Equity markets were down sharply yesterday after a Malaysian Airlines jet was shot down in the Donetsk region in Eastern Ukraine. The jet was travelling from Amsterdam to Kuala Lumpur with 295 people on board. Pro-Russian rebels have been blamed, but they have denied responsibility. Markets were already in negative territory after the EU had imposed sanctions on Russian Banks earlier in the session, whilst late in the US session equities extended their losses on news that Israeli PM Netanyahu had instructed the Military to begin a ground offensive in the Gaza Strip.
The Dow and S&P closed down 0.9% and 1.2% respectively whilst European markets averaged a 0.9% decline. US Treasuries rallied with 10-Year Bond Yields down 7 basis points to 2.46%. The impact on Currencies so far has been limited whilst Gold surged, as expected, on the news.
Amid the geopolitical developments there was very little attention paid to the very mixed US economic data. There was some good news with the Weekly Jobless Claims coming in at 302k versus 310k expected and the Philly Fed Survey at 23.9 in July against a 16.0 expectation. However Housing data was weak with Housing Starts falling a further 9.3% in June and Building Permits falling 4.2%. The decline in Housing Starts was mainly in the south which saw a 29.6% fall, with bad weather partly to blame. The other three Regions all rose in the month.
This morning on the economic front we have no data due from the UK or the Euro-Zone. At 2.55 pm we have the University of Michigan Consumer Confidence Index.
September S&P 500
The S&P had its worst day in over three months with the market closing down 1.2% following the shooting down of the Malaysian Jet however, even before the incident, it had already traded in a wide range.
Shortly after I posted it traded down to my 1963 buy level before having a nice rally to 1976 after the US Markets opened which enabled me to cover my long position at 1969 and I am now flat. The S&P has been very weak in the overnight session, trading down as low as 1944.50 before having a small re-bound this morning.
Today is Nominal Expiration for the Options Contracts in the US giving me reason not to short the market today unless we get a good rally first. Today I will be a small buyer on any dip to 1943/1948 with a 1939 stop. My only interest in selling the market is on a rally to 1969/1973 with a 1977 stop which is just above yesterday’s high. The 1945/1950 area is good support and if we break and close below 1940 it will be short-term bearish.
Euro/USD
The Euro has held up well considering what happened yesterday. After I posted it finally traded down to my 1.3515 buy level and I will leave my stop the same at 1.3465 on this position as 1.3480/1.3500 is good support. In addition, it continues to trade at the bottom of its Bollinger Band and Williams Index at this time. To show how important these technical signals are please look at the Daily Chart for the Dax and Crude and see the powerful move that these signals generated over the last week.
US Dollar Index
No change as I m still a buyer on any dip to 80.00/80.25 with a 79.70 stop. I am not chasing the Dollar higher from here as we are trading at the top of the Bollinger Band.
September DAX
The Dax plan also worked well yesterday as shortly before lunch it traded down to my 9770 buy level before following the US Markets higher shortly after the US open which enabled me to cover this position at 9820 and I am now flat. Despite the jet tragedy yesterday the Dax in my opinion is holding in well making me reluctant to short the market at this time. Today I will be a small buyer on any dip to 9660/9690 with 9615 stop which is just below last week’s low.
September FTSE
After I posted yesterday morning the FTSE traded down to my 6710 buy level before quickly stopping me out of this position at 6680 and I am now flat. Yesterday was another great example of how important it is to have stops in the market. Even though the FTSE is now trading below 6710 it is so far holding above the 6660 pivot point which is preventing me fro shorting the market. I am going to stay flat unless we break 6710. If we break this level I will again be a small buyer with a 6675 stop.
Dow Rolling Contract
The Dow missed my 17160 sell level by 10 points before trading over 200 points lower and I am still flat. Thankfully we have not been long the market given how overbought this market is trading on a Daily, Weekly and Monthly basis. Yesterday the Dow was trading at the top of its Bollinger Band and Williams Index gioving another good sell signal. Today I will be a small seller on any rally to 17060/17090 with a 17130 stop. I still do not want to be long the Dow at this time.
September BUND
The Bund also finally traded up to my 148.40 sell level. I am still short as this market is extremely overbought and also trading at the top of its Bollinger Band. I will leave my stop the same at 14875 on this position.
Gold Rolling Contract
My long Gold position worked out well yesterday although it took tragic circumstances for this to happen. After the Malaysian Jet was shot-down Gold spiked to my 1317 sell level which enabled me to cover my long 1303 position from earlier in the week and I am now flat. Today I will look to buy Gold again on any further dip to 1302/1308 with a 1297 stop.
Silver Rolling Contract
Silver also spiked higher yesterday which enabled me to cover my long 20.70 position at 21.15 and I am now flat. Today I will again be a buyer on any further dip to 20.65/20.95 with a 20.25 stop.
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