Equity markets reacted erratically after Fed Chairman, Bernanke’s speech in Jackson Hole last Friday. However whilst Bond yields fell, the US Dollar weakened. Even though there was no specific announcement, Bernanke made a compelling case for more easing in monetary policy and clearly will be pushing his colleagues to agree at the next FOMC meeting on September 13th. In China, PMI was released on Saturday and was weaker than expected, showing the risks to growth are now clearly on the downside.
This is another busy week for economic data with the ECB meeting on Thursday and are likely to outline their bond buying plan which has been supporting the Euro over the last month. On Friday, in the US, we have Non Farm Payroll data and policy makers would like to see gains of more than 150K per month for signs of economic growth. Today is Labor day in America and all markets in the US are closed, so expect another slow day as we await the news later in the week.
Sept S&P 500
The game plan for the S&P worked well on Friday as the market had a nice rally ahead of Bernanke’s speech, as expected, and traded as high as 1412 before he spoke. I cut my own position at 1408 and I am now flat again. As long as the market stays over 1395 we are short term bullish. I will look to go long from 1396/1400 with a 1394 stop. I still want to go short on any spike to the 1420/1425 with a 1427 stop.
EURO/USD
The Euro also worked really well as the market traded up to 1.2580 before Bernanke spoke. I took a nice profit at 1.2560 on my 1.2490 long and I am still flat. As I have been saying for the last month I think the Euro bottomed at 1.2050 and I will look to buy any dips as long as we stay over 1.2500. Today I will look to go long from 1.2530/1.2560 with a 1.2500 stop. I still want to short the first time we trade up to the 1.2680/1.2710 level with a 1.2750 stop.
Sept FTSE
My long position worked really well as we traded up to 5770 before the speech and I took a nice gain at 5760. The market is back down below the 5700 and we are at the bottom of the Bollinger Band and Williams Index. I have gone long this morning at 5695 and I will leave a stop on this position at 5665. Again, any rally to the 5740/5770 area and I will look to take profit.
Sept DAX
Unfortunately I didn’t hold onto to my long position as the Dax rallied 100 points before Bernanke. I will look to reset my long position on any dip to the 6870/6900 with a 6850 stop. I will only trade in small given the volatility. As I said on Friday I do not want to be short the Dax at this time.
USD/JPY
No Change I still want to go long from 7770/7800 with a 7750 stop.
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