We have seen some profit taking and position unwinding ahead of today’s Jackson Hole Fed Symposium which has left Bond Yields a little lower and the US Dollar lower. Equities continued their cautious upswing with the S&P closing up 0.3% to post yet another record close. Pretty much everything else is being ignored ahead of such a well anticipated event and this morning is likely to remain very quiet ahead of Ms Yellen’s speech at 3 pm today.
We did get some data yesterday with positive headlines in the US and in particular, the Philadelphia Fed PMI was exceptionally strong. However despite despite the highs in the headline number the details were actually very soft as Orders and Employment were down. More encouraging was the pick-up in Existing Home Sales which followed on from the positive Housing data earlier in the week. Finally Jobless Claims continue to trend downwards showing good news on the labour market front.
It wasn’t so positive in Europe though with the Markit Flash PMI coming in lower than expected. Both Services and Manufacturing were lower than projected however it was Manufacturing that was the main drag. In the UK Retail Sales were better than expected.
The only economic data of note today is Ms Yellen’s speech at 3 pm. Markets have been waiting for today for some time now. This speech has been known to signal the Fed’s intentions and at the very least, guide market direction with regards to policy. Either way 3 pm today should lead to a lot of two-way volatility.
September S&P 500
Finally the day of reckoning has come for the S&P with Fed Chair Janet Yellen’s Jackson Hole speech and as expected the S&P closed at yet another record high yesterday. It is amazing that whenever the Fed Chair is due to speak or we have a major announcement/FOMC Meeting the market nearly always rallies into the event. After I posted and shortly after the US released its latest economic data the S&P finally traded up to my 1992 sell level. I am only short in small size and given how overbought this market is trading I am going to stay short with the same 2003 stop. If I am stopped out of this position I will again be a seller on any 5 handle drop with a stop put in just above whatever new high is made. For new members please read about the ‘5 Handle Rule’ on the Education page. I am not going to chase this market higher from here and I will leave my buy level the same at 1971/1976 with a 1967 stop.
Euro/USD
No change as I am still a small seller on any rally back to 1.3320/1.3350 with the same 1.3375 stop. My only interest in buying the Euro is on a dip to 1.3180/1.3210 with a 1.3160 stop.
US Dollar Index
Having taken profit on my long Dollar position earlier in the week I am still flat. Today I will still be a small buyer on any retracement to 81.60/81.80 with the same 81.35 stop.
September Dax
Unfortunately the Dax started to rally from my buy area before I posted yesterday morning and eventually the market rallied to my 9405 sell level. As I am currently short the S&P and the Dow I decided to cover my Dax position, before the New York close, at 9390 and I am now flat. As I mentioned yesterday the Dax has a lot of catching up to do especially with the main US Indices at or near record levels.
Today I will be again be a small seller on any further rally to 9440/9470 with a 9510 stop. Given the importance of today’s speech by Fed Chair Yellen I will leave my buy level the same at 9270/9300 with a 9240 stop
September FTSE
The FTSE has struggled to trade higher over the last couple of days with the market not helped by the split decision from the MPC Members as outlined in Wednesday’s Bank of England Minutes. As the UK Markets are closed this coming Monday for the Bank Holiday I will leave my buy level the same at 6695/6725 with the same 6665 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
As expected, the Dow traded up to my 17050 sell level. I am still short but only in small size and today I will raise my stop on this position to 17110. If I am stopped out of this position I will be a more aggressive seller in front of 17150 with a 17210 stop. The Dow is still trading 100 points below its July high despite the S&P closing at yet another record, so as long as we stay below 17150 we still have negative divergence between the two main indices.
September BUND
No change as I am still short in small size at 150.20 with the same 150.75 stop. Today I will also be a buyer of the Bund on any dip to 149.40/149.70 with a 149.20 stop
Gold Rolling Contract
After I posted yesterday morning Gold continued its sell-off and finally hit my 1283 stop on my long 1294 position as it fell nearly 2% on the day. It finally traded down to my 1274 buy level. I am still long and I will leave my stop the same at 1261. If it rallies from here I will look to cover my position in front of 1285 as the 1285/1290 should be strong resistance despite the fact that Gold is oversold at this time.
Silver Rolling Contract
Silver held in a lot better than Gold yesterday and I still plan to buy on any dip to 19.00/19.25 with the same 18.75 stop.
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