Ahead of this morning’s March Euro-Zone CPI report and the ECB Meeting on Thursday, Spanish and German CPI reports for March were softer than expected. Spain, which is now in deflationary territory (-0.2%), hit the Euro before Germany released its CPI, which came in at 1%, and soothed nerves, thus stabilizing the currency ahead of the rest of the CPI reports for the Euro-Zone which will be released at 10.00 am.
US Consumer Spending came in as expected at +0.3% for February but January was revised downwards by 0.2%, leaving Q1 spending running at a soft 1.5% annual rate compared to 3.3% in Q4 2013. The final University of Michigan Survey was revised up only very marginally and less than expected. Equity markets ended the day higher on both sides of the Atlantic with the US well off its intra-day highs. Markets are opening stronger this morning after Russia said over the week-end that it had no intention of invading Ukraine. A meeting between the Russian Foreign and the US Secretary of State yesterday after a telephone call between Presidents Putin and Obama has for now kept Russia-Crimea concerns at bay.
Currency-wise the notable mover on Friday and again this morning was the softness in the Japanese Yen possibly in anticipation of capital outflows around the end of the Japanese Fiscal year.
This morning on the economic front we have UK Net Consumer Credit and Mortgage Approvals at 9.30 am followed by the Euro-Zone CPI as mentioned above. At 1.45 pm we have the Chicago Purchasing Managers Survey followed at 2.30 pm by the Dallas Fed Manufacturing Activity. Later this afternoon the Fed’s Chair Janet Yellen will speak at a conference in Chicago.
June S&P 500
Last Friday was yet another trading session when the S&P opened strongly only for the market to be hit by sellers and to close again near the lows of the day. The S&P plan worked well, as shortly after the US markets opened the market traded up to my 1856 sell level before having a nice sell-off which enabled me to cover this position at 1850 and I am now flat. Today is month-end which is seasonally also a strong time of the year and yet again the S&P Futures market is trading strongly this morning as it follows the lead from the German Dax which has been on a roll over the last two weeks. Today I will again be a small seller on any further rally to 1861/1865 with a 1868 stop. I will also raise my buy level slightly to 1846/1850 with a 1844 stop which is just below last Friday’s low.
Euro/USD
Shortly after I posted on Friday the Euro tried the downside but just missed my 1.3700 buy level with a 1.3703 low before having a nice rally and I am still flat. The Euro is still oversold and I will leave my buy level the same at 1.3675/1.3705 with a 1.3650 stop. I still do not want to be short the Euro at this time.
US Dollar Index
Shortly after I posted on Friday the US Dollar Index traded down to my 80.20 buy level. I am still long and I will raise my stop slightly to 79.80. If I am stopped out I will be a more aggressive buyer in front of 79.60 with a 79.30 stop.
June DAX
This morning the Dax is trading above its Bollinger Band and is at the top of its Williams Index. As I mentioned on Friday my only interest in selling the Dax is on a rally to 9630/9650 and I have gone short this morning in the middle of this range at 9645. I will leave my stop the same at 9670 as 9640/9660 is key resistance and if I am stopped out I will be a more aggressive seller in front of 9710 with a 9735 stop. To show how overbought the Dax is trading the DAX/FTSE spread is now at 3070 which is up from 2400 in the last two weeks.
June FTSE
The FTSE plan worked well on Friday as shortly after I posted the market was trading near the highs of the day. I went short at 6570 and after a nice sell-off I was able to cover this position at 6535 and I am now flat. This morning it is back trading over the key 6560 resistance level and today I will be a small buyer on any dip to 6555/6570 with a 6540 stop. I do not want to be short the FTSE at this time.
Dow Rolling Contract
The Dow just missed my 16260 buy level on Friday before turning around and is trading a lot higher this morning. Over the last 10 days the Dow has been trading the strongest of the other major US Indices and I still believe it will break its Dec 31 high of 16589 before the market starts to roll over to the downside. Today I will raise my buy level to 16290/16330 with a 16260 stop which is just below last Friday’s low. I still do not want to be short the Dow at this time.
June BUND
The Bund is back on the defensive this morning having traded down to my 143.60 buy level on Friday. Today I will lower my stop to 146.25 and if I am stopped out I will be a more aggressive buyer in front of 143.10 with a 142.80 stop. I still do not want to be short the Bund at this time.
Gold Rolling Contract
No change as I am still long from last week at 1292 with the same 1282 stop as I look for Gold to trade higher from this major support level.
Silver Rolling Contract
Just like Gold, I am expecting Silver to start a rally from near current levels. I am still long from last week at 19.90 and I will leave my stop the same at 19.40 which is just below last week’s low.
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