Currency markets continue to remain in a holding pattern ahead of today’s EU Summit. The Euro managed to trade down to 1.2440 before bouncing back to 1.2500 this morning. Rising Peripheral Bond Yields remain a head wind for the Euro with 10 year Spanish Yields touching 6.9% and Portugal 10.1%. Monti said that if yields continue to stay high it will be a disaster for the Euro and it is hard to see how the Summit is going to resolve this crisis.
Despite the persistent negativity, the broader Equity Markets rose yesterday helped by the better than expected Durable Goods No’s from the US. It is worth noting that the markets have trimmed their expectation as to what to expect out of the Summit and there maybe less fallout for risk assets as a result. Today we have the weekly Jobless Nos from the US at 1.30pm.
Sept S&P 500
The market rose yesterday in line with my view that it would continue to squeeze upwards into the Summit. It is amazing everytime we have a FED meeting or big news event, like todays EU Summit, that the market nearly always rallies into one of these events.Yesterday I took a small profit on my 1325 short and I am now flat. As long as the S&P does not close over 1330 the market is bearish. It is too dangerous to have a position ahead of today and I am going to stay flat as I await the next announcement. If the S&P drops down to the 1310 area I will be a small buyer with a 1299 stop.
August Crude Oil
Crude worked well yesterday and I took profit on my 7850 long at 7990 and I am now flat. As I said yesterday I think we are putting in a medium term bottom and I will look to reset my long position in front of 7850 or if we break 8150 I will go with it as 8150 will be very strong resistance.
Sept DAX
I sold the Dax yesterday at 6240 and I have just scratched the trade as I want to be flat today. I have no view here and, just like with the S&P, I am staying out of the market.
Sept FTSE
The FTSE rallied as expected but I took my profit to early at 5450 and I am now flat. If we get bad news today I will be a buyer from 5400/5425 with a 5390 stop.
Sept EURO
The Euro worked well as the market dropped down to my buy zone at 1.2440 and I have covered this morning at 1.2500 and I am now flat.
Silver
Silver is at an interesting level. It is very oversold on the charts and 26.14 is the low from the end of December. I am a small buyer from 26.10/26.50 with a 25.80 stop. I am only trading in small size as Silver is a very volatile contract.
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