Yesterday was a very interesting day with generally better news in the key economic reports in Europe and the US. It was another ‘risk on’ day despite the 11% fall in Apple Shares, with US Treasury Yields rising on the unexpected low number in the US Weekly Jobless Report, whilst in Europe, the preliminary PMI’s were a little higher than expected.European equity markets were helped by the Euro-Zone PMI reading, for January, which came in at 47.5, up from 46.7 the previous month, so still very much in contractionary territory but less so than at the end of last year. The German PMI improved to 48.8 however there was nothing rosy on the economic front in Spain where the unemployment rate lifted from an already staggering 25.02% in Q3 to an even higher 26.02% in Q4. In the US, Apple shares fell heavily yesterday weighing on sentiment in related IT Sectors with the NASDAQ continuing to under-perform the other indices.
This morning on the economic front we have UK GDP and the IFO Business Climate from Germany. This is followed in the US at 1.30pm by New Home Sales which will be closely watched after last weeks impressive Housing Starts.
March S&P 500
The S&P worked really well yesterday as we traded up to 1497 sell level with a 1497.75 high. I went short at 1497 and I covered my position at 1488 for a nice gain and I am now flat. This market continues to trade in overbought territory and I am convinced that we are going to put in a top of some significance over the next two weeks. Today I will look to sell again on any rally to 1497/1502 with a 1505 stop. I will also be a small buyer on any dip to 1483/1487 with a 1481 stop.
Euro/USD
The Euro has finally broken this very important 1.3410 level this morning. Yesterday I went short at 1.3380 and I covered my position at 1.3360 as I did not like the way the Euro was so bid especially against Sterling and the Yen. The fact that we have broken this 1.3410 level is something I must respect and today I am a small buyer from 1.3400/1.3420 with a very tight 1.3385 stop.
March FTSE
Just like the S&P, the FTSE continues to rally in a relentless fashion this year and I was stopped out of my 6200 short position for a small loss at 6220 and I am now flat. The FTSE is also very overbought on the daily chart and is also at the top of the Williams Index. This morning I will only be a seller from 6240/6260 with a 6280 stop and I will also look to buy the market on any dip to 6180/6195 with a 6170 stop.
GBP/USD
I am amazed how weak Sterling is against the US Dollar when you see how strong the Euro is. GBP/USD continues to trade at the bottom of its Bollinger Band and Williams Index and this morning I have bought this currency pair at 1.5795. I will leave my stop at 1.5750 which is just below the low which was made overnight and I will look to take profit on any rally to 1.5860.
March BUND
The Bund, having looked so good yesterday morning, ran into a brick wall at 144.00 and is now back down to the 143.30 level. I went long yesterday at 143.60 and I was subsequently stopped out at 143.35 and I am now flat. Today I will look to buy again on any dip to 142.90/143.10 with a 142.75 stop.
March DAX
The Dax which has totally under-performed versus the other markets is finally playing catch up this morning and is finally back to where it opened on January 2nd at 7825. I went short yesterday at 7760 and fortunately I covered my position at 7740 and I am now flat. This 7820/7850 is critical for the Dax and this morning I am a small buyer on any dip back to 7800/7820 with a 7790 stop. I do not want to be short at this time.
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