European Indices closed mixed after ECB President Lagarde said in her virtual press conference following the unchanged announcement in Interest Rates at yesterday’s ECB Meeting, that she will not let Monetary Policy be constrained as she fights to support the Euro-Zone’s economic recovery from the Coronavirus. Ms Lagarde said that she expects the ECB to spend the full amount of the Pandemic Bond buying programme. Italian 10-Year Bonds fell to a four-month low on this news and helped support the equity markets where the DAX closed 0.43% lower, reversing an earlier 1.5% fall while the Italian MIB closed with a gain of 0.3%. The ECB at its monthly meeting agreed to keep the bond buying programme unchanged at Euro 1.35 trillion and the Deposit Rate at -0.5%. Meanwhile the EU Leaders are meeting later today to try and agree on the unprecedented Euro 750 billion recovery fund. In the U.S., another 1.31 million people filed Initial Jobless Claims, which was worse than Wall Street’s estimate of 1.25 million. There are concerns over the pace of declines of Jobless Claims slowing. This comes on top of worries that any potential Coronavirus vaccine may not provide a long-term immune response. Other economic data was positive. Retail Sales rose 7.5% in June compared to May’s revised surge to 18.2%. Meanwhile Homebuilder Sentiment rose for a third straight month, reaching pre-pandemic levels of optimism. Elsewhere, Oil retreated from a four-month high while the Dollar closed 0.3% higher. The up-move in the Dollar saw Gold fall 0.7% .
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Equities
The S&P 500 Index closed 0.3% lower at a price of 3215.
The Dow Jones fell 135 points for a 0.5% loss to close at 26,734.
The NASDAQ 100 closed 0.7% lower at 10626.
The DAX closed 0.43% lower.
The MSCI World Index fell 0.6% to 545.
This morning the Nikkei closed 0.32% lower at 22,696.
Currencies
Here is a Summary of the main Changes in F.X. Markets:
The Bloomberg Dollar Spot Index rose 0.3% to 1207.
The Euro decreased 0.3% to $1.1381.
The British Pound closed 0.2% lower $1.2554.
The Japanese Yen fell 0.4% to 107.33 per dollar.
Bonds
The yield on 10-year Treasuries dipped one basis point to 0.62%.
Germany’s 10-year yield declined three basis points to -0.47%.
Britain’s 10-year yield fell two basis points to 0.11%.
Commodities
West Texas Intermediate crude decreased 1.1% to $40.43 a barrel.
Gold fell 0.7% to $1,796.20 an ounce.
This morning on the Economic Front we have the EU Leaders Summit. At 10.00 am we have Euro-Zone CPI and Construction Output. This is followed at 1.30 pm by U.S Building Starts and Housing Permits. Finally, at 3.00 pm we have the University of Michigan Consumer Sentiment Index.
September S&P 500
The S&P traded in a narrow range yesterday with the market missing my 3185 buy levels a few times throughout the session with a low print of 3189 and I am still flat. Despite the S&P trading overbought, I am still looking for the market to test the huge ‘’3258/3330’’ Open Gap from February over the coming weeks before we see a more meaningful correction. Today I will raise my buy level to 3178/3193 with a higher 3167 stop. Despite the weakness in the S&P yesterday I am not going to chase the market lower and I will leave my 3241/3255 sell level unchanged with the same 3267 stop.
EUR/USD
The Euro just missed my 1.1460 sell level before falling 70 points yesterday and I am still flat. With the EU Leaders meaning this morning we can expect to see some choppy trading in the Euro as the various headlines from the Summit hit the wires throughout the day. I will leave my 1.1300/1.1340 buy level unchanged with the same 1.1255 stop. I will now lower my sell level slightly to 1.1445/1.1485 with a lower 1.1525 stop.
September Dollar Index
I am still flat the Dollar and today I will raise my sell level slightly to 96.70/97.10 with a higher 97.45 tight stop.
September DAX
The unprecedented Euro 130 billion stimulus from the German Government continues to put a floor under the market. As I have said countless times that I will continue to be a buyer on dips as long as we do not close below 12270. Yesterday the DAX never came close to my buy range and I will now raise this level to 12650/12750 with a higher 12575 stop.
September FTSE
The FTSE traded in a narrow range yesterday and I am still flat. I will now raise my buy level to 6150/6190 with a higher 6115 stop. Given how much the FTSE has underperformed the other major Indices this year I still do not want to be short the market at this time.
Dow Rolling Contract
My Dow plan worked well with the market trading lower to my 26600 buy level before rallying to my 26690 T/P level with a 26750 rebound high and I am still flat. As long as the Dow can hold the 200 Day Moving Average which comes in at 26225 this morning, I will continue to buy the dip. The Dow has short-term support from 26350/26600 where I will be a buyer with a 26195 wider stop. My only interest in selling the Dow is still on an aggressive move higher to 27300/27550 with the same 27725 stop.
September NASDAQ
Frustratingly the NASDAQ just missed my 10480 buy level before rallying back above 10600 and I am still flat. I will now raise my buy level to 10410/10535 with a higher 10395 stop. The NASDAQ has strong resistance from 10740/10840 where I will continue to be a seller with a 10955 stop.
September BUND
After the Bund traded higher to my 176.70 sell level, the market had a small drop and I covered this position at my revised 176.54 T/P level and I am still flat. The Bund is opening unchanged this morning. We have short-term resistance from 176.90/177.40 where I will be a seller with a 177.75 stop.
Gold Rolling Contract
Gold is finally it difficult to break the key 1820 level which is no surprise given how high the DSI is at this time. I am still flat and I will continue to look to sell any rally to 1825/1837 with the same 1849 stop. If I am taken short I will have a T/P level at 1817.
Silver Rolling Contract
I am still flat and this morning I will now lower my buy level slightly to 18.30/18.70 with a lower 17.95 stop. If I am taken long I will have a T/P level at 18.05.
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