After an initial rally in equities yesterday, investors moved into sell mode resulting in US and European markets closing heavier. Sobering details of Spain’s bank bailout emerged, in particular, that the Troika of the ECB, EU and IMF would be sending officials to asses the extent of the rescue and to commence oversight. Presumably they will need to make an assessment of the economy and, in particular, the housing market. There was market talk that eventually Spanish credit default swaps could be triggered. Fitch downgraded Santander and Bond Yields rose above 6.5%. After opening some 5% higher the Spanish IBEX closed in negative territory. In the US today we have Budget No’s for May.
Please note the change in contracts from June to July/September as appropriate.
Sept S&P 500
We have rolled forward to the September contract which is a 6 point discount to the cash market. Another wild trading day for the S&P. I took profit on my 1342 short and but I covered and went long at 1325 and I was stopped out of this position at 1319 and I am now flat. It is important to note that the S&P had a weekly reversal to the upside last week. The market made a new low last Monday morning and then not only finished the week higher but finished it above the previous week’s high. Weekly reversals are rare and need to be respected.
Today I will look to buy the S&P from 1299/1304 with a 1295 stop. I do not want to be short the market and I if I am taken long I will look to take profit from 1315/1320.
EURO – Spot
I managed to make a profit on my 1.2630 short position as I exited at 1.2550. I subsequently went long, only to be stopped out at 1.2520 and I am now flat. Today I will buy from 1.2480/1.2500 with a stop below 1.2450 which is the overnight low. I do not want to be short the Euro unless we trade up to 1.2700.
Cable (USD/GBP) – Spot
I bought the Cable at 1.5500 and I am still long as my 1.5460 stop has not been triggered. I will leave the same stop and I will take profit from 1.5560/1.5590.
Sept Bund
Just like Equities the Bund has had a wild week and is now trading 120 points up from yesterday’s low. I sold the Bund this morning at 143.70 and I will leave a stop at 144.10 which is above yesterdays high. I will look to take profit from 142.90/143.10.
July Crude
I was stopped out of my small long at 84.20 and I am now flat. I still believe we are putting in a bottom in Crude and I will look to reset my long position from 81.20/81.70 with a 80.50 stop.
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