now rise to 86% and if this breaks 90% I will then start to look to short the Euro but for the now the price action is telling me to still be long the Euro but not in big size.
US Dollar Index
No change as I am still long the Dollar Index from last week at 79.80. I will leave my stop the same at 79.30 as I want to try and give this trade some room.
March DAX
The Dax continues to under-perform the other major indices over the last week as shown by the DAX/FTSE spread which has now moved from over 3000 points to 2600 this morning. The key support level for the Dax going forward runs from 9150/9200 and as long as we stay over this area then it okay but a break and close below 9150 signals a move to 8950 and possibly 8610. I was unlucky after I posted yesterday morning as it traded down to my 9275 buy level before quickly stopping me out of this position near the lows of the day at 9235 and I am now flat. Today I will be a small buyer on any dip to 9180/9225 with a 9140 stop. Given the volatility I am trading in smaller size with a larger stop. I do not want to be short the Dax at this time especially the fact that it is trading in a very oversold fashion.
March FTSE
After I posted yesterday morning the FTSE just missed my 6740 sell level by 10 points before accelerating lower. It managed to close over 6685 yesterday but is back trading below this level this morning. However the market is trading at the bottom of the Bollinger band making it difficult for me to short the FTSE here. Today I will be a small buyer on any further dip to 6610/6635 with a 6595 stop. I do not want to be short the market at this time as a break and close over 6720 tells me to go long again.
Dow Rolling Contract
The Dow worked very well yesterday as after the US markets opened it traded down to my 16350 buy level before having a nice rally which enabled me to cover my position at 16420 and I am now flat. I still like the Dow as long as we can stay over the 14 year trendline support at 16220/16250. Today I will leave my buy level the same at 16320/16360 with a 16295 stop on any long position. I still do not want to be short the Dow at this time.
June BUND
Shortly after I posted yesterday morning the Bund traded down to my 142.15 buy level before having a nice rally and I was able to cover this position at 142.50 and I am now flat. I still like the Bund especially if we can stay over last Friday’s low of 141.80. Today I will raise my buy level to 142.15/142.35 with a 141.95 stop.
Gold Rolling Contract
Gold, having again tested the downside yesterday, has rallied back above 1345 this morning. I still like Gold as long as we can stay over 1320 and today I will raise my buy level to 1328/1335 with a 1318 stop on any long position.
Silver Rolling Contract
No change as I am still long Silver from last Friday at 20.80. It is trying to break 21.00 this morning as I write this commentary and if it could close over 21.20 today it will very constructive. I will leave my stop the same at 20.40.
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