After a week of Equity market rises, investors pulled back last Friday with several reports suggesting that large investors were unwilling to carry risk positions over the weekend. A range of negatives contributed to the slump. Spain’s Prime Minister Rajoy said that the Valencia Regional Government would need a bailout and he cut his GDP forecast for 2013 to -0.5% versus +0.2% earlier. Spanish 10 year yields rose to a new high of 7.28%. A parliamentary ally of Merkel said that if Greece could not meet its obligations it should leave the Euro. Also the ECB announced it would no longer accept Greek Government Bonds as collateral for its regular operations which means the Greek Banks will have to source funds from the Greek Central Banks Emergency Liquidity Assistance program at a higher cost. The rating agency Egan Jones cuts Spain’s sovereign rating to CC+ from CCC+. Later today, we have the Chicago Fed Nat Activity Index.
Sept S&P 500
Just after I posted on Friday all of the bad news from Spain started to come out and I was stopped out of my 1362 long position at 1358 for a small loss. It again shows how important it is to have stops in the market. On the bigger picture, as long as the S&P stays over 1340 we are still in a bullish market. The US market has been down for the last 7 Mondays in a row so today will be interesting to see if this trend continues. Today I will look to go short from 1362/1366 with a 1368 stop and I will attempt a small long from 1347/1351 with a 1345 stop.
Sept FTSE
It was good that I took profit on my first long a 5680 on Thursday and I was then stopped out of my 5640 long at 5620 on Friday afternoon and I am now flat. Today I will look to go long on any dip to the 5540/5560 with a 5525 stop. If I am taken long I will look to take profit from 5595/5610.
EURO/GBP
The Euro got killed on Friday after the dreadful Spanish news and I was able to go long EUR/GBP at 7785 and I will leave my stop the same at 7750. The market is extremely oversold and we are at the bottom of the Williams Index. If we manage to rally I will look to take profit from 7820/7840.
Sept DAX
The Dax short at 6750 worked great and it is a pity I did not have more confidence in this position as I took profit to early at 6700 before the market fell another 100 pips. I am now flat and I want to see how we trade over the next 24 hours before doing another trade.
EURO
I was stopped out of my long Euro position at 1.2215 before the Euro went into freefall. Again it shows the importance of stops. The next big support for the Euro comes in at 1.2050 and I will attempt a small long from 1.2050/1.2080 with a tight 1.2035 stop. If I am taken long I will look to take profit from 1.2130/1.2150 as the 1.2160/1.2190 area will now be strong resistance. If we break back above here then we can talk about the Euro putting in a more long term bottom but as long as we remain below 1.2200 the market is bearish.
Sept BUND
Once the Equity markets started to sell off on Friday the Bund went bid. Today I will look to go short again from 146.10/146.30 with a 146.50 stop.
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