Equity markets on both sides of the Atlantic rebounded impressively after Wednesday’s sell-off, helped by the better than expected US economic data. The Dow and S&P 500 closed up 0.7% and 0.6%, respectively, after analysts began to assess what Fed Chair Janet Yellen had said in her press conference on Wednesday with clearer heads. The rally was also helped by economic data showing that the US economy will strengthen after the weather-induced slowdown in the first quarter as the indicator of leading indicators rose more than forecast in February. The Philly Fed Manufacturing Index rose to 9.0 in March from -6.3 the previous month whilst the Weekly Jobless Claims came in better than expected, showing that the labour market continues to improve.
The markets are opening stronger this morning after the US Ratings Agency Fitch raised the US AAA Credit Rating to ‘stable’ from ‘negative’ whilst overnight Asian stock markets have had their biggest rebound in almost seven months.
On the currency markets, the US Dollar is set for its biggest gain in two months amid prospects that the Fed will pare stimulus, with the US Dollar Index trading at 80.30 this morning versus 79.40 ahead of the Fed Meeting last Wednesday.
This morning on the economic front, at 9.30 am, we have the UK Public Sector Net Borrowing Requirement. This is followed at 10.00 am by the Euro-Zone Consumer Confidence. We have no data of note from the US as Triple Witching for all the March Futures and Options Contracts come to a close. This afternoon the Fed Hawk, Fisher is due to speak on the economy and it will be interesting to see what he has to say about QE tapering coming to an end later this year.
June S&P 500
The theme of not to be short the S&P on the week of triple witching worked out really well yesterday as the S&P had another impressive rally and is now within touching distance of another record close.
Yesterday’s plan worked out well as, after I posted, the S&P traded down to my 1845 buy level and after a nice rally I cut my position too early at 1853 and I am now flat. This morning the market is approaching the top of its Bollinger Band and Williams Index and I will be a small seller on any further rally to 1874/1879 with a 1883 stop. We still have the open Gap from last Monday at 1832/1842.5 which I would expect to be filled over the coming weeks. I will also be a small buyer on any dip to 1860/1864 with a 1857 stop.
Euro/USD
By the time I posted yesterday morning the Euro was trading at the bottom of my buy level at 1.3790 and after a small sell-off I was quickly stopped out of this position at 13765 and I am now flat. The Euro managed to close above the key support at 1.3760 and this morning it is again testing this level. I am going to stay flat here as I want to see how the market reacts today as I prefer to have a long Dollar position via the US Dollar Index at this time.
US Dollar Index
No change as I am still long half my position from last week at 79.45. The Dollar Index is currently trading at 80.30 and I will raise my stop to 79.95 on this position having cut half my position on Wednesday night at 80.10. If I am stopped out of the rest of my long position at 79.95 I will be a more aggressive buyer on any dip to 79.60 with a 79.25 stop.
June DAX
The Dax plan worked well yesterday as, after I posted, it was trading at my 9210 buy level and after a very nice rally in the afternoon I was able to cover this position at 9260 and I am now flat. The market then traded higher and managed to close over the key support at 9295 and as long as it can stay over this level the market is fine. Today I will be a small buyer on any dip to 9280/9305 with tight 9260 stop. I do not want to be short the Dax at this time.
June FTSE
The FTSE is still struggling after the UK Budget on Wednesday and is trading the heaviest of the major indices. After I posted yesterday morning the market was trading at my 6445 buy level and after a nice rally overnight I have covered this position this morning at 6490 and I am now flat. I still like the FTSE at these levels and I would expect the market to play catch up with the other indices especially after the March Contract expires this morning. For this reason I will be a small buyer of the June contract on any dip to 6455/6475 with a 6440 stop. I still do not want to be short the FTSEat this time.
Dow Rolling Contract
I was unlucky with my Dow buy level yesterday morning as, after I posted, it made a low of 16145 against my 16130 buy level which was a pity as the market is trading over 200 points higher this morning. At least we have not been short the Dow this week especially with the March Contracts expiring this afternoon. I am not going to chase the market higher at these levels and today I will raise my buy level to 16260/16300 with a 16230 stop. I still do not want to be short the Dow at this time.
June BUND
The Bund managed to find some support at the 142.10 level yesterday after the drubbing the market got on Wednesday following the change of forward guidance from the Fed. Today I will leave my sell level the same at 142.90/143.15 with a 143.30 stop. I will also be a small buyer on any dip to 142.00/142.20 with a 141.85 stop.
Gold Rolling Contract
After I posted yesterday morning Gold was trading at my 1322 buy level and after a nice rally overnight I have been able to cover this position at 1334 and I am now flat. I still like Gold down here especially as we have now had a $70 correction from last Monday’s high. This morning I will again be a small buyer from 1320/1326 with the same 1310 stop.
Silver Rolling Contract
Just as I posted yesterday morning Silver stopped me out of my long 20.75 position at 20.40. It then traded down to my 20.20 buy level and I am still long with the same 19.70 stop.
Recent Comments