The markets are little changed from yesterday as we await the US Earnings Season to kick off tonight, after the close, when Alcoa will be first to report. The ‘Wall Street’ Consensus has been dimmed so much that earlier expectations for a 1.9% gain over Q3 in 2011, have now been adjusted to projections of a fall of 2.6%, the first decline since 2009. Despite these downgrades we note the S&P stands 9% higher than it did three months ago – testament to the enduring power of Fed policy injections to support asset prices and thus keep the US Dollar soft.
There has been no major news out of the Finance Minister’s Meeting in Brussels and later today Merkel is going to Athens for a meeting with the Greek PM, Samaras. Also noted overnight are the comments from the Japanese Vice President for International Affairs, Nakao, who tells the Nikkei that Japan is ready for decisive action on the Yen. This morning the IMF has said that it sees an alarmingly high risk of a deeper global slump. It says that the world economy will grow 3.3% this year and 3.6% next year compared to its July predictions of 3.5% and 3.9% respectively. Later this morning we have Industrial Production and Trade Balances from the UK followed later in the US by the NFIB Small Business Optimism Report.
Dec S&P 500
A very quiet trading range for the S&P yesterday as the markets await the earnings report from Alcoa after the close. We might get some positive news from Merkel’s meeting with Samaras later today. I plan to raise my sell level in the S&P to 1457/1462 with a 1465 stop. I will still look to buy any dip from 1443/1447 with a stop below the key 1440 support level. A break and close below 1440 will confirm a short term top is in the market.
Dec FTSE
The FTSE just missed my 5840 profit target with a 5835 high and we are now back to the 5815 price level as I write this commentary. I still like the FTSE compared to all the other equity markets and I will raise my stop to a breakeven on my long position which I entered at the 5795 level yesterday and I will look to take profit if the market rallies back to 5835/5845.
Dec BUND
The Bund dropped into my buy zone and I went long at 141.20. As I said yesterday, I like the Bund and I am going to leave my stop the same at 140.95 as I look for it to trade up the 141.80/142.00 important resistance zone where I will look to take profit.
Euro/USD
No change from yesterday and I still look to go long on any dip to the 1.2900/1.2920 with a 1.2880 stop.
Euro/JPY
On the back of the comments made by Nakao (please see my introduction commentary) I will look to buy Euro /JPY from 100.70/101.00 with a stop below the important 100.50 support.
Dec Dax
The Dax worked well yesterday as we traded up to my sell zone with a 7330 high. I only went short in small at 7325 and I will leave a breakeven on this position as I look for the market to test the important 7220/7240 area where I will look to cover and go long in small against a 7195 stop.
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