Though the likes of the Turkish Lira, Indian Rupee, Indonesian Rupiah are weaker again over the last 24 hours there has not been the same severe stress in emerging markets that we saw mid-week. Better economic data out of Europe, and to some extent from the US, has also helped to support developed world equity markets. Even the three hour closure of the Nasdaq because of a computer malfunction failed to have a negative impact on prices across the exchanges that remained open.
Although France disappointed, German and the broader Euro-Zone PMI”s all exceeded expectations and improved quite significantly on the final July readings with the Euro-Zone Composite Index coming in at 51.7 versus 50.5 last month Euro-Zone indices all posted gains of at least 1% with Spain the strongest at +2%. The Weekly Jobless Claims in the US came in better than expected and the 4 Week Average is now down to 330k which is the lowest level since September 2007 and consisted with downward progress on the unemployment rate in the coming months.
Today is another busy one for economic data as this morning we have UK GDP and the Index of Services followed by German GDP and Euro-Zone Consumer Confidence. Later from the US we have New Home Sales.
September S&P 500
Yesterday, on foot of the release of the Euro-Zone PMI”s, the S&P followed European Indices higher. It traded up to my 1654 sell level and then had a small sell off on the Nasdaq malfunction and I was able to cover this position at 1649 and I am now flat. The two key levels for the market are 1630 on the downside and 1660 on the topside and a break of either of these levels will lead to an acceleration in the S&P. Today I will be a small seller from 1653/1658 with a 1661 stop. I will also be a small buyer on any dip to 1642/1646 with a 1639 stop. If I am taken long and subsequently stopped out I will be a more aggressive buyer in front of 1630 with a 1627 stop.
Euro/USD
The Euro continues to frustrate traders as despite the very good economic data from Europe the Euro was unable to hold onto its gains and is still trading at the same price as it was yesterday morning. Today I will be a small buyer on any dip to 1.3290/1.3310 with a 1.3270 stop. I do not want to be short at this time.
September DAX
The DAX plan worked well helped by the better PMI data from Germany and the Euro-Zone and I was able to take profit at 8350 on my 8260 long position taken yesterday morning and I am now flat. As I mentioned over the last few days the DAX continues to outperform the other markets especially the S&P and the FTSE and today I will raise my buy level to 8320/8340 with a 8295 stop. I still do not want to be short the DAX at this time.
September FTSE
The FTSE also worked well yesterday and I was able to cover my 6380 long position taken yesterday morning at 6440 and I am now flat. The key level for the FTSE is 6500 and as long as the market can stay below here the FTSE is bearish. The FTSE just missed my 6470 sell level last night with a 6467 high and I am still flat. Today I will be a small buyer on any dip to 6370/6390 with a 6340 stop which is below the low made early yesterday morning and I will leave my sell level the same at 6470/6500 with a 6510 stop.
10 Year Treasury Note
Shortly after the US market opened the Treasuries had a small rally and I was able to cover my 124.20 long position at 124.50 and I am now flat. I still expect the market to make a bottom somewhere in the 123.00/124.00 support zone and I would expect a meaningful rally from this area over the next few weeks. Today I will lower my buy level to 123.50/123.80 with a 122.80 stop.
Gold Rolling Contract
Gold also worked well yesterday as we had a nice rally off my 1355 buy level and I was able to cover this position at 1370 and I am now flat. As long as Gold can stay over 1350 this market is bullish. Today I will raise my buy level to 1354/1360 with the same 1645 stop.
Silver Rolling Contract
No change as I am still a buyer on any dip to 22.30/22.60 with the same 22.25 stop.
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