Market optimism is on the rise as Economic Reports and Fed language give a boost to speculation that the world is a better place! US equities made further gains on the back of better than expected US Retail Sales and a higher German ZEW index. The Fed described the unemployment rate as having declined notably but still elevated. They also said that the majority of the largest US banks will continue to have enough capital to satisfy regulators even if they suffer a financial shock that includes unemployment rising to 13% and a 21% drop in housing prices.
S&P 500
The S&P hit my 1380 target and we are now trading at 1390. I am flat here. In the last seven days we have had a 90 per cent down day followed by a 90 per cent up day on Tuesday. As we are so close to the 1400 level I expect a test of this level and I will go short with a small position at 1399/1402 with a 1407 stop looking for a test back to 1388/1390. On any pull back I will be a buyer at the 1370/1375 level as this will now offer strong support.
Euro
The Euro is short term oversold and I have gone long here with a stop below 1.30 looking for a test of 1.3100/1.3130.
Dax
The Dax hit my 7050 level this morning and I have now cut the rest of my position. The market is testing the top of the Bollinger Band and I will go short with a small position at 7100 with a closing stop over 7130.
USD/JPY
As a result of yesterday’s action by the Fed, the USD/JPY is the likely main beneficary as Japanese policy eases further. USD/JPY has now broken my 83 level and I have gone long here with a closing stop below 82.70 looking for a move to 84.80/85.20
Bund
I had the misfortune to cut my Bund position too early as it is now 120 pips lower since yesterday. It has now broken big levels and I will sell on any move back to 137.70/138.10.
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