Today is Friday the 13th and the geopolitical news is not good. Tensions and factional fighting have risen in Iraq, pulling in Turkey, Iran and possibly the US. There is also talk of a re-escalation in Ukraine which has damaged Equity markets on both sides of the Atlantic. The US Dollar does not like it much either while Bond Yields are understandably lower. Gold and Oil are also stronger.
The US has refused to rule out airstrikes in Iraq after Sunni insurgents took Mosul. the Government retaliated yesterday while Kurds in the North attempt to take Kirkuk. This deterioration in stability raises concerns not just over regional stability but for markets especially if the US become involved.
In economic news Retail Sales were lower than expected but there were revisions to prior months that did not make it look so bad. On balance the data was just below expectations. Th US Jobless Claims halted their declines as they rose to 317K versus 310K expected which also put equity markets in a sour mood.
In the UK the first signs that the Bank of England’s Governor Carney may be turning as he noted yesterday that they could raise interest rates earlier than markets expected. This was due to concerns about the Housing Market.
This morning on the economic front we have UK Construction Output at 9.30 am. This is followed at 10.00 am by German CPI and Euro-Zone Trade Balance. At 1.30 pm we have US PPI while at 2.55 pm we have the latest University of Michigan Consumer Confidence.
June S&P 500
It looks more likely with each passing day that we may finally have put in at least a temporary top in the S&P at last Monday’s 1959 high with the market at one stage trading under 1925 yesterday before having a rally back into the close in Chicago. The June Contract expires next Friday and traditionally whatever low is put in yesterday/today in the week ahead of expiration is generally the low. The S&P having just missed my 1949 sell level finally traded down to my 1934 buy level before having a brief rally back to 1939 after the US markets opened which enabled me to cover this position at 1938 and I am now flat. The next good support for the market comes in at 1920/1925 and today conscious of next week’s expiration I will be a buyer from 1922/1926 with a 1919 stop. My only interest in selling the market is on a rally to 1940/1944 with a 1947 stop.
Euro/USD
I am glad that I gave the Euro one more day to rally as it had a nice rally after the US stock market sell-off which enabled me to cover my long 1.3535 position from earlier in the week at 1.3570 and I am now flat. Today I will again be a buyer on any dip to 1.3500/1.3530 with a 1.3480 stop which is just below the low made after the ECB Rate cut last week. I do not want to be a seller of the Euro at this time.
US Dollar Index
No change as I am still a small buyer on any dip to 80.20/80.40 with the same 79.95 stop.
June DAX
The Dax just missed my 9995 sell level before trading lower after I posted yesterday morning and I am still flat. As you know I do not like the Dax at these lofty levels but unfortunately the market did not trade as high as my 10215 target level before turning down. Having been stopped out of my Dax/FTSE spread near the highs at 3190 earlier in the week I decided to go back into this spread yesterday in small size at 3110. I will leave a 3200 stop on this position which is just above contract and all time highs.
I will also be a small seller of the Dax outright from 9960/9990 with a 10020 stop. I still do not want to be long the Dax at this time.
June FTSE
No change as I am still long the FTSE at 6840 with the same 6810 stop. I will give this market one more day to rally or else I will stand aside and take another look next week. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
Very frustrating as the Dow just missed my sell level by six points before trading 180 points lower and I am still flat. The Dow should have some good support from 16610/16650 which is where the recent breakout took place from. Today I will be a small buyer from 16620/16660 with a 16570 stop which is just below the high made on Dec 31 2013. Given the fact that next Friday is expiration for the June Contract I do not want to be short the Dow at this time.
September BUND
The Bund plan worked well yesterday as it traded down to my 144.95 buy level and after a nice rally I was able to cover this position near the New York close at 145.50 and I am now flat. I still like the Bund and as I have mentioned over the last few months the fact that German Bond Yields are so low is a warning that the economies are not performing as well as the authorities would lead to believe. Today I will be buyer of the Bund from 145.15/145.35 with a 144.85 stop which is just below yesterday’s low. I still do not want to be short the Bund at this time.
Gold Rolling Contract
The oversold extreme readings in Gold are finally beginning to kick in the last few days with it closing over 1270 in New York last nigh. I am still long from 1250 and today I will raise my stop to 1260 on this position.
Silver Rolling Contract
Unfortunately I do not have a long position in Silver especially with the market continuing to trade higher. Today I will raise my buy level to 19.20/19.40 with a 18.90 stop.
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