Equity markets gained on both sides of the Atlantic yesterday despite the ongoing tensions in Ukraine. The EU widened sanctions against Russia targeting a further 18 individuals but markets were more focussed on US earnings reports and economic data. US equity markets closed 0.5% higher whilst European markets averaged a 1.2% gain.
Currency markets were mostly driven by UK/Euro-Zone data releases. UK GDP growth slightly disappointed in Q1 rising by 0.8% versus 0.9% expected. However it did leave annual growth at 3.1% which is the highest growth rate since December 2007. Meanwhile the German CPI fell 0.2% in April whilst the EU Harmonized Measure fell 0.3% continuing the pressure on the ECB to act against the risk of deflation. The Euro fell from 1.3860 to 1.3810 in response.
In the US, ahead of the FOMC announcement this evening, economic data was mixed. Consumer Confidence fell in April from 93.9 to 82.3 with most of the decline coming from the Present Situation Index falling 4 points whereas the more important Expectations Component edged higher. Case Shiller House Prices were in line with expectations rising 0.8% in February.
Equity markets are opening weaker this morning after Twitter reported weaker earnings last night, with its share price down nearly 10%. Also this morning the Bank of Japan kept its stimulus at current levels.
Today is another busy day for economic releases. This morning we have UK GIK Consumer Confidence followed by German Unemployment. At 1.30 pm we have the US ADP Unemployment Change which will be closely watched ahead of Friday’s Non Farm Payrolls Report. The US also releases its latest GDP Report and the Chicago Purchasing Index ahead of the FOMC announcement at 7 pm in relation to any interest rate adjustment and their expected further $10bn of QE tapering.
June S&P 500
The S&P rose as expected to continue its Tuesday winning streak which now extends to 16 of the last 18. The S&P plan worked very well as shortly after the US markets opened the market traded down to my 1866 buy level before having a nice rally which enabled me to cover this position at 1872 and I am now flat. This morning I will be a small buyer on any dip to 1861/1866 ahead of the FOMC announcement and if I am taken long I will go flat ahead of 7 pm as I do not to have a position over this very important Fed statement. After we get the Fed statement I will be a small buyer on any dip to 1854/1860 with a 1848 stop. I will also be a small seller on any rally to 1885/1891 with a 1894 stop which is just above the contract highs made on April 4.
Euro/USD
The weaker than expected CPI release from the Euro-Zone yesterday led to the Euro trading lower after I posted my commentary yesterday morning. I went long the Euro at 1.3840 before been quickly stopped out of this position at 1.3810 and I am now flat. As I have mentioned over the last few months I will not look to short the market until we finally see Dragi and the ECB take some action to fight the threat of deflation and as long as the Euro can hold the key 1.3750 support level it is still bullish. Today I will be a small buyer from 1.3760/1.3790 with a 1.3735 stop.
US Dollar Index
In all my years of trading I have never seen such a narrow trading range for the Dollar Index which has been trading 50 points either side of the key 80.00 level for the last six months. Today I will still be a buyer on any dip to 79.20/79.50 with the same 78.80 stop.
June DAX
Late yesterday evening the Dax again tested the key 9630/9660 resistance level before trading lower this morning on the weaker Twitter earnings report and I am still flat. Today I will still be a buyer on any dip to 9460/9490 with a 9430 stop. I will also be a small seller on any rally back to 9640/9670 with a 9690 stop. Note, a break and close over 9660 for 2/3 opens up the possibility of a move higher to 10000/10200.
June FTSE
Just as I posted yesterday morning the FTSE traded down to my 6680 buy level and after a nice rally I was able to cover this position at 6720 and I am now flat. The FTSE has been trading better over the last few days and today I will again be a small buyer on any dip to 6680/6710 with a 6660 stop. I will still keep my sell level the same at 6775/6800 with a 6820 stop.
Dow Rolling Contract
No change as I am still flat ahead of tonight’s FOMC Rate announcement. After we get the rate and tapering decision, I will be a small buyer on any dip to 16390/16440 with a 16350 stop. I still do not want to be short the Dow at this time as I still look for it to break and finally close over the key 16600/16640 resistance level.
June BUND
I was very unlucky with my Bund plan yesterday as it just missed my 143.80 buy level with a 143.81 low before trading higher. I am not going to chase this market here and I will leave my buy level the same at 143.50/143.80 with a 143.35 stop.
Gold Rolling Contract
I am still flat Gold as the market continues to trade in a very narrow range. I am going to stay flat as it is 50/50 as to which way this market breaks from here and tonight’s FOMC statement will hopefully bring some clarity to the Gold market.
Silver Rolling Contract
No change as I am still long at 19.40 with the same 18.90 stop. Again if I am stopped out of this position I will be a more aggressive buyer in front of 18.50 with a 17.90 stop as I am still looking for Silver to put in a major bottom between 17.00/20.00.
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