The US Dollar is little changed this morning after a rather mixed performance against the majors in the past 24 hours. A more upbeat German Confidence Number as well as uninspiring US releases saw the Euro and other European Currencies gain with the JPY and AUD under-performing despite the lack of fresh drivers. Yesterday’s IFO Survey faced greater than usual scrutiny being the first Euro-Zone data point after ECB President Dragi’s rather gloomy assessment of the economy last Friday. As it happened the Survey beat lowly expectations in each of its three main sub-indices. The Business Climate component rose from 103.2 to 104.7 spurring calls for a slide to to 103.0. Before we get too excited please keep in mind that this remains very low relative to the 2014 high of 111.2 and is only consistent with very miserly growth.
Nevertheless the positive surprise was enough for the Euro to reject a JPY-inspired move lower against the US Dollar. Instead the Euro rose 0.4% with the single currency also helped by comments from conservative ECB Board members. Nowotny expressed a preference to see the effects of past policy action before undergoing fresh easing whilst Weidmann noted that any Sovereign Bond buying would face legal barriers. I expect the Euro to remain relatively contained until next week’s December 4, now key, ECB Meeting.
This morning on the economic front Germany has already released its final GDP which came in as expected at +0.1% whilst Spain’s PPI fell 0.5% versus a rise of +0.5% last month, thus putting more pressure on the deflation argument for the Euro-Zone. At 10.00 am we have the OECD Economic Outlook. This is followed at 1.30 pm by US GDP. Then finally at 3 pm we have Consumer Confidence Index and the Richmond Fed Manufacturing Index.
December S&P 500
The S&P traded in a very narrow range yesterday with total volume one of the lowest of the year mainly due to the fact the this Thursday is Thanksgiving and as the week goes on trading will become slower due to few traders at their desks. Yesterday, after I posted, the S&P traded higher to my 2068 sell level. I am still short and I will leave my stop the same at 2073. If I am stopped out of this trade I will again use my 5 handle rule to reset my short position with a stop just above whatever new high is put in. I will also move my buy level higher to 2051/2055 with a 2047 stop.
Euro/USD
The Euro just missed my 1.2380 buy level before spending the rest of the session trading higher. I still believe that the Euro will have great difficulty breaking this 1.2350 support level without having a decent rally first. Today I will move my buy level higher to 1.2380/1.2420 with a 1.2335 stop. I still do not want to be short the Euro at this time.
US Dollar Index
No change as I am still a small seller on any rally to 88.50/88.80 with a 89.10 stop.
December DAX
By the time I posted yesterday morning the Dax was already rallying on the stronger IFO release. The Dax was trading at my 9800 sell level. I am still short but only in small size and I will leave my stop the same at 9840. If I am stopped out of this trade I will be a more aggressive seller in front of 9870 with a 9920 stop especially with the Dax trading at the top of its Bollinger Band and Williams Index.
December FTSE
The FTSE plan worked out well yesterday as just as I posted the market was trading at my 6755 sell level and after a nice sell-off I was able to cover this position overnight at 6725 and I am now flat. Today I will again be a seller on any rally to 6755/6780 with the same 6810 stop I still do not want to be long the FTSE given that it looks tired to me at these lofty levels.
Dow Rolling Contract
The plan of selling rallies with a tight stop again worked well yesterday as after I posted the Dow traded higher to my 17850 sell level and after the US markets opened it sold off which enabled me to cover this trade at 17800 and I am now flat. Today I will again be a seller on any rally to 17870/17920 with a 17950 stop.
December BUND
This morning the Bund has traded higher to my 152.10 sell level. I will lower my stop to 152.52 on this position which is just above contract highs of 152.48 made last month.
Gold Rolling Contract
This morning Gold is again testing the key 1200/1204 resistance level and if it prints at 1210 I will buy the market with the same tight 1195 stop.
Silver Rolling Contract
This morning Silver is testing its 16.60 key resistance, a break of which should lead to an accelerated move higher. I am still long at 16.25 and today I will raise my stop on this position to 15.95.
January NYMEX Crude
Overnight Crude has traded lower to my 75.50 buy level. I am still long and I will leave my stop the same at 74.95. If I am stopped out of this trade I will be a more aggressive buyer form 74.00/74.40 with a 73.35 stop. I have to use wider stops in Crude given the volatility.
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