There is increased scepticism regarding this week’s EU Summit as Cyprus joins Spain in asking for bank aid. The markets have reacted poorly. The USD is broadly stronger with the JPY outperforming. Whilst none of the news yesterday was a surprise, the negative nature of Europe’s problems and the long term nature of the solution came home to roost. Cyprus asked for €6 billion which is not a large amount but it compounds the impact of one European country being in trouble weighing heavily on another. Greece remains in the news with the Finance Minister resigning due to health reasons and the sooner the Government is finalised the better thus allowing Troika to their job. We should hear some news on the EU Summit Vision in the coming days and this will test the markets’ reaction as Dragi, Rompuy, Barraso and Junker have put together a paper for structural change. In the US, Home Sales were better than expected but this did not help the Equity markets. Today we have Public Sector Borrowing from the UK and later we have Consumer Confidence and the Richmond Fed Index from the US.
Sept S&P 500
I was stopped out of my long 1314 position at 1308 yesterday and I am now flat. The market is very hard to call ahead of the EU Summit but I fancy the market to squeeze ahead of Friday. Today I will look to buy from 1300/1305 with a 1295 stop. Again I am only trading in small size and I will look to go short from 1318/1323 with a 1325 stop. The two important levels are 1325 and 1300.
Sept DAX
The Dax never entered my sell level and then traded down to the 6130 level. I will leave the same order in place as yesterday selling from 6210/6230 with a 6265 stop. I do not want to be long the Dax for the moment.
August Crude Oil
Crude traded down to my buy level at 7850 and I am still long. I will raise my stop to breakeven and I will look to take profit from 7980/8010. If Crude rallies up to my take profit area I will still look to buy on any retracement back to the 7850 area.
Sept FTSE
I went long FTSE yesterday at 5420 and I am still long as the market never closed below 5395. I will leave my stop the same and look to take profit at 5450.
USD/JPY
I was stopped out of my long 8020 position at 7975 and I am now flat. I am very surprised by this move and I will stand aside to see how we trade over the next few days.
Sept EURO
The market remains in a ‘sell the rallies’ mode and it is trying to find the right level to get short. The 1.2535/1.2580 is strong resistance and I will look to sell in this area in small size with a 1.2600 stop as I look for a downward target of 1.2420/1.2440 where I will look to take profit if I go short.
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