The theme of last week has been one of good but not good enough. The US data has seen a lot of positive surprises but the markets still like to believe that the Fed will have to wait in order to raise interest rates. This was the focus post the US Payrolls on Friday and it is colouring most global markets. US equities were lower as were most European Bourses, US 10-Year Yields dropped to 2.58%, Commodities were higher and the US Dollar was ‘slightly lower to unchanged’.
The headline US Payrolls were very good with a 288k rise in people employed and a net 38k upward revision to previous months. The unemployment rate dropped to 6.3% from 6.7% but on the downside there was a big drop in the participation rate which drives the unemployment rate lower and flat earnings growth.
This was accompanied by news flow from the Ukraine which is seeing an escalation of unrest and a rise in political rhetoric from Russia, Germany and the US which is keeping risk aversion elevated but so far contained relative to other periods of geopolitical unrest.
The equity markets are opening lower this morning after China reported another contraction in Manufacturing for April. The HSBC Purchasing Manufacturing Index came in at 48.1 which is the fourth month in a row that this index has come in under 50. With London closed for the UK May Bank Holiday the only economic data of note due this morning is the Euro-Zone Spring Economic Forecasts from the EU Commission. Later at 3 pm we have the US ISM Non Manufacturing Composite Index.
June S&P 500
Despite the really good Non Farm Payroll data released on Friday, followed by a positive upward revision to the previous two months, the S&P closed down slightly at -0.13%. I have been brought up on a mantra of ‘be very wary of a market that cannot rally on ‘good news’. Amazingly, despite all the talk ahead of Friday’s data the volume was the lightest of the week. None of my parameters were hit and I am still flat the market. Today I will be a small buyer on any dip to 1864/1869 with a 1859 stop. I will also lower my sell level to 1885/1890 with a 1893 stop which is just above the contract highs made on April 4 last.
Euro/USD
I was very unlucky with my long 1.3865 on Friday which got stopped out near the lows of the day at 1.3820 before having a strong rally in the afternoon and I am still flat. I still like the Euro as the price action is telling you not to be short the market especially given how strong the Payroll data was, as the US Dollar is still weakened along with the Bond market. Today I will again be a small buyer on any dip to 1.3830/1.3860 with a 1.3795 stop.
US Dollar Index
No change as I am still a buyer on any dip to 79.00/79.30 with the same 78.80 stop.
June DAX
The Dax plan worked well on Friday as shortly after Non Farm Payrolls were released it spiked higher to my 9630 sell level before having a nice sell-off which enabled me to cover this position at 9580 and I am now flat. The Dax is having real trouble trying to break this key 9630/9660 resistance level and today I will lower my sell level to 9580/9610 with a 9645 stop which is just above last Friday’s high. I will also be a small buyer on any dip to 9420./9460 with a 9395 stop.
June FTSE
The FTSE traded better than the other major indices on Friday. After the Non Farm Payrolls were released the market traded up to my 6795 sell level. I am still short despite the fact the UK Markets are closed today and I will leave my stop the same at 6840 as the FTSE is overbought here and trading at the top of the Bollinger Band and Williams Index.
Dow Rolling Contract
The Dow plan also worked well on Friday as it traded down to my 16540 buy level before having a nice rally which enabled me to cover this position at 16600 and I am now flat. Today I will be a buyer on any dip to 16450/16480 with a 16430 stop. I still do not want to be short the Dow at this time.
June BUND
The Bund plan worked well, as after the Payroll data was released the market spiked lower to my 144.30 buy level with a 144.11 low before turning around and following the US Bond Prices higher which enabled me to cover this position at 144.80 and I am now flat. I still like the Bund and today I will raise my buy level to 144.30/144.60 with a 144.05 stop which is just below last Friday’s low.
Gold Rolling Contract
Gold has been very tricky to trade lately especially as it is very sensitive to the news out of Ukraine. It is comfortably back above all its major Moving Averages this morning and I have to respect this. Today I will raise my buy level to 1290/1300 with a 1283 stop on any long position.
Silver Rolling Contract
My long 18.98 position worked well as Silver followed the Gold market higher which enabled me to cover this position at 19.60 and I am now flat. Obviously I still like Silver and today I will again be a small buyer from 19.20/19.50 with a 18.70 stop which is just below last week’s low.
Recent Comments