Nothing new on the Portuguese Bank (BES) front over the past few days, apart from an outgoing Board Member calling for management change after last Thursday’s missed Bond payment that unseated markets. Friday saw European stock markets rebound by 0.2% whilst the Portuguese PSI General Index closed 0.9% higher and it’s Sovereign Bonds rallied relative to German Bonds after Thursday’s sell-off.
Elsewhere the debate continues to simmer within the Fed about the timing towards rate normalisation with noted Fed hawk, Charles Plosser, saying ‘we are a lot closer than a lot of people might think’ to the first interest rate increase. At the other end of the policy spectrum Evans and Lockhart see the Fed as likely to tolerate higher inflation for a time and no lift off in rates before H2 2015/Q1 2016 although Williams (also more dovish) said that more rapid progress in reducing Unemployment could mean earlier than anticipated rate rises. Wednesday’s testimony by Fed Chair, Yellen, to the House Committee promises to be very interesting and will set the tone for trading over the next couple of weeks.
On the currency front the big mover was the Canadian Dollar which unexpectedly weakened by nearly 1% after Canada reported a fall in Employment whilst the Unemployment Rate increased to 7.1% from 7.0% last month.
This morning on the economic front we have German Industrial Production at 10.00 am whilst we have no data of note due today from either the UK or the US.
September S&P 500
The S&P plan worked well on Friday as shortly after the US Markets opened it traded down to my 1954 buy level. It then spent all day Friday trading in a very narrow range before finally rallying into the close which enabled me to cover my long position at 1960 and I am now flat. The S&P is following the European markets higher this morning after we had no more negative news out of Portugal with BES seemingly an isolated incident. Also with Janet Yellen due to give her Semi-Annual Testimony to the House Committee on Wednesday I do not want to be short until we get this very important Testimony out of the way. Today I will be a small buyer from 1960/1964 with a 1955 stop. I do not want to be short the S&P today.
Euro/USD
No change as I am still long from last Thursday at 1.3600 with the same 1.3570 stop as the Euro traded in an extremely narrow range last Friday.
US Dollar Index
Also no change as I am still long from 80.30 with the same 79.70 stop which is just below the low following the last ECB Meeting nearly three weeks ago.
September DAX
The Dax plan worked well on Friday as shortly after the US Markets opened it followed the S&P lower which enabled me to buy the market at 9640. After a nice rally on the open this morning I have covered this position at 9720 and I am now flat. Today I will again be a buyer on any dip to 9630/9660 with a 9615 stop which is just below last Friday’s low. I will also be a small seller on any further rally to 9750/9780 with a 9810 stop which is just above key resistance at 9800.
September FTSE
My long 6625 FTSE position from last week has finally worked out this morning as it has traded up to my 6650 sell level and I am now flat. Despite the very weak price action of the FTSE I do not want to be short the market at this time as it is still very oversold relative to the other major indices. Today I will again be a small buyer on any dip to 6610/6635 with a 6590 stop.
Dow Rolling Contract
The Dow is also following the other major European Indices higher this morning. I am still flat as I expect the Open Gap from July 7 at 17024 to be filled. Today my only interest in selling the Dow is on a rally to 17060/17090 with a 17110 stop. I still do not want to be long the market at this time.
September BUND
No change as I am still a small buyer on any dip to 147.10/147.30 with a 146.90 stop.
Gold Rolling Contract
My fear that Gold might sell-off proved correct this morning as it is trading nearly 1.5% lower than when I posted on Friday hence the reason that I did not want to chase the market higher. It has just traded down to the bottom of my buy range at 1320 and I am still long. I will leave my stop the same at 1309 and if I am stopped out of this position I will be a more aggressive buyer in front of 1298 with a 1289 stop.
Silver Rolling Contract
Silver is not trading as weak as Gold and I am still long from last week at 21.15 with the same 20.90 stop. Again if I am stopped out of this position I will be a more aggressive buyer in front of 20.75 with a 20.45 stop.
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