After Tuesday’s hammering in risk assets all changed yesterday which saw something of a risk-on day for equities and bonds with Greek PM Tsipras saying that a solution was “close” seemingly supporting investor sentiment. Though not headline moving data, and released earlier in the morning, Spanish house mortgage approvals growth (+19.7% y/y to April) and another report of soaring Irish house prices (+15.8% y/y to April) are pointers to some traction in Euro-area activity. European officials poured cold water on Tsipras’ statement, the EC saying a deal was not imminent and German Finance Minister Schaeuble saying he was surprised to hear reports of an imminent deal.
The Euro had a subsequent hiccup but trades this morning at just over 1.09, where it was late in the afternoon session yesterday. European equities though still closed noticeably higher, positive sentiment carrying over into the US session. There was no mainstream Euro or US data.
The Bank of Canada left rates steady at 0.75%, as expected, with no lasting spillover for the Canadian Dollar. The BoC has now left rates steady since its cut in January, the outlook improving of late from a pick-up in Oil prices – on which the Canadian economy is dependent – the fall in the C$ and most recently from hopeful signs of US economic progress. Oil prices were lower overnight on signs that Iraq plans to lift its exports by 26% in June, Brent crude down 2.6%.
US equity market volatility has eased, copper declined 0.4% but Chinese spot iron ore rose again yesterday, up another $0.32 to $63.10.
This morning on the economic front we have the Fed’s Williams who will speak on Banking Supervision at 7.20 am in Singapore. This followed at 9.30 am by UK BBA Loans for House Purchase. At 10.00 am we have Euro-Zone Business Climate Indicator and Industrial Services/Consumer Confidence. The US will release its latest Weekly Jobless Claims and Pending Home Sales at 1.30 pm and 3.00 pm respectively. Finally the Fed’s Kocherlakota will speak on Monetary Policy at 7.45 pm.
June S&P 500
The S&P plan worked very well yesterday but you had to be quick as the market hit my 2101 buy level shortly after the London Markets opened before going on to recover all of its losses from Tuesday. This rally enabled me to cover my position way too early at 2109 and I am now flat. As I mentioned despite all the bearish doom and gloom analysts in the newspapers until we get a sell extreme that takes out the now three crucial supports for the S&P, namely 2095/2100, 2065/2070 and the major one at 2035/2040 there is no point in been short for more than a few hours as every dip continues to get bought by the market. Today I will again be a small buyer on any dip to 2112/2118 with a 2107 stop. If I am taken long and subsequently stopped out of any long position I will again use my ‘5 Handle Rule’ to go long one more time with a stop below whatever new low is printed. I still do not want to be short the S&P at this time.
EUR/USD
What a roller-coaster ride the Euro has had over the last week but at least the Euro finally looks like it put in small bottom at the 1.0800/1.0830 major support zone. Shortly after the European Markets opened the Euro rallied to a 1.0929 high just missing my 1.0930 sell level by one point before finally stopping me out of my long 1.0890 long position at 1.0835. Thankfully I had a re-buy level at 1.0820 which got triggered and after a nice rally in the afternoon I was able to cover this position at 1.0890 and I am now flat. Today I will again be a small buyer on any dip to 1.0860/1.0890 with a 1.0815 stop which is just below yesterday’s low. My only interest in selling the Euro is on a rally back to 1.1050/1.1100 which I believe we will get over the next week.
June US Dollar Index
My short 97.20 Dollar position did not work out yesterday as the rally in USD/JPY continued and this rally is really putting a bid on the Dollar. I was eventually stopped out of this trade at 97.70 and I am now flat. The Dollar continues to trade at the top of its Bollinger Band but interestingly the small sell-off in the Dollar late yesterday afternoon as led to the Williams Index giving a small sell signal. For this reason I will look to go short the Dollar today on any rally higher to 97.45/97.75 with a 98.10 stop.
June DAX
The DAX just missed my 11820 sell level shortly before the US Markets closed and I am still flat. If as I suspect we get another Greek deal today the DAX will have another attempt to rally and for this reason I will raise my sell level to 11870/11920 with an 11960 stop. My only interest in buying the DAX is on a dip lower to 11590/11640 with a wider 11530 stop.
June FTSE
My long 6845 FTSE position worked out very well today as the market which opened soft spent the rest of the day trading higher before enabling me to cover this position at 6990. The FTSE continues to rally in the late afternoon with the market eventually hitting my 7015 sell level before stopping me out of this trade at 7030 for a small loss. Today I will again look to go short on any spike higher to 7065/7095 with a tight 7110 stop. My only interest in buying the FTSE is on a dip to 6940/6970 with a 6905 stop.
Dow Rolling Contract
The Dow rallied as expected yesterday with the market eventually hitting my 18180 sell level. As I am not comfortable in been short the Dow at this time I have covered this position at 18150 and I am now flat. I still do not like the Dow but I believe the Dow has one more decent rally left in it before we start to see some selling that lasts. Today I will again be a small seller on any further rally to 18240/18290 with an 18330 stop.
June BUND
Unfortunately the BUND just missed my 154.30 buy level by 5 pints before having a nice rally into the New York close and I am still flat. As I mentioned last week a break and close over 154.50 will be short-term positive and opens up the possibility of a move higher to 155.80 and possibly 156.60. For this reason I will move my buy level higher to 154.45/154.75 with a wider 153.95 stop. I do not want to be short the BUND at this time unless we rally to 156.40/156.70 where I will be a reasonable seller with a 157.10 stop.
Gold Rolling Contract
No change as I am still long at 1190 with the same 1179 stop.
Silver Rolling Contract
Silver traded in a very narrow range yesterday with the market eventually hitting my 16.65 buy level. I am still long and today I will raise my stop on this position to 16.20.
Recent Comments