Equity markets failed to gain any momentum yesterday with the US stock market closing flat having endured another wild trading session as yet again the market has managed to rally off earlier intra day lows. Citigroup shares plunged 6% after its capital plan was rejected by the Federal Reserve while the economic data provided no boost to sentiment.
US Economic data however was mostly positive. Q4 GDP was revised higher to 2.6% from 2.4% helped by an upward revision to construction spending. Weekly Jobless Claims fell 10K to 311K which is the lowest reading since early December and a positive sign that Unemployment will continue to trend lower. The only negative was Pending Home Sales which added to the run of recent weak housing data falling 0.8% in February and now down a significant 9.3% over the past year.
Much stronger data was reported in the UK where headline Retail Sales rose by 1.7% in February comfortably beating market expectations for a 0.5% increase. The Cable (GBP/USD) gapped from 1.6567 to 1.6640 on the release. In contrast the Euro continues to drift lower as speculation over sanctions for Russia continues after President Obams’s strong words on Wednesday.
This morning on the economic front we have UK GDP and its latest Current Account Reading. This is followed by Euro-Zone Consumer.
June S&P 500
The S&P had yet another wild trading session yesterday with the ‘Open Gap’ from last Monday week finally getting filled as the June Contract made a low of 1833.75 before the market again rallied into the close. The S&P plan worked really well yesterday as shortly after I posted the market traded down to my 1834 buy level and as outlined all week that I expected a big rally the first time we would trade down to this level and after this rally ensued I was able to cover this position at 1846 and I am now flat. Despite the rally into the close the S&P is still trading heavy and you have to respect the significant Key Day Reversal that we had in the market on Wednesday. Today I will still be a seller on any rally to 1854/1858 with a 1862 stop. My only interest in buying the market is on a dip to 1833/1837 with a 1829 stop. Remember a break and close below 1825/1830 will be very bearish.
Euro/USD
The Euro also continues to trade heavy and this morning is trading at the bottom of its Bollinger Band and Williams Index. As expected I was stopped out of my 1.3775 small long position at 1.3745 and I am now flat. As the Euro is very oversold on a Daily basis this morning I will again be a buyer on any further dip to 1.3670/1.3700 with a 1.3645 stop. I still do not want to be short the Euro at this time.
US Dollar Index
The Dollar continues to strengthen but unfortunately just missed my 80.00 buy level with a 80.05 low. I still like the Dollar overall and I am expecting a large rally this year for the Dollar especially when the stock markets start to run into trouble. Today I will raise my buy level to 80.00/80.20 with a 79.70 stop.
June DAX
The DAX continues to be strongest of the major indices. Remember a market that cannot fall on bad news is not to be shorted and this was again very evident yesterday especially when the S&P got hit hard the Dax only fell a small amount before again rebounding strongly and this theme has continued this morning. The key resistance level for the Dax comes in at 9660 which is where the breakdown occurred in mid-January. This morning I will raise my buy level for the June contract to 9430/9450 with a 9390 stop. My only interest in selling the Dax is from 9630/9670 with a 9690 stop which I expect to be hit over the next week.
June FTSE
The FTSE is again testing the key 6560 level this morning. None of my parameters got hit yesterday and I am still flat. This morning I will be a very small seller form 6555/6575 with a 6590 stop. Remember a break and close over 6560 will mean that the Bulls are back in control.
Dow Rolling Contract
The Dow worked well yesterday as shortly after I posted the Dow traded down to my 16240 buy level before having a nice rally which enablef me to cover this position at 16290 and I am now flat. The Dow made a low of 16190 before again the market rallied to close over the key 16210/16250 support level. In contrast to the past few weeks the Dow is trading the strongest of the US Indices especially versus the very heavy NASDAQ. Today I will again be a small buyer on any dip to 16210/16260 with a 16180 stop which is just below yesterday’s low. I still do not want to be short the Dow at this time.
June Bund
The Bund has rallied this morning stopping me out of my 143.55 short position at 143.80 and I am now flat. I have to respect the fact that the Bund has closed over the key 143.50 level and this area will now act as strong support. Today I will be a buyer on any dip to 143.55/143.80 with a 143.35 stop. Given how strong the price action in the Bund is I do not want to be short the market at this time.
Gold Rolling Contract
After I posted yesterday morning Gold traded down to my 1292 buy level. I am still long and I will lower my stop to 1282. Gold is still trading at the bottom of its Bollinger Band and Williams Index and the 100 day Moving Average comes in at 1286 so I would expect the market to offer some support in this area.
Silver Rolling Contract
No change as I am still long from last Monday at 19.90 with the same 19.40 stop. Long term members know that I expect Silver to put in a major bottom somewhere between 17.00/20.00 before having a very strong rally later in the year.
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