Greece has officially missed its payment to the IMF, but markets are seemingly unconcerned. We have passed that mattering for now. There is so much uncertainty, speculation, truth and partial truth that many markets are in stasis; waiting to see which way this goes. We may have an answer Monday morning, we may not. Expect more of the same. In the US equities rose, while they remained under pressure in the EU. Yields were lower, including in the European periphery, while Gold and Iron Ore were lower. The USD was supported, with AUD the outperformer and the NZD the underperformer (no news); EUR was lower. But overall, moves were generally somewhat modest.
For anybody following my new Platinum Service it made 190 points yesterday after a 110 point gain on Monday. Overall it generated a total of 3045 points for June. If anybody is interested in this new service please email me on bryan@tradernoble.com
We get more noise tomorrow, with the ECB meeting to discuss its liquidity assistance (ELA) program for Greece. Most analysis suggests they will not do anything to worsen the situation, but it is likely to remain frozen; watch for haircuts to collateral. And there is also a 9:30am GMT meeting of the Eurogroup to discuss the situation. Yesterday, Greece’s Tspiras put forward a new proposal to the Institutions to get a two year funding deal, but with no reforms. That was rejected. Germany’s Merkel said that there would be no negotiations before the referendum. That is a strong line, and we know that all sides are talking (not always to each other). But overall, we are no further ahead. There was a massive rally in Athens in support for the Yes vote; that is likely to gain support into the weekend but the outcome remains uncertain as of now.
There was actually some data released, but not much attention is being paid to it. European CPI was as expected at 0.8%A, E, 0.9P. In the US the data was mostly positive, with Consumer Confidence up sharply and House prices rose. The Chicago PMI was not up as much as expected but still rising. Chinese equities ranged from -5% to +5% over the course of yesterday. The massive swings continue and this brings about uncertainty. There were also further reverse repos to lower yields and ease financial conditions yesterday. These moves have been rapid, but most believe that there is a PBoC ‘put’ which will win out and support the economy. So no reaction elsewhere either. The new age of Central Banks/Governments to the rescue is creating an interesting phenomenon of muted or only positive reactions to adverse events.
This morning on the economic front we have German Euro-Zone and UK Manufacturing PMI which will be released at 8.55 am, 9.00 am and 9.30 am respectively. At 12.00 pm the US will release its latest MBA Mortgage Applications. This is followed by the very important ADP Employment Change at 1.15 pm. The US will release its Manufacturing PMI at 2.45 pm. Finally we have Construction Spending and ISM Manufacturing at 3.00 pm.
September S&P 500
The idea that the US Markets would sell-off shortly after they opened after the Clearing Houses sent out margin calls for all traders who got caught on Monday’s sell-off certainly worked well yesterday. The S&P traded to a low of 2046.75 which enabled me to go long at 2047 and after a nice run higher I was able to cover this position too early at 2053 and I am now flat. The S&P is opening firm this morning and today I will be a small seller on any further rally to 2073/2079 with a 2085 stop. My only interest in buying the S&P today is still on a dip to 2045/2050 with a tight 2041 stop. If I am taken long and subsequently stopped out of this position, I will use my ‘5 Handle Rule’ to go long again. I will also be a reasonably aggressive buyer on any subsequent drop to 2016/2025 with a 2009 stop.
EUR/USD
The Euro plan worked very well yesterday as shortly after I posted the Euro traded lower to my 1.1140 buy level before having a nice rally which enabled me to cover this position as outlined to my Platinum Members at 1.1210 and I am now flat. Subsequently the Euro got sold off into the New York close and this theme is continuing this morning. Today my only interest in buying the Euro is on a further drop to 1.1050/1.1080 with a tight 1.1025 stop.
September Dollar Index
The Dollar rose after I posted yesterday with the market eventually hitting my 95.90 sell level. I am still short and I will leave my stop the same at 96.35
September DAX
The DAX plan worked very well yesterday as just as I posted the DAX when into a nose-dive which enabled me to go long at 10940 before the market turned around and spiked 100 points higher which enabled me to cover this position at 11020 and I am now flat. In my almost 30 years of trading it is a long time since I have seen a major market like the DAX have such two way volatility with 100 point moves happening every couple of hours. The last hour of trading last night for the DAX was incredible. At this late stage I still would not rule out some sort of deal been agreed for Greece as no politician wants the Greek exit on their watch. For this reason I will continue to buy dips as I mentioned yesterday the risk/reward after the move lower this week is to the upside. Today I will be a small buyer on any further dip to 10900/10960 with a 10850 stop. If I am taken long and subsequently stopped out of this trade I will be a more aggressive buyer in front of 10780 with a 10730 stop.
September FTSE
Soon after I posted yesterday morning I was stopped out of my long 6520 for a small loss at 6495. Eventually very last in the trading session the FTSE traded lower to my 6475 buy level and I have just covered this position here at 6520 and I am now flat. Today I will again be a small buyer on any dip lower to 6470/6500 with a 6435 stop. Given how oversold the FTSE is trading I do not want to be short the market at this time.
Dow Rolling Contract
The Dow plan worked well yesterday as eventually after a few close attempts the Dow traded lower to my 17600 buy level before having a nice rally which enabled me to cover this position at 17680 as again outlined to my Platinum Members and I am now flat. Given how oversold the Dow is trading and despite the fact that we have five confirmed Hindenburg Omen’s on the clock I do not want to be short the market at this time. Today I will again look to go long on any drop lower to 17540/17590 with a 17480 stop.
September BUND
No change as I am still a small seller on any further rally to 152.65/153.05 which the market just missed yesterday by 10 points before having a nice sell-off. I will also be a small buyer on any dip lower to 151.10/151.50 with a 150.80 stop.
Gold Rolling Contract
The Gold plan worked well yesterday as shortly after I posted Gold traded lower to my 1168 buy level before having a nice rally to 1181 which enabled me to cover this position at 1176 and I am now flat. Even though the price action in Gold is extremely weak I will continue with my strategy of buying dips with a tight stop. Gold has major support at 1140 and a break and close below here cloud see an acceleration lower which may be the last move lower before turning around and spiking substantially higher. Remember a break and close over 1220/1230 is very bullish. Today I will again look to buy any dip to 1156/1164 with a 1149 stop.
Silver Rolling Contract
Unfortunately I was stopped out of my long 15.90 position from two weeks ago near the lows of the day at 15.50 and I am now flat. Today I will again look to buy any dip to 15.00/15.40 with a wider 14.40 stop which is below the 14.49 low made earlier this year.
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