Fed Chair, Janet Yellen’s speech yesterday again reassured markets that the Federal Funds Rate will remain low until an economic recovery is assured. She again highlighted the slack in the labour market while inflation risks were low, with a much greater probability of inflation persisting below 2% rather than rising substantially above 2%. Ms Yellen also said that the Fed must remain vigilant on ‘unforeseen economic developments’ that may further affect the economic outlook. All very dovish and all aimed at further moving away from the ‘6-month’ comments that she made at her March press conference.
The economic news released yesterday was mostly positive. The Beige Book reported that growth increased in most regions of the US in March with Labour market conditions generally positive. On the data front, Industrial Production was stronger than expected with a 0.7% gain in March whilst February was revised up to 1.2% from 0.6%. However Housing data again disappointed with Housing Starts rising just 2.8% in March versus 7% expected.
Equity markets were in positive mood throughout the day with the DOW and S&P 500 both closing up 1% whilst European Markets averaged a 1.3% gain. However markets are opening weaker this morning after Google earnings disappointed, with the stock down over 5% in after hours trading.
This morning we have no economic releases due from the UK or the Euro-Zone whilst at 1.30 pm we have the latest US Weekly Jobless Claims. Later this afternoon we have the US Philly Fed Business Outlook.
As the markets are all closed in observance of Good Friday tomorrow, my next update will be on Monday, April 21. I would like to wish all Tradernoble members a safe and happy Easter and to thank everybody for their continued support.
June S&P 500
Since the markets are closed tomorrow in observance of Good Friday today will be a rare Thursday Options expiration. Stocks have temporarily staved off a potential sell-off by virtue of the size of the rally over the last two days with the S&P rallying nearly 50 handles from the low made late Tuesday afternoon.
The S&P plan worked well yesterday as shortly after the US opened it traded up to my 1850 sell level before having a nice sell-off which enabled me to cover this position at 1844 and I am now flat. The market just missed my 1840 buy level with a 1841 low before spending the rest of the day trading higher. The S&P has left a small gap yesterday from 1838.50/1841. The markets are lower this morning on the back of the weaker than expected Google earnings and today I will be a small buyer on any further dip to 1842/1847 with a 1836 low. I will also be a small seller on any further rally to 1864/1868 with a 1873 stop .
Euro/USD
After I posted yesterday morning the Euro had a nice rally which enabled me to cover my long 1.3810 position at 1.3845 and I am now flat. I still like the Euro and I will stay with this view until the ECB back up their words to fight deflation with some action to try and weaken the currency. As long as it can stay over 1.3760 then this market is going to trade higher. Today I will again be a buyer on any dip to 1.3780/1.3820 with a 1.3745 stop.
US Dollar Index
No change as this market is trading in a very tight range and I am still a buyer on any dip to 79.20/79.50 with the same 78.75 stop which is just below last November’s low.
June DAX
The Dax continues to trade higher following last Tuesday’s spike lower and reversal. I am still flat the Dax and today I will raise my buy level to 9245/9275 with a 9195 stop I will still be a seller on any rally to 9395/9425 with a 9460 stop.
June FTSE
The FTSE plan also worked well as finally, very late in the trading session, the market traded up to my 6550 sell level. It is opening lower this morning following the Google earnings report and I have decided to cover this position at 6530 and I am now flat. Today I will again be a seller on any rally to 6555/6585 with a 6605 stop. I still do not want to be long the TSE at this time as the price action is not constructive.
DOW Rolling Contract
After the US markets opened yesterday afternoon the Dow traded up to my 16380 sell level and finally, after what seemed to take forever, it had a nice sell-off which enabled me to cover this position at 16335 and I am now flat. The Dow has now built a nice cushion over the key 16210/16260 support zone. Today I will again be a small seller on any rally to 16460/16500 with a 16540 stop. My only interest in buying the Dow is on a dip to 16300/16340 with a 16280 stop.
June BUND
No change as I am still a buyer on any dip to 143.80/144.10 with the same 143.60 stop. I still do not want to be long the Bund at this time.
Gold Rolling Contract
No change as I am still a small buyer on any dip to 1283/1290 with a 1276 stop which is just below last month’s low.
Silver Rolling Contract
The sell-off in Silver on Tuesday broke a 9.5 month trendline going back to last June’s low point at 18.19 when the market broke the 19.70 support level. The Daily Sentiment Index for Silver has fallen to 15% Bulls and I would prefer to see this reading in single digits for me to set up a meaningful long position. In other words Silver may need to have one more good down day to reach this target. Today I will be a small buyer on any dip to 18.95/19.25 with a 18.70 stop. If I am taken long and subsequently stopped out I will be a more aggressive buyer in front of 18.20 with a 17.80 stop.
As the markets are all closed in observance of Good Friday tomorrow my next update will be on Monday April 21/ I would like to wish all my members a safe and happy Easter and to thank everybody for their continued support over the last two years.
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