The Euro whipsawed yesterday, losing some ground initially on a weaker French PMI report but then recovering as Germany’s Index was surprisingly higher. It then eased off on US Dollar strength with some safe haven flavour despite a very weak US New Home Sales Report. The Euro-Zone data revealed overall that Germany continues to carry its neighbours forward with growth in the second quarter looking set to be strong. In contrast, Sterling lost a modest amount of ground after the UK CBI reported a mixed report whilst the Bank of England Minutes from the April MPC were of no real surprise.
The March US New Home Sales Report added its own source of US growth gloom to a somewhat defensive market where sentiment was already being tested again by the re-emergence of Ukrainian tensions since Easter. Home Sales fell a significant 14.5% with the negative fallout only slightly helped by an upward revision to February.
Equity markets, having broken their winning streak yesterday, are higher this morning after Facebook and Apple reported stronger earnings. Indeed Apple is doing a 7 for 1 split as it looks to become a member of the Dow.
This morning on the economic front we have UK CBI reported sales followed at 10.00 am by the German IFO Survey. At 1.30 pm we have the US Weekly Jobless Claims and Durable Goods Orders.
June S&P 500
For the second consecutive day the S&P had a very narrow trading range as the market waited for the earnings reports from Facebook and Apple and as a result none of my parameters were hit yesterday and I am still flat. The Futures markets are higher this morning after both of the above companies reported stronger earnings and it will be interesting to see where the S&P closes this evening as the market is very overbought on a short term basis after the huge run up in the last week.
Today I will be a small seller from 1881/1886 with a 1894 stop which is just above the contract high made on April 4th after the Non Farm Payrolls were released. I do not want to move my buy level higher and I will leave it at 1862/1867 with the same 1859 stop.
Euro/USD
No change as I am still a small buyer on any dip to 1.3780/1.3805 with a 1.3755 stop on any long position. I still do not want to go short the Euro until such time we see the ECB take some action to fight deflation and thus weaken the Euro.
US Dollar Index
The Dollar continues to trade in a very narrow range and I will leave my buy level the same at 79.30/79.60 with a 78.80 stop.
June DAX
After I posted yesterday morning the Dax broke my 9580 sell level and I went short at this price. For a while yesterday afternoon this position looked good but I have stopped myself out for a small loss this morning at 9610 as I want to be flat ahead of the German IFO Survey at 10.00 am. Today I will again be a seller on any further rally to 9635/9665 with a 9685 stop. As I mentioned yesterday a close over 9630/9660 for 2/3 days will be very bullish and I will then look to go long for a possible move to 10000/10200.
June FTSE
The FTSE also had a very narrow trading range yesterday as it continues to trade the weakest of the major indices. Today I will leave my sell level the same at 6665/6680 with a 6705 stop. I still do not want to be long the FTSE at this time.
Dow Rolling Contract
The Dow was the strongest of the US indices yesterday as the market looks set to test the key 16580/16200 resistance level from April 4 and December 31 2013. The Dow is also overbought after the 550 point rally from last week and today I will move my sell level higher to 16600/16640 with a 16670 stop. Given how overbought the Dow is trading I do not want to be long the market at this time.
June BUND
My long Bund position finally worked out yesterday as the market had a nice rally which enabled me to cover my long 143.85 position at 144.05 and I am now flat. Today I will still be a small buyer on any dip to 143.50/143.75 with a 143.35 stop. I still do not want to be short the Bund at this time.
Gold Rolling Contract
For the third consecutive day Gold has traded in a very narrow range. I am still long from last Monday at 1285 and I will leave my stop the same at 1276. If it can rally back to 1292/1297 I will look to exit my position and go flat.
Silver Rolling Contract
No change as I am still a buyer on any dip to 19.00/19.30 with the same 18.70 stop on any long position.
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