On a day of very little news, US stock markets rose with bench indices extending their record highs. Small Cap shares rallied, helped by Family Dollar Stores Inc which rose 13% as it became known that the well known investor, Carl Icahn, had amassed 9.4% of the stock. The S&P 500 closed up 0.1%, capping its 7th record close of the past 8 trading sessions.
The only change yesterday was the fact that the S&P did not go out on its highs as the market lost 5 points in the last hour of trading.Otherwise it was an extremely slow trading day with the markets not helped by the fact we had no economic releases on either side of the Atlantic.
This morning on the economic front we have UK Industrial Production and NIESR GDP Estimate at 9.30 am. Unfortunately we again have no major economic data out of the Euro-Zone however at 1.30 pm we have the NFIB Small Business Optimism from the US.
June S&P 500
As I mentioned last week, Advisor Optimism is near a 27 year high whilst the Daily Sentiment Index rose to the most optimistic level of the entire year at 81%. This compares to levels last reached on December 26 and 31, 2013 from where the Dow fell 7.5% by February 5 this year. Of course even greater readings can be attained but the risk reward from here is for the market to at least have a correction, especially since my 1935/1950 resistance level that I have been looking for has been reached.
Yesterday, shortly after the US markets opened the S&P rallied and in the process stopped me out of my 1948 short position at 1954. The market subsequently made a new high at 1955 which put me back to the short side again at 1950. I am still short and I will leave a 1955.50 stop on this position. Just like yesterday if I am stopped out of this trade I will use any subsequent 5 handle sell-off to reset my short position with my stop again above whatever high is put in. I have been bullish this stock market for at least the last 5 years but this market is now as overbought as any time that I have seen in the last 14 years. For this reason I do not want to be long the market at this time.
Euro/USD
Shortly after I posted, the Euro was trading in the middle of my buy range at 1.3610. I am still long and I will lower my stop slightly to 1.3570. If I am stopped out of this position I will look to reset on any further dip to 1.3520/1.3550 with a 1.3495 stop which is just below last week’s Key Day Reversal. I still do not want to be short the Euro at this time.
US Dollar index
Today I will raise my buy level slightly to 80.00/80.20 with a 79.75 stop.
June DAX
The Dax had one of its quietest trading sessions of the year to date yesterday. Today I will still be a small seller on any rally to 10040/10080 with a 10105 stop. My target area for putting on a more Macro short position is still from 10215/10300 with a 10450 stop. I still do not want to be long the Dax at this time.
I am still short the Dax/FTSE spread t 3120 with the same 3190 stop.
June FTSE
No change as I am still a buyer from 6830/6850 with the same 6795 stop. Despite how heavy the FTSE is trading in comparison to the other major indices I do not want to be short the market at this time.
Dow Rolling Contract
No change as I am still short in small size from late Friday at 16920 with the same wider stop at 17080.
September BUND
The Bund continues to trade higher today as European Bond Yields continued their fall to new record lows. The low Bond Yields signify to me that these European Economies are not performing as well as the authorities would lead us to believe. Today I will raise my buy level to 144.90/145.10 with a 144.70 stop.
Gold Rolling Contract
Gold also had a very narrow range trading session. Today I will still be a small buyer from 1245/1250 with a 1238 stop.
Silver Rolling Contract
Silver had a nice rally just after the US markets opened which enabled me to finally cover my long 18.80 position at 19.20 and I am now flat.
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