Yesterday was a very quiet trading session for markets as news content was light and most moves were small. The US equity markets were lacklustre, etching out a very small decline and seeing small but mixed performances across Europe in the markets that were open despite the May Day Holiday. However the US Bond market, particularly the long-end, showed a relatively large move lower in yields.
The US ISM was perhaps the most important data released where the headline was positive, rising 54.9 versus 53.7 last month. The commentary from production managers was very good although the details were mixed with employment up solidly, orders were flat and production a little lower. On balance, it suggests enough for a pick up in US GDP but perhaps not enough to achieve the Fed’s target of 3% year on year on year in 2014 after a weak first quarter.
The UK data was universally good and enough to increase talk about a ‘bubble’ developing in the property market. The Manufacturing PMI was strong at 57.3, up from 55.6 last month, while house prices data was double expectations leading to another rise in Sterling.
This morning on the economic front we have Euro-Zone Manufacturing PMI and Unemployment Rate. This is followed at 1.30 pm by the US Non-Farm Payrolls with the consensus looking for an increase of 215k and the unemployment rate falling to 6.6%, from 6.7% last month. At 3 pm we have US Factory Orders.
June S&P 500
The S&P had one of its quietest trading sessions of the year as the market turned its attention to the Non Farm Payroll data which is due at 1.30 pm today. This is now the key data for the month and the one that has the Fed’s attention as the market looks for an increase of 215k jobs. Despite yesterday being a very quiet trading session the S&P plan worked well as shortly after the US markets opened it traded down to my 1875 buy level with a 1871.75 low before having a nice rally which enabled me to cover this position at 1881 and I am now flat. I am going to stay flat until we get the payroll data and if we get a weak number I will be a small buyer on any dip to 1865/1871 with a 1859 stop. If we get a strong number I will be a small seller on any rally to 1895/1900 with a 1904 stop.
Euro/USD
After I posted yesterday morning the Euro traded down to my 1.3865 buy level. I am only long in small size and I will leave my stop the same at 1.3820 as I still look for it to trade higher especially with US Bond Yields declining.
US Dollar Index
No change as I am still a buyer on any dip to 79.00/79.30 with the same 78.80 stop.
June DAX
I am surprised that the Dax is not higher this morning given how strong the S&P and the FTSE are trading. As I have mentioned over the last few weeks the Dax needs to break and close over 9630/9660 for 2/3 days for me to continue to be bullish this market. Today I will be a very small seller on any rally to 9630/9660 with a 9685 stop. My only interest in buying the Dax today is on a dip to 9430/9470 with a 9395 stop.
June FTSE
After I posted yesterday morning the FTSE traded up to my 6780 sell level. Given that today is Non-Farm Payroll day I have decided to cover this position this morning at 6766 as I want to be flat ahead of this very important economic release. After the numbers are released I will be a seller on any further rally to 6795/6825 with a 6840 stop. I still do not want to be long the market at this time given how strong the resistance is at the 6800 level which could lead to an accelerated move lower.
Dow Rolling Contract
The Dow plan worked well yesterday as shortly after the US markets opened it traded lower to my 16545 buy level before turning around and having a nice move higher which enabled me to cover this position at 16595 and I am now flat. I still like the Dow as I believe the market will eventually break higher through this key 16600/16640 resistance level. Today I will again be a small buyer on any dip to 16500/16540 with a 16460 stop. I still do not want to be short the Dow at this time.
June BUND
The Bund continues its relentless march higher. I am still flat and today I will raise my buy level to 144.10/144.40 with a 144.85 stop on any long position. I will also look to set up a small short position on any further rally to 145.00/145.30 with a 145.50 stop.
Gold Rolling Contract
Gold continues to trade in a very narrow range as the market is trying to make up its mind as to which way it wants to break and I am still flat. Today I will leave my buy level the same at 1258/1265 with a 1249 stop. I still do not want to be short Gold at this time.
Silver Rolling Contract
Unfortunately I was stopped out of my long 19.40 position for a small loss at 18.90 yesterday. I still like Silver especially with the Daily Sentiment Index at such a low level. I have re-bought my Silver position this morning at 18.98 and I will leave a 18.40 stop on this position.
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