It has been another 24 hours again where the market has not had to be besotted with global Geo-Politics such as Greece and has been able to focus on the flow of data and more reports out of the US earnings season. None too compelling data, US earnings reports that have failed to inspire the market, and weakness in Hard Commodities is what’s transpired. It’s not been a huge day for economic reports. UK Retail Sales missed its estimates in June, though there’s still good annual growth evident at 4.2%. With the market having been bulled up on the positive Sterling story really since the clear outcome from the election, this miss was the trigger for some to take profits on long sterling positions.
For anybody following my New Platinum Service it lost 30 points yesterday and is now ahead by 1405 points for July. Last Month it generated a 3045 point return.
Even the AUD/GBP made up some lost ground after the release of the number. It should have been the opposite for the Canadian Dollar with Canadian Retail Sales rebounding more than expected in May after a soft April, but continued weakness in the traded commodity complex (Oil down further and Copper taking more heat) kept the commodity currencies including the Canadian Dollar on the defensive during the session, USD/CAD trading higher back up through 1.30.
US mostly second tier data reports were generally positive, Jobless Claims printing much lower than expected in the July Payrolls survey week, though they can be volatile at this time of the year owing to car plant shutdowns and re-tooling timetables. Even discounting this to some extent, the Chicago Fed National Activity Index and the Leading Index reports for June were encouraging and the Kansas City Fed manufacturing somewhat less negative. These proved only a slight foil to further overall disappointments with the US reporting season, with particular focus on the commodity space, as Copper prices took another turn for the worse, down 1.65% on the LME and 2.1% in New York and now off 18% from its recent May high and to the lowest since 2009.
A disappointing report from Caterpillar that cut its full year sales forecasts warning of end user industries remaining weak turned the gloom dial up a little more. The Materials sector of the S&P 500 fell 1.46%, outpacing the 0.57% decline in the S&P 500. In FX, the US Dollar was neither stronger nor weaker as currency pairs were whipped around by the particular news on the day. After an some early session decline (since reversed) in the US Dollar and thus short-lived $A rally, the Aussie has been rather listless, trading if anything lower, not helped by the weakness in Hard Commodity prices. The AUD/USD sits in the mid 0.7350s this morning ahead of little data due in the Asia session. In days ahead, the market will be endeavouring to position into the FOMC next week, the language they use and what that might mean for the odds of a September lift-off. Market pricing remains split on the prospect of lift-off starting then and thus still prone to the coming data flow. US GDP is due next week.
This morning on the economic front we have German and Euro-Zone Manufacturing PMI at 8.30 am and 9.00 am respectively. This is followed at 2.45 pm by US Manufacturing PMI. Finally at 3.00 pm we have US New Home Sales.
September S&P 500
Yesterday was not my lucky day for trading the S&P as shortly after the European Markets opened the S&P rallied but missed my exit level at 2114 by a few ticks before turning around and stopping me out of this position at my 2102 level. Subsequently the S&P traded lower to 2096 before having a small 5 Handle rally which put me long at 2101 only for the market to get hit again and thus stop me out of this second position at 2096. This is the first time that I can remember been stopped out of my ‘5 Handle Rule’ and then to rub salt into my wounded day the S&P turned around and closed at 2102. The S&P has strong support at 2090/2095 and very strong resistance from 2120/2125 and it will take a break of either of these levels for the market to make its next run. On top of this we have the FOMC Meeting and Rate decision on Wednesday and as most members know at this stage I will never be short the S&P in the week of an FOMC Meeting. For this reason today I will be a small buyer on any dip lower to 2090/2095 with a 2086 stop. Despite the US stock market generating another Hindenburg Omen on Wednesday I do not want to be short the S&P ahead of next week.
EUR/USD
The Euro opened higher yesterday morning and held these gains into the New York close with the market again testing 1.10. As I mentioned earlier this week the Euro has very strong support at 1.0820 and it will take a break of this level for the market to turn bearish. I am still flat the Euro and today I will raise my buy level slightly to 1.0920/1.0950 with a 1.0875 stop. I still do not want to be short the Euro at this time.
September Dollar Index
My short 97.80 Dollar position from last Tuesday worked well yesterday with the Dollar falling soon after the European Markets opened which enabled me to cover this position at 97.40 and I am now flat. Today I will again be a small seller on any rally higher to 97.70/98.00 with a 98.35 stop.
September DAX
My DAX plan also worked well yesterday as shortly before lunch the DAX traded lower to my 11490 buy level before having a nice rally which enabled me to cover this position as outlined in a separate email to my Platinum Members at 11540 and I am now flat. Today I will again look to buy the DAX on any dip lower to 11340/11400 with an 11290 stop. Despite the DAX selling off hard this week I still do not want to short the market ahead of the FOMC Meeting next Wednesday.
September FTSE
The FTSE continued its recent sell-off as it continues to lead the major World Indices lower. Technically the market looks very bad and does not find and decent support until the 6400/6430 area. I am still flat the market and today I will lower my sell level to 6650/6690 with a 6725 stop.
Dow Rolling Contract
As mentioned in the S&P commentary the US Stock market generated another Hindenburg Omen on Wednesday. Technically this market is not in good shape as more and more Dow stocks are reporting weaker earnings as the strong Dollar continues to have an impact. However with the FOMC Meeting on Wednesday I do not really want to be short the Dow ahead of this key Meeting. The Dow has had a bad week with the market down nearly 450 points since last Monday’s high. Today I will be a small buyer on any further dip lower to 17630/17690 with a 16560 stop.
September BUND
I am still flat the BUND and today I am going to raise my sell level slightly to 153.90/154.20 with a 154.45 stop. I will also be a small buyer on any dip lower to 152.00/152.40 with a 151.60 stop.
Gold Rolling Contract
Gold traded lower to my 1080 buy level overnight.I am still long and as I am nervous in holding this position as so far Gold has not been able to find a floor I am going to I will leave my stop the same at 1071. If I am stopped out of this trade I will be a more aggressive buyer in front of 1052 with a 1039 stop.
Silver Rolling Contract
Silver continues to trade better than Gold at this time. I am still long at 15.05 with the same 14.40 stop. Again if I am stopped out of this position I will be a more aggressive buyer in front of 14.10 with the same 13.60 stop.
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