Weak data released in the US has taken its toll on risk assets with the S&P 500 now at least taking a breather if not entering a pull-back phase. Price action yesterday saw the S&P down by about 0.5% after rising modestly the day before, although the market looked to be a bit ‘toppy’ in Wednesday’s trading after the weak data released that day (Empire Survey, Industrial Production and PPI). The US Dollar fell yesterday on the latest poor economic statistics but hints of a cut-back in the Feds QE programme as early as this summer, from San Francisco’s Fed Member John Williams (not an FOMC voter), set the hares running and the US Dollar has rebounded to where we were yesterday morning. Market chatter is also asking the question whether the Fed will be able to control the pace of the sell-off in US Bonds even if it is cautious about removing QE. In any case Bonds have rallied in the past two days with 10 Year Treasuries falling from a high of 1.98% to 1.88% presently.
The Australian Dollar is the weakest performer on currency markets with the AUD/USD now below .9750 as more and more hedge funds cut their Aussi exposure. The economic data from the US was very weak yesterday with the Weekly Jobless Claims rising to 360k from 330k expected, whilst Housing Starts came in at 853k versus 980k expected. On the economic front today we have no news of note from Europe whilst at 1.30 pm we have US Leading Indicators followed at 3.00 pm by the University of Michigan Survey. Later on, the Fed’s Evans speaks on the economy in Chicago.
June S&P 500
The S&P worked well yesterday as after New York opened we traded up to my 1657 sell level with a 1658.75 high. The market traded around this level for quite a while before having a nice sell-off in the last hour of trading and I was able to take profit at 1650 and I am now flat. The economic data released yesterday was very soft and were it not for QE this market would be in a lot of trouble. We have now tested the 1658 resistance level three times in the last two days and maybe finally the S&P is taking a breather. Today I will be a small seller again from 1653/1658 with a 1660 stop. I will still be an aggressive seller on any rally to 1669/1674 with a 1682 stop and I will also be a small buyer on any dip to 1640/1644 with a 1638 stop. A break and close below 1630 will be short term bearish and I will be a seller on this break with a 1636 stop.
Euro/USD
The Euro worked really well as we traded up to my 1.2930 sell level with a 1.2931 high. For once I was lucky on a decent fill and I was able to take profit last night at 1.2880 and I am now flat. The Euro is soft this morning following the sell-off in the Aussi Dollar and Gold. I will leave my buy level the same as yesterday morning from 1.2750/1.2780 with a 1.2730 stop. I will also look to sell any rally to 1.2920/1.2950 with a 1.2970 stop.
June DAX
The Dax also worked well yesterday as I was able to take profit at 8330 on my 8370 short position before it rallied back to my 8390 sell level with a 8404 high. I took profit on this position at 8350 last night and I am now flat. I still believe the Dax is trying to put in a top in the market and I will be a small seller again today on any rally to 8375/8400 with an 8415 stop. I do not want to be long the Dax at this time.
Nasdaq 100
The Nasdaq rallied to my 3015 sell level. I am still short and I will leave a 3020 stop on this position which is just above the high made yesterday.If I am stopped out I will look to reset my short position on any further rally to 3030/3050 with a 3070 stop.
June BUND
The Bund has continued to rally off the very important 144.20/144.40 support zone. If the Bund continues to rally I will be a small seller from 14560/145.90 with a 146.10 stop.
Gold Rolling Contract
Gold is still trading heavy again this morning and my only interest is to buy the market aggressively on a spike lower to 1280/1310 with a 1265 stop.
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