The S&P closed at yet another record high buoyed by better earnings from Facebook and a huge fall in the Weekly Jobless Claims. They fell 19k to 284k which is the lowest rate since February 2006. Facebook closed 5.2% higher on record earnings which showed second quarter sales rising by a very impressive 61%. The S&P had been higher but was hit after New Home Sales were released which showed a fall of 8.1% to 406,000 annualised pace, which is the lowest since March. The May number was revised down by 12% to 446,000.
Restrictive lending rules, limited land supply, higher mortgage rates and more expensive properties are restraining the housing market thus underscoring Fed Chair, Janet Yellen’s concern that the industry is underperforming.
After I posted yesterday Euro-Zone PMI’s were released and came in at an average of 54.0 versus 52.6 expected and the eleventh consecutive month that expansion is showing a reading of greater than 50. This helped propel European Equity Markets higher.
Markets were hit late in the US trading session after the IMF lowered its world growth forecast to 3.4% from the 3.6% that it had predicted in April.
This morning on the economic front we have UK GDP at 9.30 am and this is followed at 10.00 am by the very important German IFO Survey. At 1.30 pm we have US Durable Goods Orders.
September S&P 500
Unfortunately the S&P just missed my 1986 sell level by less than a half point before trading lower. Given how overbought this market is trading on a Daily, Weekly and Monthly basis it is due a correction. However I am also conscious of how close we are trading to key round number support at 2000. Today I will lower my sell level to 1983/1988 with a 1991 stop and if I am taken short and subsequently stopped out I will be a more aggressive seller in front of 1998 with a 2003 stop. I will leave my buy level the same as yesterday at 1968/1973 with a tight 1965 stop.
Euro/USD
The Euro continues to trade at the bottom of its Bollinger Band and having initially risen just before I posted yesterday is now back trading lower. This despite the fact that the Williams Index gave a small buy signal. Today I will raise my buy level slightly to 1.3410/1.3440 with the same 1.3375 stop. I will also leave my sell signal the same at 1.3520/1.3550 with a 1.3570 stop.
US Dollar Index
No change as I am still a buyer on any dip to 80.45/80.65 with a 80.25 stop as I do not want to chase this market higher given how overbought the Dollar is trading at this time.
September DAX
The DAX had a wild trading session yesterday. Initially it was down hard after France reported it’s very weak PMI only to rebound strongly on the better than expected German PMI which was released just as I posted. I went short at 9780 but unfortunately I was stopped out of this position for a small loss at 9805 before the market traded lower. The DAX performed poorly yesterday despite the strong the economic data. Today I will be a seller on any further rally to 9800/9830 with a 9850 stop. I do not want to be long at this time.
September FTSE
Unfortunately the FTSE started to rally just after I posted and I am still flat. It has been very impressive over the last few days and for this reason I will raise my buy level to 6740/6760 with a 6725 stop. I still do not want to be short at this time.
Dow Rolling Contract
The Dow plan worked well yesterday as after I posted it traded up to my 17120 sell level before having a nice sell-off which enabled me to cover this position at 17060 and I am now flat. It continues to trade heavily vis-a-vis the other major US Indices. Today I will again be a seller on any rally back to 17095/17125 with a 17155 stop. I still do not want to be short the Dow at this time.
September BUND
The Bund plan also worked well yesterday as just after I posted it was trading at my 148.35 sell level and after a nice sell-off I was able to cover this position at 148.00 and I am now flat. I still believe that it is trying to put in a top and so today I will again be a seller on any rally back to 148.00/148.25 with a 148.50 stop I still do not want to be long the Bund at this time.
Gold Rolling Contract
No change as I am still long from yesterday at 1297 with the same 1289 stop which, so far, despite the extreme weakness in Silver has not been hit. If I am stopped out of this position I will look to re-buy my Gold position in front of 1282 with a 1275 stop.
Silver Rolling Contract
I am glad that I raised my stop on Silver yesterday which ended up having a really bad trading session. After I posted I was stopped out of my long 20.85 position for a small loss at 20.70 and after the market fell hard I was able to re-buy at 20.40. I am still long and I will leave my stop the same at 19.90.
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