Ongoing concerns about the Spanish economy and weak US Housing data had the markets lower yesterday. In Spain, as the Government prepares to unveil its updated Budget plan later today there have been more violent protests in Madrid against the planned austerity measures. Meanwhile the Spanish Central Bank said that Spain’s recession was deepening with the economy weakening at a significant pace in Q3. Spanish 10 year Bond yields rose 31 basis points yesterday back over 6% to 6.08%, the first time since the ECB meeting on Sept 6th that they have been above 6%. Attempting to address market perceptions that Spain is dithering on seeking aid, the Spanish PM stated that he would 100% seek a rescue package if borrowing costs stayed too high. Meanwhile a general strike in Greece also weighed on market sentiment.
In the US, Housing data was slightly disappointing. New Home Sales fell 0.3% in August which was much softer than expected. Asian equities are higher this morning as a drop in Chinese industrial profits has increased pressure on Premier Wen to step up measures to increase growth in the world’s second largest economy.
Today is a busy day on the Economic front with UK final estimates for Second Quarter GDP released this morning. This is followed in the US by the Weekly Jobless Nos, August Pending Home Sales, August Durable Goods and the third estimate of 2nd Quarter GDP Growth.
Dec S&P 500
A very frustrating day yesterday as I left my stop too tight on my 1434 long and I was stopped out at 1428 and I am now flat. Despite the weak economic news it is still very difficult to be short as you are fighting the Central Banks. As I said yesterday, as long as the market stays over 1420/1425 I will give the bulls the benefit of the doubt but a closing break of this level will be short term bearish. Today I will be a small seller from 1437/1442 with a 1444 stop and I will also look to set up a long position from 1425/1430 and I will trade in smaller size as I want to leave a larger stop at 1418 on any long.
Euro/USD
My Euro position worked well and, given my loss on the S&P yesterday, I have taken a small profit at 1.2895 on my 1.2860 long and I am now flat. Today 1.2950 is strong resistance and I will be a seller from 1.2920/1.2950 with a 1.2970 stop. I will also look to go long on any dip to the 1.2820/1.2850 area with a 1.2795 stop. The 1.2800/1.2820 area is strong support.
Dec FTSE
The FTSE dropped down to my buy zone and I went long at 5745. I have taken a small profit this morning at 5770 and I am now flat. I will still look to reset my long position on any dip to the 5720/5740 area with a 5695 stop. As I said yesterday I do not want to be short at this time.
Dec DAX
Very frustrating as the Dax just missed my buy level by 12 points and then rallied 120 points from the low made yesterday. I will leave my buy zone the same from 7220/7250 with a 7195 stop.
Silver
I have not traded Silver for a while and to me Silver is trading heavy. Today I will be a small seller from 34.40/34.80 with a stop over 35.22 which is the high made last week. Again given the volatility I am leaving a wider stop for Silver with a smaller position size.
Nov Crude
I was stopped out of my 9075 long and 9040 and I was able to reset my long position at 8950 only to have to be taken out of my position with a tight a stop at 8910 before Crude rallied hard into the close and overnight. The one lesson for trading commodities is you have to trade in smaller size and leave a wider stop and I paid the penalty for not doing this yesterday. Today I will be a buyer in Crude on any dip to the 8880/8930 area with a 8820 stop.
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