While European Equities closed higher yesterday in what turned out to be one of the wildest trading sessions of the year to date, the US market opened down and it’s remained that way into the last hour of trade where the Dow closed 250 points lower at 17,495. The 15 minutes post the Cash Equity Markets closing saw an acceleration lower to such an extent that the Dow is now lower again by a further 120 points. Energy and Material sector stocks – commodities – have again been the centre of selling with a further push lower in the price of Oil, Base metals, and Gold, helped along by still evident support for the USD, evidence of “risk-off” with some support on the day for US Treasuries, yields easing. For once, iron ore was not part of the selling, inching higher by $0.25, to $US39.43/t.
For anybody following my new Platinum Service it made 145 points yesterday and is now ahead by 1610 points for December. The previous six months saw gains of 1510, 1600, 2833, 2195, 1810 and 3045 points respectively. If anyone is interested in my Platinum Service please ckeck out the Membership Link on my tradernoble.com website.
Currency markets played to script, the commodity-related group coming in for more selling with the A$ at the forefront. The AUD/USD has traded yesterday with 70 handle and this morning sits just above $0.71. Other commodity-related currencies to lose ground against the USD (that’s sitting at its cyclical high) include the NZD (-0.78%), CAD (-0.91%), and NOK (-0.76 %).
Not even a very strong print on UK Retail Sales could lift Sterling, also succumbing to support for the USD. Not even UK retail sales in November rising an exceptionally strong 1.7% could do the trick, increasing three times expectations. Adding to the positive UK data surprise list, the CBI trends survey for December was not quite as negative as feared, though there’s no denying that UK manufacturers have found business conditions tougher this year.
Other mainstream data released was not strong enough in either direction to swing markets either way. The December Philly Fed survey revealed still weak conditions for US manufacturers, but the labour market seemingly kept its mojo through December with jobless claims 271K in week ended 12 December.
Overnight was the news from the Bank of Japan who by an 8/1 vote have agreed to conduct Money Market Operations so that the Monetary base will increase at an annual pace of 80 Trillion Yen. In a press conference currently ongoing the BoJ Governor Kuroda said that they want to lower the whole yield curve and that they did not wait for the Fed to act. Initially Equity markets soared and the Yen weakened but this has changed dramatically in the last hour with the Nikkei closing down 2% to sit below 19,000. The $/Yen traded as high as 123.50 but got slammed and is now trading at 121.80.
This morning on the economic front we have the ECB Current Account and speech from Nowotny at 9.00 am. At 1.30 pm we have Canadian CPI. Next we have the US Markit PMI at 2.45 pm. Finally at 4.00 pm we have the Kansas Fed Manufacturing Index.
The Fed’s Lacker will speak on Economic Outlook at 6.00 pm.
March S&P 500
Apart from the ‘Flash Crash’ on August 24th this week has seen the wildest swings in trading all year which is not entirely unexpected when we are facing the third largest Quarterly Expiration on record. Not for one minute when I said to go short the March S&P at 2072 yesterday would we be trading 60 Handles lower this morning as Monday/Tuesday’s ‘Open Gap’ now get filled. Yesterday after I went short at 2072 I covered this position at my 2066.50 T/P level and hopefully you were able to do better. The main reason that I covered is that so many of my position calls are getting hit at nearly the same time which just shows how volatile these markets are when most traders are suppose to be celebrating the festive season. Subsequently the S&P traded lower to my 2046 buy level and as I did not like the price action I emailed my Platinum Members to cut this position at 2047 and I am now flat. Today is one of the most difficult trading days to call the S&P as although the December Contract expires at 2.35 pm the Options Contracts do not expire until 9.00 pm thus adding to the volatility and uncertainty. To compound matters after the Options expire the last 15 minutes for the futures markets can be even more volatile. Therefore today is a trading session for light positions. My only interest in the S&P today is to be a buyer on any dip lower to 1998/20006 with a 1991 stop especially as we have such a large ‘Down Gap’ this morning. I still do not want to be short the S&P today.
EUR/USD
My Euro plan worked very well yesterday as the Euro traded lower to my 1.0805 buy level before having a nice rally to 1.0870 which has enabled me to cover this position at my 1.0835 T/P level and I am now flat. Today I will again look to buy the Euro on any dip lower to 1.0725/1.0775 with a 1.0695 stop. I still do not want to be short the Euro at this time.
March Dollar Index
At the same time I went long the Euro the Dollar hit my 99.30 sell level. Thus I emailed all my Platinum Members to exit this position at 99.25 and I am now flat which is frustrating when you see the Dollar trading at 98.75 this morning. Today I will again look to go short on any move higher to 99.40/99.70 with a 99.95 stop.
March DAX
The DAX plan has worked out very well for anyone who bought the Market in my buy zone this morning with the DAX trading down to 10620 shortly after the open and is now trading at 10680. If you did buy the market I would cut your position here and T/P especially as I would expect more volatility ahead of the December Contract expiring later this morning. Today I will be a buyer on any dip lower to 10570/10620 with a 10530 stop. I still do not want to be short the DAX at this time.
March FTSE
My FTSE plan did not work out as shortly after the market traded lower to my 6060 average buy level I was stopped out of this position near the New York close at 6025 and I am now flat. I am still expecting a ‘Santa Rally’ in the FTSE ahead of year end and today I will look to buy the market again on any dip lower to 5980/6020 with a 5955 stop.
Dow Rolling Contract
I cannot believe that we nailed the high of the Dow yesterday at 17815 which enabled me to go short at my 17810 sell level to see the Dow trade 500 points lower with a 17315 low print earlier this morning. Unfortunately I was wimp and covered my short position at 17770 and I am now flat. The main reason as outlined above is the open interest in the December Contract is still huge so literally anything can happen ahead of the two expirations at 2.35 and 9.00 pm today. Given the fact that we have such a large ‘Down Gap’ from last night’s cash closing at 17495 I have bought the Dow in small size at 17340. I will leave a stop at 17285 on this position which is just below the low made earlier. Today given the extent of yesterday’s move lower I do not want to be short the Dow at this time.
March BUND
The BUND is opening higher this morning on the back of the weaker equity markets. I am still flat the BUND and today my only interest in selling the market is on a further rally higher to 159.20/159.50 with a 159.70 stop.
Gold Rolling Contract
My Gold plan worked well yesterday despite the awful price action with the market trading lower to my 1050 buy level. Overnight Gold has traded higher to just below 1058 and I have cut this position at 1054 and I am now flat. The main reason that I cut my Gold position is I prefer to be long Silver which is less volatile. Today I will agin look to buy Gold on any further dip to 1036/1043 with a 1029 stop which is just below the 2008 low at 2032 which should act as strong support initially.
Silver Rolling Contract
No change as I am still long at 14.00 with the same 13.55 stop.
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