Confirmation of a tangible recovery in US Consumer Confidence with the Confidence Board Index bouncing nine points yesterday, following on from the five point bounce in the University of Michigan Index reported earlier in the month. This holds out hope that the US consumer is alive with the Confidence Board also reporting that the difficulty of getting a job had eased a touch, heralding some improvement in the US jobs market. The US also reported another month of gradually rising house prices in July/August adding a little more weight to the US housing recovery story. The Fed’s, Plosser, a monetary policy hawk, but a non-voter on the FOMC was again confirming he was arguing against QE3, suggesting that their was little economic gain and potential damage to the Fed’s credibility. These comments led to a late sell off in US equities. Spain was again in the news with demonstrations in Madrid and the Spanish Deputy PM calling for the ECB to quantify the extent of possible intervention to support Spanish bonds in any bail-out plan, so doubts linger.
Today is a quiet day on the economic front with CPI from Germany and, later in the US, we have US Home Sales.
Dec S&P 500
The S&P had a nice rally on the back of the very strong Consumer Confidence Nos and traded up to the start of my sell zone at 1457. The market then fell on the comments from Plosser and we traded down to my buy level at 1446. I covered my short and went long here and I was subsequently stopped out of this position when we broke 1443 and I am now flat. This is an interesting week as we have quarter end on Friday. The next support for the S&P comes in at 1432 which is the reaction low from two weeks ago when the Fed announced QE3. Today I will look to go long from 1430/1434 with a 1428 stop. A break and close below 1420/1425 will be very bearish and will probably lead to a test of the 1362/1374 open gap from August 1st. If the market rallies I will be a small seller from 1443/1446 with a 1448 stop.
Euro/USD
The Euro traded down to my buy level this morning and I have gone long at 1.2860. I will leave my stop at 1.2820 and I will look to take profit on any rally back to the 1.2920 area.
Dec DAX
The Dax had a nice rally initially off my 7370/7390 buy zone as we traded back to 7440 on the back of the US Consumer Confidence Nos. I went long at 7382 and took profit at 7425 and I am now flat. I am very surprised how weak the Dax is this morning and I am only interested in going long from 7220/7250 with a 7195 stop, otherwise I am going to leave the Dax alone unless we trade back to my buy level.
Nov Crude
Crude traded down to my buy level late yesterday and I have gone long in small at 9075. I will leave my stop the same at 9040 which is last weeks low and if I am stopped out I will look to reset on any dip to the 8930/8960 area with a 8910 stop. The next major support comes in at the 8700/8750 which is the low from late July and I will be an aggressive buyer here against a 8680 stop.
Dec FTSE
The FTSE is still trading in a very narrow range and I was able to take profit on my 5810 long at 5838 yesterday and I am now flat. I will still look to go long from 5740/5760 ahead of Friday’s quarter end with a 5720 stop on any long position.
Dec BUND
I was unlucky with the Bund as I was stopped out of my long position at 140.30 before the market rallied late on. I will still look to go long on any dip to the 140.30/140.50 with a 140.20 stop.
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