The US Non Farm Payroll Report, on Friday, was almost bang on expectations but there was a real surprise with a drop in the Unemployment Rate where the predictions had been a rise to 8.2% and instead it fell to 7.8%, thanks to an out-sized 873k gain in the Household Employment Measure. Markets responded but overall ended the week with a mixed tone.
Later today we have a Euro-Zone Finance Ministers Meeting, the primary purpose of which is to discuss Greece and Spain. The German Factory Orders report last Friday was a sober reminder of the weakened growth rate of the strongest economy in the Euro-Zone, with Orders down 4.8% year on year. Markets are weaker this morning on the back of the weaker than expected HSBC Chinese Services PMI and later we have German Industrial Production. We have no Economic data from the US of note today.
Dec S&P 500
The S&P followed my roadmap really well on Friday as the market rallied nicely into my 1465/1470 sell zone, on the back of the fall in the unemployment rate, with a 1466.5 high. A market that reacts badly to good No’s has got to get your attention and I believe Friday’s high won’t be broken for some time. I went short the market at 1465 and I took a nice gain at 1453 just before the close and I am now flat. I believe the game has changed after Friday’s reaction and I have no interest in been long the market. Today I will use any rally to get short and I want to sell from 1455/1460 with a 1462 stop.
Dec DAX
The Dax rallied really nicely after the Non Farm Payroll number so I went short in small size at 7400 and I have covered my position this morning at 7310 and I am now flat. I still don’t like the Dax as the economic slowdown is hitting Germany hard and I will use any rally to the 7320/7350 area to go short with a 7370 stop. I will still look to go long on any dip to the 7200/7230 with a 7195 stop.
Dec BUND
I was stopped out of my 141.38 long at 141.10 after the better Payrolls on Friday. I still like the Bund as I believe the Equities are running into trouble and I will look to go long on any dip to the 141.10/141.30 area with a 140.95 stop.
Euro/USD
Just like the S&P, the Euro has reacted very badly to last Friday’s Payroll data. Today I will still be a buyer on any dip to the 1.2900/1.2920 with a 1.2880 stop. I will also look to go short on any rally to the 1.3000/1.3030 area with a stop at 1.3050.
Dec FTSE
The only Equity market that I like is the FTSE and it just missed my 5780 buy level on Friday. However, this morning I have gone long at 5795 and I will leave my stop at 5778 which is just below the key 5780 support. I will look to take profit on any rally to the 5840/5860 area.
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