Oil took centre stage again with WTI closing down no less than 10.2% to $66.15/bbl on Friday. It is down another 3% this morning to $64 as the market continues to absorb the shock of OPEC leaving its production unchanged at last Thursday’s meeting. The US Treasury market rallied with 10 Year Bonds down another 8bps to 2.16% with the market winding back US Fed Rate Rise expectations. US stocks closed flat but are opening down 0.5% this morning as the US National Retail Federation reported weekend sales down 11.4% as shoppers skipped the rush of Black Friday discounts, perhaps waiting for Cyber Monday Internet Sales.
Gold is also opening lower after the Swiss Referendum to compel the SNB to hold at least 20% of its assets in Gold failed leading to another mover lower in the Australian Dollar.
In other news former Bundesbank Vice President, and now ECB Governing Council Member, Sabine Lautenschlaeger on Friday strongly rebuffed calls for Sovereign QE ahead of this week’s ECB Meeting, adding to the prospect of no further QE until at least Q1.
Overnight China released its latest Manufacturing PMI data which came in at 50.3 below the 50.5 expected and is now trading at an eight month low.
This morning on the economic front we have German and Euro-Zone Manufacturing PMI at 9.00 am. This is followed at 9.30 am and 2.45 pm by the UK and US equivalent respectively. At 3 pm we have the ISM Manufacturing and ISM Prices Paid. Finally the Fed’s Dudley and Fisher will speak on economic policy at 5.15 pm and 6 pm respectively.
December S&P 500
The Futures Markets are opening lower this morning on the back of the 11.4% drop in reported Thanksgiving Weekend Sales with the S&P currently trading below its 5 Day Moving Average. If the market closes near these levels this evening it will be the first time in 30 trading sessions (6 weeks) that this has happened. Late on Friday I covered half my 2073 position at 2065 and I am still short the other half in the hope that today gives the decent sell extreme that I have been looking for. I will lower my stop slightly to 2070 on the rest of my position and if I am stopped out of this trade I will use my 5 handle rule to go short again with a stop above whatever new high is posted. Given how overbought and overextended this market is I do not want to be long at this time. After the massive 260 handle rally since the October 15 low of 1812 the S&P has left a few gaps below. The first one is currently been tested from 2050/2056 from two weeks ago whilst the really big one is from 1904/1910 from late October.
Euro/USD
My long 1.2450 Euro position worked out well on Friday as after I posted the market had a nice rally which enabled me to cover this trade at 1.2490 and I am now flat. I still believe that the Euro will not break the key 1.2350 support level ahead of Thursday’s ECB Meeting and today I will again be a small buyer on any further drop to 1.2380/1.2410 with a 1.2335 stop.
US Dollar Index
Unfortunately I was stopped out of my 88.00 short position for a small loss at 88.30 after I posted on Friday and I am now flat. I still believe the Dollar is due a decent rally especially given how over sold the market is currently. Today I will again be a small seller from 88.20/88.50 with a 88.75 stop.
December DAX
The Dax is proving to be the most resilient of the main Indices at this time and this will probably be the case until we get this Thursday’s key ECB Meeting out of the way. Everytime I am short the Dax I am nervous as although the price action is bullish, the economic situation does not augur well for this market. For this reason I have covered half my short 9995 position from last Thursday at 9950 this morning and I will leave my stop the same on the other half at 10020. If I am stopped out at 10020 I will be a more aggressive seller on any further rally to 10090/10130 with a wider 10180 stop.
December FTSE
Just like last September the FTSE is starting to lead the main Indices lower. Having covered half my short 6760 position last Friday at 6690 I was unfortunately stopped out of my other half near the highs of the day at 6730 and I am now flat which is very frustrating especially with the FTSE trading 80 points lower this morning. I still believe that the FTSE is an accident waiting to happen and today I will again be a seller on any rally to 6670/6700 with a 6732 stop.
Dow Rolling Contract
The idea of selling rallies in the Dow with a tight stop continues to pay dividends. After I posted on Friday the Dow was trading at my 17840 sell level. As I really believe the Dow is going to have a decent correction before we get the Santa Claus Rally I am going to stay short and I will only lower my stop on this position to a break-even.
December BUND
No change as I am still short from last week at 152.70 with the same 153.10 stop.
Gold Rolling Contract
Late on Friday Gold started to sell-off hard as expected with the market eventually hitting my 1170 buy level. Unfortunately I was stopped out of this trade on the open last night, on the back of the Swiss Referendum, at 1159. It traded lower to 1146 overnight but is having a nice bounce this morning on market nervousness. Today I will again be a small buyer from 1152/1160 with a 1143 stop which is just below overnight lows.
Silver Rolling Contract
Just after I posted on Friday, Silver traded lower all day before hitting my 15.60 buy level. Unfortunately I was stopped out of this trade overnight at 14.95. I really believe that Silver is overdue a decent rally and for this reason I have bought Silver again this morning at 15.10. I will leave a 14.60 stop which is just below the overnight low.
January NYMEX Crude
I cannot remember a market as oversold as Crude is trading right now, down an incredible 40% from its June highs. The price action in the last 30 minutes of trading on Friday night was incredible when Crude fell 200 points in this time and this continued overnight as the market fell another 240 points before attempting a small rally. After I posted on Friday, and especially when the New York Market opened, it had a decent rally which enabled me to cover my long 68.50 position at 69.40. I bought Crude on the open last night at 65.20 and I am still long. I will put a wider 62.50 stop on this position especially given the volatility at this time.
Recent Comments