Shortly after I posted yesterday morning Greece announced that it had made a formal request to its European creditors for a six month extension of its bailout that runs out at the end of this month. There are mixed reports about how Germany might view this application but nothing definite at this stage.
The data flow was limited yesterday. US Jobless Claims was probably the pick, pushing back down a little further in the February US Payrolls survey week, suggesting a still strong labour market. Oil prices are lower again for the day, but have recovered mid-session after the Weekly Crude Oil Inventory build proved to be less than some expected. The EIA reported that crude inventory rose 7.72mb to a record 425.6mb.
In FX markets, the US Dollar has recovered its mojo after Wednesday night’s FOMC inspired sell-off. Likewise, US Treasury Yields have backed up modestly, as they remain relatively impervious to continued US economic data disappointments, such as the Philly Fed Index’s shortfall yesterday which printed 5.2 versus 9.0 expected.
In a letter to its European creditors, Greek Finance Minister Varoufakis has formally requested a six-month extension of the Master Financial Assistance Facility Agreement, and which upon reading in its quite rather legalistic construction seems to express a wish to comply with its existing conditions or at least work toward a solution rather than blanket rejection of completely re-writing the conditions. Wire reports suggest that so far Germany’s reaction has been mixed.
On a more positive note, one report suggested it seemed to be the basis for negotiations, according to unnamed German Government officials. Chancellor Merkel spoke with Greek PM Tsipras yesterday afternoon for just under an hour and Tsipras later tweeted that there was a positive tone and interest in finding a mutually beneficial solution.
This morning on the economic front we already have had German PPI which came in weaker than expected at -0.6 versus -0.4. Germany and the Euro-Zone will release its Services PMI and Manufacturing PMI at 8.30 am and 9.00 am respectively. This is followed at 9.30 am by UK Public Finances and Retail Sales. Finally at 2.45 pm the US will release its US Manufacturing PMI.
March S&P 500
The S&P plan worked really well yesterday as shortly before lunch the S&P spiked higher to my 2098 sell level before having a nice sell-off on weaker than expected economic data which enabled me to cover this position at 2090 and I am now flat. The S&P traded in a very narrow range as the market awaits the Greek talks outcome but there is no doubt the market is having trouble so far in breaking out above the now key 2100/2105 resistance level. Today I will again be a small seller on any spike higher to 2099/2104 with a 2107 stop. Again if I am taken short and subsequently stopped out of this position I will use my 5 handle rule to go short again with a stop above whatever new high is printed. I will leave my buy level unchanged at 2078/2083 with a 2074 stop.
EUR/USD
The Euro is opening lower this morning as nervousness about the Greek outcome persists. The weaker than expected German PPI Report is also not helping the Euro and after I posted yesterday morning the Euro traded lower to my 1.1360 buy level. I am still long and I will leave my stop the same at 1.1315 which is just below the early morning low. If I am stopped out of this position I will be a more aggressive buyer on any further dip to 1.1240/1.1280 with a 1.1195 stop.
US Dollar Index
This morning the Dollar Index has again traded higher to my 94.60 sell level. I am still short and I will leave my stop the same at 95.10. For the last two weeks the Dollar has been stuck in a 93.80/95.20 trading range and until we get some news of consequence this trading range looks like it will hold for the time being.
March DAX
The DAX plan also worked well yesterday as after I posted the DAX spiked higher to my 11020 sell level before having a nice sell-off after lunch which enabled me to cover this position at 10960 and I am now flat. The DAX is extremely news sensitive at this time and for this reason is more volatile than the other major Indices. Today I will again look to go short the DAX on any move higher to 11040/11090 with a 11120 stop. As I do not want to chase this market higher I will leave my buy level unchanged at 10795/10835 with a 10750 stop.
March FTSE
No change as I am still long the FTSE from Wednesday at 6835 with the same 6795 stop on what was a very narrow trading range yesterday. I will also still look to go short on any move higher to 6895/6915 with a 6930 stop.
Dow Rolling Contract
The Dow plan also worked well yesterday as the idea of selling rallies continues to pay dividends. After I posted the Dow rallied to my 18040 sell level before trading lower on the weaker than expected US economic data releases which enabled me to cover this position at 17980 and I am now flat. Today I will again look to go short on any move higher to 18050/18100 with an 18130 stop.
March BUND
No change as I am still a small seller on any further rally to 158.90/159.20 with a 159.40 stop.
Gold Rolling Contract
My long 1208 Gold position taken after the release of the FOMC Minutes on Wednesday worked out well yesterday as after I posted Gold spiked higher which enabled me to cover this position at 1218 . This made up for Wednesday’s loss when I was stopped out of my 1206 position at 1199 and I am now flat. Today I will again be a small buyer of Gold on any further sell-off to 1190/1198 with a 1183 stop.
Silver Rolling Contract
No change as I am still a buyer from 16.10/16.40 with the same 15.70 stop. As long as Silver can hold the January low at 14.49 Silver is fine but a break and close below here opens up the possibility of a move lower to 12.20.
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