Friday witnessed a decent rally day as the market ignored the weaker than expected Univ of Michigan Consumer Confidence Report which came in at 72 versus 73.2 for June. The logic of weak data improving FED QE prospects also helped the market. Sentiment was helped further by the rally in JP Morgan shares which rose 6%. Despite reporting an 8.7% fall in Q2 profit it still expects to report record profits for 2012. The Equity markets ended the week unchanged and, despite all the bearish news out of Europe, the Euro only lost 30 pips versus the US Dollar. On Tuesday Bernanke gives his monetary report to the US Senate and the markets will again look for some clarity on what it will take for the FED to resume QE. Later today we have Retail Sales from the US at 1.30pm.
Sept S&P 500
The S&P had a large rally on Friday and was able to reverse all its losses for the week. It just shows how important the 1321 level is as we managed to rally 30 handles to close at 1351. I tried a small short at 1345 and I was quickly stopped out at 1348 and I am now flat. As long as the market can hold over the 1340 level it is still bullish and today I want to buy from 1343/1347 with a 1339 stop. I will look to take profit and then go short the first time we trade 1356/1360 with a tight 1363 stop.
Sept Bund
The Bund worked well on Friday and I was able to take profit at 144.60 on my 145.10 short. Today I will look to go short again from 145.10/145.30 with a 145.40 stop. The Bund is extremely overbought and I do not want to be long.
Sept EURO
The Euro has twice held the very important 1.2160/1.2190 level. Today I will look to go long from 1.2190/1.2210 with a 1.2150 stop. Again given the wide stop I am only trading in small size. If I am taken long I will look to take profit from 1.2260/1.2290.
Sept FTSE
The FTSE continues to trade well and I will look to go long from 5580/5600 with a 5565 stop. If it can break 5640 it will be very bullish and I would expect the market to trade up the next important level at 5700.
USD/JPY
I have not traded this currency pair for a few weeks but the Yen continues to strengthen and we are now near a decent risk reward trade. I will look to go long from 78.60/78.80 with a 78.45 stop.
Bryan,
I think it would be helpful to let people know what platform you trade.
I currently use Delta and FXCM. The S&P now is at 1352/1353 on FXCM and 1347/1348 on Delta (Sept. Futures). Your signals don’t match these levels and are thus degraded in their quality.
Regards,
John Healy
Hi John
Thanks for the question and I am happy to explain. The levels that I refer to in the S&P500 are based on the September Futures Contract, hence the fact that I use Sept S&P500 in the paragraph heading before outlining my strategy. I don’t use either platform that you mention but it is likely that the FXCM figures quoted represent the cash market whereas the Delta levels, as you suggest, are from the futures market. There is always a variation in the two markets. The reason I trade the futures market rather than cash is that, up until the advent of spread betting, it wasn’t possible to trade the cash market so futures contracts were the only way to trade indices such as the S&P, FTSE, DAX etc. As a result, having traded futures contracts since the early 1990’s, I became very familiar with their nuances and continue to do so now – old habits die hard! With regard to the varying platforms and consistency in their respective quotes, there should be no difference between them because they all receive the same data feeds from the various exchanges.
So, in summary, when I prefix an instrument with a month (for example; March, June, September), I am always talking about the futures contract. If there is no reference to a month in front of the instrument, as in the USD/JPY in today’s update, then it refers to the cash market.
I hope this explains the position for you.
Best Regards
Bryan
Hi Bryan,
Just wanted to say thanks for all the work you put into this. From 16/07/2012 alone, the S&P, EURUSD and FTSE all worked very well and it looks like the Bund and USDJPY are going to do every bit as well.
All the best,
Adrian.