Generally positive US Economic data has helped generate a risk positive day to equity markets yesterday as measured by a 1% gain in US Indices and a sharp drop in the VIX proxy measure of risk aversion, which has not led to a weaker US Dollar. The Euro is weaker on the back of the break down in negotiations with Greece two weeks before she faces bankruptcy. The Greek stock market fell another 5% yesterday whilst the bank sub-Index lost 11.7%. In the US the Chicago ISM came in at 51.7 versus 51.0 expected, the Weekly Jobless No. fell to 363K and the ADP Employment came in at +158k against 131k
expected which really helped the US Equity Markets.
The key economic event today is the Non Farm Payrolls report due at 12.30 pm and this is the most important economic news before next Tuesday’s Presidential and Congressional Elections. A strong report would play in favour of Obama’s re-election prospects on top of the boost he already received from Hurricane Sandy. Market consensus is for a fairly anaemic 125k gain and the Unemployment Rate to come in slightly higher at 7.9%
Dec S&P 500
The S&P traded down to my 1402 buy level with a 1401 low and I took a nice gain at 1412 on this position. Unfortunately I went short at 1414 and I was stopped out of this position at 1418. I should not have gone short as I said yesterday I am really bullish of the stock market going forward and I think once we get the Employment No’s and Tuesday’s Presidential Election out of the way, the positive effects of hurricane Sandy will start to kick in. I was in London yesterday and I had meeting with two very respected economists and both are very bullish of the US and European Equity markets going forward.
They both think the US Dollar is going to tank due to the deficit. This morning I am flat ahead of the Non Farm Payrolls and I will react to the news. We still have an open Gap at 1431 from two weeks ago and I still believe we will fill this Gap. I f we get a weak No I will be a buyer from 1409/1413 with a 1405 stop.
Euro/USD
The Euro initially rallied on the back of US Equity market before the Greek new really started to hinder the Euro. I took profit on my 1.2940 long at 1.2980 and I am still flat. As I said last week the Euro has huge support between 1.2770 and 1.2870 and I will look to buy the Euro if we drop into this range. If I am taken long it will be in smaller size as I will have to leave a wider stop at 1.2750.
USD/JPY
The market is finally trading higher and I now have a nice gain on my 7990 long from yesterday morning. I am going to let this position run and I will raise my stop to breakeven. I really believe that the weak Yen story will be the major mover for the next 12 months.
Gold – Rolling Contract
I am very surprised that Gold is trading so heavy and as a result I am going to lower my buy level to 1688/1695 with the same 1678 stop. One of the people I met yesterday is convinced Gold will be $2000 next year.
Dec FTSE
The FTSE was trading very heavy yesterday morning and just missed my 5750 buy level before it start to rally by 80 points. Today I will raise my buy level to 5770/5790 with a 5758 stop.
Dec BUND
The Bund traded up to my 141.80 sell level and due to the Non Farm Payroll Nos out today I do not want to have a position into these Nos and I have cut my position this morning at 141.75 and I will stay flat. I will take another look at the Bund on Monday.
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