The Australian Dollar continues to lose ground falling to a low of .9050 versus the US Dollar. It was only one week ago that the AUD seemed to be on a move upwards, touching 0.94 after the US Non Farm Payrolls release, but sentiment has quickly turned with the AUD losing ground not just against the US Dollar but against most other currencies as well. The weakness in Gold and the other base metal prices are also weighing on the currency along with the slowdown in the Chinese economy.
Meanwhile Equity markets closed little changed in Europe and the US with most Indices closing down an average of just 0.1%. With little economic news, geopolitical concerns drove sentiment as President Obama’s speech put the Middle East conflict back on investors minds whilst the EU said that new sanctions against Russia will be implemented today.
On the data front, only the US Weekly Jobless Claims were released. Claims rose 11K to 315K last week, versus 300K expected, leaving a 4 week average of 304K , a level that is consistent with further solid gains in employment.
This morning on the economic front we have Euro-Zone Industrial Production and the latest Employment data at 10.00 am. This is followed at 1.30 pm by the very important US Retail Sales. Finally at 2.55 pm we have the University of Michigan Consumer Confidence Index.
September S&P 500
The S&P plan worked reasonably well yesterday as after the market had been down earlier on weaker than expected Weekly Jobless Claims the S&P subsequently rallied to my 1995 sell level. Following this rally the market fell back to 1989 which enabled me to cover this position at 1990. I am still short my small macro position at 2001 and I would not be surprised to see this position taken out later today. If I am taken out I will be a more aggressive seller from 2006/2010 with a 2013 stop which is just above last week’s contract highs.
The S&P September contract expires next Friday and as I have previously stated whatever low is put in on the Thursday/Friday before expiration is normally the low for the following week. This makes me nervous of being short the market at this time. We also have the Fed 2-day Meeting next Tuesday/Wednesday followed by the press conference with Fed Chair Janet Yellen which is another excuse for the markets to rally next week. I have no doubt that when this rally eventually ends that it will not be a pretty picture. Today I will also be a small buyer on any dip to 1985/1990 with a 1981 stop which is just below the low made on Wednesday and yesterday.
Euro/USD
Today I will raise my buy level slightly to 1.2870/1.2900 with a 1.2845 stop which is just below this week’s low. I will still be a small seller on any spike higher to 1.2990/1.3020 with a 1.3040 stop.
US Dollar Index
I have now rolled to the December Contract which trades at a 18 point premium to the September Contract. Given how overbought the Dollar is trading I will still be a seller on any rally to 84.65/84.95 with a 85.25 stop.
September DAX
The Dax plan worked well yesterday as shortly after I posted it traded down to my 9640 buy level.It subsequently followed the US markets higher which enabled me to cover this position near the close at 9685 and I am now flat. Today I will again be a buyer on any dip to 9600/9630 with a 9575 stop. As I have mentioned all week I do not want to be short the Dax at this time.
September FTSE
By the time I posted yesterday the FTSE was trading at the low end of my buy level at 6800. Unfortunately I was stopped out of this position near the lows of the day at 6770 and I am now flat. Today I will again be a buyer on any dip to 6775/6795 with a 6755 stop which is just below yesterday’s low as I expect a nice rally to ensue following the Scottish Referendum next Thursday.
Dow Rolling Contract
The Dow again tested the key 16980 support level before again finding buyers at this level. However it has basically gone nowhere over the last 6 weeks but as I mentioned above, I am nervous being short especially with the contract roll-over and Fed Meeting next week. For this reason I will raise my sell level to 17130/17160 with a 17190 stop. Despite my above concerns I still do not want to be long the Dow at this time.
December BUND
The Bund just missed my 148.90 sell level yesterday and I am still flat. It is opening lower this morning and today I will be a small buyer on any further dip to 147.60/147.85 with a 147.35 stop. I will also lower my sell level to 148.50/148.80 with a 149.05 stop.
Gold Rolling Contract
Gold continues to make new lows with very little buying interest. I must say that I am very surprised by this development especially given the geopolitical risks which are now growing by the day. For example, this morning Australia raised its ‘terror alert’ to its highest level in 10 years. After I posted yesterday morning I was stopped out of my 1250 position for a small loss at 1237 and I am now flat. The next key support for Gold comes in at 1181/1205 which is the double bottom from 2013. If it manages to test support I will look to put on a more macro trade. Today given how very oversold it is trading I will again be a small buyer from 1225/1232 with a 1218 stop.
Silver Rolling Contract
Silver is catching up with Gold on the downside and eventually traded down to my 18.60 buy level. I am still long and I will leave my stop the same at 18.25. Initial resistance comes in at 1910/19.30.
Recent Comments