After Wednesday excitement, there was a collective deep breath yesterday, with some of the preceding moves reversed. There was little newsflow but what there was allowed for some relaxation of the prior day’s anxiety. Equity markets were particularly pleased with the low inflation, positive employment data; ending the day strongly both in Europe and the US. Yields edged lower consistently in the US, and after a little hiccup in Europe, also ended lower. Commodities were softer too. The USD was one exception – it seems to lose ground no matter what at the moment. Yesterday, it was weak against the EUR, CHF and CHF in particular. The AUD underperformed.
The US data was mixed, although there wasn’t any top tier data. The PPI tends to get interest if it comes ahead of CPI. It was soft. However, the statistics bureau (BLS) noted that the timing of the survey and moves in oil prices was unfavourable, which contributed to the decline. On the other hand, the jobless claims remained encouraging, with the four week moving average at its lowest level since April 2000. That should keep hopes alive for a better payrolls outcome.
In Europe, again, there was little out but the headlines were somewhat hopeful. Greece seems to have acquiesced to privatising the ports and airports. It helps at the margin. While the ECB’s Draghi reminded markets that they would continue with their QE policies ‘in full’ until they achieve their inflation goals. These factors contributed to the non-linear path of the EUR as it ended higher just at the critical 1.1400 key pivot point.
News that there was a limit down move in the Dalian iron ore market yesterday may have contributed.to the Australian Dollar underperforming. While the move is also interesting in the context of the news that China is effectively implementing an ECB like LTRO program to encourage banks to buy local government debt to use as collateral at the PBoC to gain cheap funding. Further China monetary easing is likely now viewed as maintaining the (modest) growth status quo rather than accelerating it – which would benefit Australia. No longer do we automatically have AUD higher on news of China easing.
For the second consecutive trading session we have no Economic data of consequence due from either the Euro-Zone or the UK. At 2.15 pm we have US Industrial Production and this is followed at 3.00 pm by the University of Michigan Consumer Sentiment. Finally at the very late time of 9.00 pm this evening we have the US Net Long-Term Tic Flows.
June S&P
The S&P had a very positive trading session yesterday with the market now testing the key 2118 resistance level. As I have mentioned over the past two weeks that although I am very bearish long-term for the S&P, the price action is very positive currently and that to me it is only a matter of time before this level is taken out with the possibility of one last major move higher to 2190/2210 before we may finally see a down move that lasts for more than a few hours. Very late last evening after I posted the S&P traded higher to my 2117 sell level. As I do not want to be short the market at this time I have covered this position at my entry level and I am now flat. Today I will raise my buy level to 2108/2113 with a tight 2103 stop. If I am taken long and subsequently stopped out of any long position I will be a more aggressive buyer in front of 2094 with a 2086 stop. If The S&P can break and close over 2120 this evening I will then look to set up a more aggressive long position.
Please note that as some of my Members only trade the Cash S&P please adjust the above levels by adding 5.5 handles to the price levels mentioned in my commentary.
EUR/USD
The Euro having made a high at 1.1445 soon after I posted yesterday morning subsequently traded lower to 1.1350 which enabled me to go long the Euro at 1.1375. I am still long and I will leave my stop at a tight 1.1330. If I am stopped out of this trade I will be a more aggressive buyer in front of 1.1280 with a 1.1240 stop. I will also be a small seller on any further rally to 1.1510/1.1540 with a tight 1.1565 stop.
June Dollar Index
No Change as I am still a seller on any rally higher to 94.00/94.30 with a 94.60 stop. I am also a small buyer on any dip lower to 92.40/92.70 with a 91.95 stop.
June DAX
The DAX had a very impressive Key Day Reversal yesterday with the market having just missed my 11210 buy level with a 11220 low before rallying over 300 pints and this trend has continued this morning with the market back above 11620. I am still flat and as I mentioned yesterday that thankfully despite the very strong Euro that I did not want to be short the market at this time. Today I will raise my buy level to 11475/11520 with an 11445 stop. After you have had a 400 point rally in 24 hours it is difficult to chase the market here and it will very interesting to see where the DAX closes this evening especially if the Euro manages to hold above 1.14. My only interest in selling the DAX is on a further rally to 11695/11740 with a 11775 stop.
June FTSE
My long 6680 position from early yesterday morning worked out very well yesterday as after both the DAX and S&P started to rally the FTSE eventually followed suit which enabled me to cover this long position at 6850 and I am now flat. There is no doubt that the 6850/6880 is very strong resistance and as long as this level holds the FTSE should trade higher from here. Today I will again be a small buyer on any dip lower to 6910/6945 with a 6875 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
The Dow plan did not work out so well yesterday as shortly after I posted the Dow traded higher to my 18200 sell level before stopping me out of this position for a small loss at 18250 and I am now flat. This morning the Dow is testing key resistance at 18288 and a break and close above here will be short term bullish as it opens up the possibility of a move higher to 18500. Today I will again be a small seller on any further rally to 18370/18420 with a 18460 stop. Despite the positive price action I do not want to be long the Dow at this time as my strategy of selling rallies with a tight stop as worked very well so far in 2015.
June BUND
My long 152.45 Bund position worked very well yesterday as despite a nice wobble down to 152.05 after I posted the Bund rallied strongly in the afternoon which enabled me to cover this position at 153.00 and I am now flat. Today I will again try the short side on any move higher to 153.70/154.10 with a tight 154.30 stop. I will also be a small buyer on any dip lower to yesterday’s low at 151.95/152.40 with a 151.70 stop.
Gold Rolling Contract
No change as I am still a small buyer on any dip lower to 1202/1212 with a 1190 stop. Remember a break and close over 1230 will be very bullish and opens up the possibility of a move higher to at least 1380/1420 over the coming months.
Silver Rolling Contract
Shortly after I posted yesterday morning Silver traded lower to my 17.10 buy level. I am still long and today I will raise my stop slightly to 16.80. If I am stopped out of this position I will be a more aggressive buyer in front of 16.50 with a 15.95 stop.
Recent Comments