Last Friday’s Non Farm Payrolls came in at 192k versus 200k expected with the the previous two months revised higher by a combined 37k to leave a net gain of 229k, which has to be seen as a pretty good result. However the US Indices which were higher initially were hit hard, led by the NASDAQ which fell over 2.6% to have its worst day in over two years with market leaders like Google falling, a not insignificant, 5%.
The US 10 Year Treasuries fell 8 basis points to 2.7% as it looks like the market had built up some large Treasury positions ahead of the Non Farm Payroll news release, expecting a much larger increase. The S&P, NASDAQ and DOW all had significant Key Day Reversals on Friday as the markets all opened higher only to be hit hard just after the European markets closed with the US Indices all closing near their session lows.
Session lows for the EUR/USD at 1.3675 came about an hour before the London close on a report in Germany’s FAZ newspaper quoting sources saying that the ECB had done some modelling on a potential €1Trillion QE Bond Purchase Programme and that this was estimated to add between 0.2% and 0.8% to Inflation. This report was subsequently denied by ECB Member, Constancio, telling CNBC that he was not aware of the study.
Today is a very light day for economic data with the only release of note this morning being German Industrial Production. We have no economic releases from the US today but it will be interesting to see how the markets react to last Friday’s late sell-off in the Equity Markets.
June S&P 500
I was extremely unlucky on Friday as the market made a high of 1892.50 just missing my 1894 sell level before being hit hard, especially after the European markets closed. The market then traded down to my 1874 buy level before very quickly stopping me out of this position at 1867. Subsequently the S&P traded down to my lower 1857 buy level and after a small rally into the close I covered this position at 1861 as I did not want to have a position over the weekend. As I have mentioned over the last few months all Open Gaps in the S&P get filled and this morning the ‘Open Gap from last Monday at 1850.50 is currently being tested. The market is now back in the 1837/1872 trading range that has existed over the last few weeks and a break and close below 1837 will see me look to set up a short position. Today the market has good support between 1846/1851 and I will be a small buyer in this region with a wider 1835 stop. I need to use a wider stop given the volatility. My only interest in selling the S&P is on a rally back to 1863/1868 with a 1873 stop.
Euro/USD
The Euro worked well on Friday as after the Non Farm Payrolls were released the Euro traded up to my 1.3725 sell level before having a nice sell-off enabling me to cover this position at 1.3685 and I am now flat. The Euro is finding it difficult to break the key 1.3720 support level making it difficult for me to set up a short position. Today I will be a small buyer on any dip to 1.3660/1.3690 with a 1.3640 stop. If I am taken long and subsequently stopped out I will be a more aggressive buyer on any further dip to 1.3550/1.3580 with a 1.3530 stop. I still do not want to be short the Euro at this time.
US Dollar Index
No change as I am still long from two weeks ago at 80.20 with the same 80.00 stop. Again if the Index breaks 81.00 I will raise my stop to 80.70.
June DAX
As I have been saying over the last month the 9660/9700 is key resistance for the Dax especially since we broke this key support back in Mid-January. Everytime the market has tested this key resistance level it just runs into a wall of sellers. After the US released its Non Farm Payrolls on Friday the Dax traded up to my 9700 sell level and after a small rally I was very unfortunate to get stopped out near the highs of the day at 9730 especially since the market is nearly 200 points lower this morning. At least we were not long the market. This morning the market has good support from 9530/9560 and I will be a small buyer here with a 9495 stop. My only interest in selling the Dax in on a rally back to 9640/9670 with a 9680 stop.
June FTSE
The FTSE is trading much stronger than both the S&P and the DAX this morning. Late on Friday it traded down to my 6585 buy level and I am still long with the same 6555 stop.
Dow Rolling Contract
The Dow, having had a nice rally on Friday after the Payroll Numbers were released, could not hold onto the key 16589 closing high from last Dec 31 and followed the other major US Indices lower. The negative divergence from this Dec 31 high therefore still exists even though the Dow is trading the strongest of the major US Indices at this time. I bought the market on Friday at 16610 but I was quickly stopped out of this position for a small loss at 16560 and I am now flat. I still like the Dow as we are still in the seasonally strong time of the year and today I will be a small buyer from 16350/16380 with a tight 16320 stop. I still do not want to be short the market at this time.
June BUND
I was lucky with the Bund on Friday as after the Payrolls were released it traded around the 142.80 level for a while and when I saw the US Treasuries starting to rally I covered my short 142.95 position at 142.85 and I am now flat. The Bund has been very difficult to trade over the past few weeks as it keeps flirting with the key 143.00 level. Today I have to respect the fact that we are back trading over this key level and I will be a small buyer from 143.10/143.25 with a very tight 142.88 stop.
Gold Rolling Contract
The Gold plan worked well on Friday as the market had a nice rally which enabled me to cover my long 1283 position at 1302 and I am now flat. Gold is still oversold as it tries to stay above the key 100 Day Moving Average at 1287 and today I will again be a buyer on any dip to 1288/1293 with a 1283 stop.
Silver Rolling Contract
Silver also worked well on Friday as we also had a nice rally and I was able to cover my long 19.90 position from two weeks ago at 20.20 and I am now flat. I still like Silver as I still believe that we will put in a long term bottom between 17.00/20.00. Today I will be a buyer on any dip to 19.40/19.70 with a 19.20 stop.
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