A fairly big slug of US economic data after I posted yesterday – admittedly not all of its top drawer – collectively added up to progress, on the real economy at least, towards the commencement of Fed tightening in coming months. The weekly jobless claims number – and their current trend – fell to a level fully consistent with 250k+ monthly payrolls gains. The leading economic indicator rise by a stronger than expected 0.7%. And the Philadelphia Fed Business Outlook came in at 15.2, well up on May’s 6.7 and the 8.0 exposed.
For anybody following my New Platinum Service it made 145 points yesterday, 255 on Wednesday, 195 on Tuesday and 285 points last Monday. It generated a total of 600 points and 955 points over the previous weeks respectively.
The counterpoint was the May CPI release, which shows the core annual rate slipping back to 1.7% from the 1.8% seen in both March and April. However, after the ‘low 0.3%’ Monthly print last month and which cause a lot of market volatility (higher bond yields and a stronger US dollar) yesterday’s was a ‘high 0.1%’ Monthly print (0.145%). Annualised, core inflation is continuing to run close to 2.5% so far this year. This, together with the aforementioned better activity readings, meant that the data failed to correct the rising trend in US Treasury yields underway ahead of the data. Okay, so that was your Greece-free paragraph for the day.
Much of the volatility in market elsewhere (and also in part in US Treasuries) stemmed from the latest outpourings of red headlines on Greece. Soon after the European Markets opened yesterday morning, the ‘word’ was that Germany was close to folding and that a deal offering Greece debt relief was being drafted. Another was that the current Greek aid package was going to be extended until year-end. EUR/USD made a new 1-month high on these headlines, jumping to 1.1436. Fast forward six hours, and we learn that the meetings of Euro group Finance Ministers underway at the time had ended without any progress, and that EU President Donald Tusk had called a meeting of EU Leaders (prime ministers – not just Finance Ministers) for Monday evening (7pm Brussels time). This is now looking like the forum in which either an outline deal on Greece will be struck that will allow the ECB to keep the banking system afloat while detail are thrashed out, or a political decision is taken at the highest level to effectively boot Greece out of the club.
In the meantime, we’ve just learned that the ECB is holding an unscheduled call on Friday to discuss the Greek ELA situation. The meeting look to have been convened following news that deposit outflow from the Greek banking system have been well over €1bn in the past few days. This latter news has served to partially reverse some of the earlier back up in US Treasury yields and strength in the EUR. The other strong performer in Currencies has been Sterling drawing some support from an upside on UK Retail Sales which printed +0.2% versus –o.2% expected, and some hawkish comments from MPC Member Kristen Forbes.
This morning on the economic front we have Euro-Zone Current Account at 9.00 am. This is followed at 9.30 am by UK Public Finances. We have no US data due to be released today while at 3.00 pm we have the UK CBI Trends Total Orders. Finally at 5.00 om the Fed’s Mester will speak on Monetary Policy at 5.00 pm in Pittsburgh at a Fed Policy Summit.
September S&P 500.
The idea of buying every dip in the S&P certainly worked very well all week. However yesterday the S&P just missed my 2081 buy level by 1 Handle before going on to have a massive 38 Handle rally which is very frustrating. Interestingly the Cash S&P closed in the key 2120/2126 resistance level and a break and close above here could be potentially very bullish. As I have mentioned nearly every month since I started writing Tradernoble please do not be short in the week of a Fed Meeting and especially one which contains a Quarterly Expiration as we have with the June Contract going off the boards at 2.30 pm this afternoon. Today given the massive move up yesterday and yet again every ‘bear’ getting killed for been short I am going to raise my buy level to 2103/2109 with a 2098 stop. Given the fact that we have the June Contracts expiring later today, I do not want to be short the market at this time.
EUR/USD
No change as I am still flat the Euro. However given my real concern for the US Dollar going forward I will raise my buy level slightly to 1.1300/1.1340 with a 1.1270 stop. I am only a buyer in small size especially with the Finance Minister meeting in Brussels today.
September Dollar Index.
Today I will lower my sell level in the Dollar to 94.60/94.90 with a 95.20 stop.
September DAX
The DAX plan worked very well yesterday as the market traded lower in mid-morning to my 10830 buy level before having a near 350 point rally which enabled me to cover this position way too early at 10890 as outlined in Platinum Service and I am now flat. Thankfully we were not short this market and again as I have mentioned all week I still expect a deal to get closed with Greece as the ramifications of a Greek exit are just massive. Today my only interest in buying the DAX is on a dip to 11010/11060 with a 10970 stop. However as I have had a very good week I will only trade in very small size.
September FTSE
My FTSE plan also worked very well yesterday as shortly after the UK Markets opened the FTSE traded lower to my 6580 buy level before having a nice rally which enabled me to cover this position at 6620 as again outlined in my Platinum Email and I am now flat. Today I will again be a small buyer on any dip to 6600/6630 with a 6565 stop which just below yesterday’s 6570 low print. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
Just like the S&P above the Dow just missed my 10820 buy level by 35 points before going on to have a massive 330 points and I am still flat. Thankfully we had no sell levels even though we have a confirmed new Hindenburg Omen on the clock. Today I will raise my buy level to 17990/18040 with a 17930 stop. I will also be a small seller on any further rally to 18210/18250 with an 18310 stop.
September BUND
I am still flat the BUND and I am going to stay flat as I do not see a good risk/reward opportunity at this time. Technically the BUND looks good after its recent run higher, but I am scared to go long given the amount of positions offside at higher levels. I will take another look on Monday.
Gold Rolling Contract
I am still flat Gold as the market tries to break higher. Today I will raise my buy level to 1184/1192 with an 1178 stop. Remember a break and close over 1230 will be extremely bullish.
Silver Rolling Contract
Finally my long 15.95 Silver position worked out as initially Silver followed Gold higher which enabled me to cover this position at 16.30 as outlined to my Platinum Members and I am now flat. Today I will again be a buyer on any dip lower to 15.80/16.10 with a 15.50 stop.
Recent Comments