US Equities fell for the second consecutive day yesterday as investors assessed corporate earnings and speculated on when the Federal Reserve will cut stimulus. The S&P closed down 0.2% after fluctuating between gains and losses during the day. The market is re-rating expectations to maybe earlier Fed tapering but I still believe that it will be at least March before Tapering will begin. Even though the Jobs data is slowly improving, the pace of improvement has slowed and the quality of job growth is not that great. The S&P is trading at 16 times it’s companies estimated earnings which is the highest valuation since the start of 2010 according to data complied by Bloomberg. Yesterday the VIX (Volatility Index) rose 1.2% to 13.81 but still ended the month of October down 17%.
This morning on the economic front we have UK Manufacturing PMI. We have no data of note from the Euro-Zone whilst at 12.30 pm we have US Manufacturing PMI followed at 2 pm by the latest ISM Manufacturing data. Later this afternoon the Fed’s Bullard is due to speak on the economy.
December S&P 500
The S&P worked well yesterday as shortly after lunch the market traded down to my 1753 buy level before having a nice rally and I was able to cover my position at 1760 and I am now flat. With today been the beginning of a new month I would expect new monies to come into the stock market and I will still be a seller on any rally to 1765/1770 with a 1774 stop which is just above Wednesday’s high. I will still be a small buyer on any dip to 1748/1752 with a 1745 stop.
Euro/USD
My Dollar Index long position is really working now and as we closed above 80.00 I have raised my stop to 79.75 on my 79.15 long position. With the Index back at 80.30 I will raise my stop further to 80.00, I will also be a small buyer of the Euro/USD from 1.3530/1.3560 with a 1.3510 stop.
December DAX
My long Dax position from Wednesday at 8990 also worked well yesterday as the market had a nice rally and I was able to cover my position at 9040 and I am now flat. I still like the Dax as long as we stay over 8930 and today I will be a small buyer on any dip to 8960/8990 with a 8925 stop.
December FTSE
The FTSE also worked well as shortly after lunch the market followed the S&P lower and traded down to my 6700 buy level before having a nice rally and I was able to cover this position at 6730 and I am now flat. Today I will still be a buyer on any dip to 6680/6700 with the same 6660 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
I found the Dow hard to trade over the last few days and having watched my long 15600 position fluctuate between profit and loss all day I covered this position for a small profit at 15620 and I am now flat. The Williams Index for the Dow has started to turn down and today I will be a small seller on any rally from 15650/15680 with a 15710 stop. I do not want to be long the Dow at this time as the market has now moved up nearly 1000 points from its low earlier in October.
December BUND
The Bund continues to trade higher as expected but unfortunately I have not been on this trade but at least I have not been short. The Bund is back trading over 142.00 and today I will be a small seller on any further rally to 142.40/142.70 with a 142.85 stop. Today I do not want to be long the Bund.
Gold Rolling Contract
By the time I posted yesterday morning Gold was trading at my 1334 buy level and quickly stopped me out of this position at 1328 and I am now flat. As I mentioned yesterday a break and close below 1330 will be short term bearish. Today I will be a small seller from 1330/1336 with a 1342 stop. I do not want to be long Gold at this time.
Silver Rolling Contract
My good run in Silver came to an end yesterday as shortly after I posted, Silver was trading at my 22.25 buy level before, like Gold, I was quickly stopped out of this position at 21.95 and I am now flat. I still prefer Silver to Gold going forward and today I will be a small buyer of Silver on any dip to 21.20/21.50 with a 20.85 stop.
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