The week has opened to the news that Crimea voted on Sunday to secede from the Ukraine by a massive majority. The Crimean Government announced that it intends to adopt the Russian Ruble as its currency from April 1st. Equity markets were initially lower on this result but after news came out that Presidents Puitin and Obama had spoken for over an hour, mostly about the stability of Ukraine, markets settled and are opening higher in Europe this morning.
Focus will now be on the extent of sanctions to be imposed on Russia by the West and how Russia responds to these sanctions in particular with respect to the flow of Oil and Gas to Europe.
The other big weekend news was Saturday’s announcement by China that, effective today, it will widen the permitted trading band for the CNY to +/-2% from 1%. The news has come a little earlier than expected and is a positive step insofar as it shows that China will not be deflected from medium term returns by short term economic considerations.
This morning on the economic front we have the UK Rightmove House Price Index at 9.30 am. This is followed by Euro-Zone CPI at 10.00 am. Later at 12.30 pm we have the Empire Manufacturing and the NAHB Housing Market Index from the US. At 1.15 pm we have US Industrial Production.
March S&P 500
The S&P, after a very choppy trading session, is trading a lot stronger this morning after Crimean vote. The S&P was initially trading lower on this result but once news came out that Presidents Puitin and Obama had spoken, about the stability of Ukraine, the futures market turned around. None of my trading parameters were hit on Friday but shortly after the S&P opened last night the market traded down to my 1837 buy level and after a nice rally overnight I have been able to cover this position at 1849 and I am now flat.
As we have the FOMC Meeting on Wednesday and the March Contract expiration on Friday this is a week that I do not really want to be short the market. Today I will be a buyer on any dip to 1840/1844 with a 1836 stop. If I am taken long and subsequently stopped out I will be a more aggressive buyer in front of 1830 with a 1827 stop. My only interest in selling the S&P is on a rally to 1858/1862 with a 1865 stop but only in very small size as my bias this week is to the upside.
Euro/USD
The Euro plan worked well on Friday as, shortly after I posted, it traded up to my 1.3920 sell level. As I am still long the US Dollar Index I kept my short Euro position over the weekend and after a nice sell-off I have been able to cover this position at 1.3885 this morning and I am now flat. Today I will still be a small seller on any rally back to 1.3920/1.3950 with a 1.3970 stop.
US Dollar index
No change as I am still long from last week at 79.45 with the same 78.80 stop.
March DAX
The DAX plan worked well on Friday as, shortly before lunch, it traded down to my 8950 buy level before having a very quick rally which enabled me to cover this position at 9040 and I am now flat. The DAX is trading higher on the Crimean news after last week’s dramatic sell-off and today I will be a small buyer from 9060/9090 with a 9035 stop which is just below this morning’s low. My only interest in selling the Dax is on a rally to 9180/9220 with a 9240 stop.
March FTSE
The FTSE plan also worked well on Friday as the market traded down to my 6510 buy level before having a nice rally which enabled me to cover this position at 6540 and I am now flat. I still like the FTSE as I believe it is trying to put in a short term bottom and today I will be a small buyer from 6520/6540 with a 6595 stop. I still do not want to be short the market at this time.
Dow Rolling Contract
Last Friday the Dow closed down for five straight trading sessions for the first time in almost two years. After I posted, the market traded down to my 16080 buy level before having a quick rally which enabled me to cover this position at 16145 and I am now flat. Just like the S&P, I do not want to be short the Dow this week and today I will be a small buyer on any dip to 16070/16110 with a 16030 stop.
June BUND
No change as I am still a small buyer from 142.90/143.20 with a 142.75 stop.
Gold Rolling Contract
The Gold plan also worked out on Friday as, shortly after I posted, it traded up to my 1384 sell level and after a nice rally I was able to cover this position at 1375 and I am now flat. Gold is now trading over $200 higher than it’s low made on December 31st and is overextended. For this reason I will still be a small seller on any rally to 1390/1396 with a 1403 stop.
Silver Rolling Contract
Still no change as I do not want to chase this market higher and today I will be a buyer on any dip to 20.70/21.00 with a 20.50 stop.
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