US Equities rose again yesterday putting the S&P three points away from a new record as corporate earnings beat estimates and signs of slower economic growth fueled bets that the Federal Reserve will maintain stimulus until well into next year. The Dow for the second day in a row was the leader as it finished up 100 points or 0.6% compared to just a 0.3% rise for the S&P. About 6.5 billion shares traded across the US Exchanges yesterday which is 10% above the three month average as investors again piled into the market with Homebuilders leading the way. On the currency front the Euro rose another 0.2% to reach a high of 1.3825 which is its highest level since November 2011. The fall in the US Dollar helped Gold and Silver to rally.
Today is a very busy day for economic data and should lead to a lot of market volatility. This morning we have the German IFO Survey and Euro-Zone Money Supply followed at 1.30 pm by US Durable Goods Orders. This is followed at 2.55 pm by the University of Michigan Consumer Sentiment.
December S&P 500
The madness of weak economic news is good for the stock market because it means the Fed will wait to taper their QE Programme. The Daily Sentiment Index closed at 87% bulls last night so we are approaching the 92/93% level that I am looking for which will give me more confidence of going short the S&P. I was very unlucky yesterday as the market just missed my 1740 buy level with a 1740.25 low before having a nice rally and I am still flat. Today I will raise my buy level to 1737/1741 with a 1734 stop while I will leave my sell level the same at 1755/1759 with a 1763 stop. If I am taken short and subsequently stopped out I will be a more aggressive seller in front of 1770 with a 1775 stop.
Euro/USD
It was good that I covered half my short 1.3780 position on Wednesday at 1.3745 as I was stopped out of the other half at 1.3820 yesterday morning and I am now flat. The Euro is still very overbought and at the top of the Williams Index but given how high the Euro is trading I prefer to buy the US Dollar Index for December at 7900/7915 with a 7870 stop. If the Euro rallies up to 1.3870/1.3900 on a blow-off move I will be a seller again with a 1.3920 stop. I will still be a small buyer of the Euro on any dip to 1.3710/1.3730 with a 1.3690 stop.
December DAX
No change as I am still a seller in small from 8990/9020 with a 9060 stop. Given how overbought the Dax is trading I do not want to be long at this time.
December FTSE
Finally the FTSE traded up to my 6700 sell level and I am now short with a 6745 stop. I will still look to buy the market on any dip to 6600/6620 with a 6585 stop.
Dow Rolling Contract
Shortly after I posted yesterday morning the Dow traded up to my 15480 sell level before having a small sell off and I was able to cover this position at 15450 and I am now flat. The Dow continues to play catch up with the S&P and as long as this rally does not break 15710 the market is bearish. Today I will be a small seller on any rally to 15560/15590 with a 15610 stop. If I am taken short and subsequently stopped out I will be a more aggressive seller in front of 15700 with a 15730 stop.
December BUND
The Bund continues to trade higher without me been able to get a long position on. I do not want to chase the market and I will leave my buy level the same at 140.35/140.55 with a 140.15 stop.
Gold Rolling Contract
I am beginning to believe that Gold is going to break higher as we have now closed over the 1330 resistance level for the last three days. Today I will raise my buy level to 1332/1340 with a 1325 stop.
Silver Rolling Contract
Silver worked well as we had a nice rally this morning and I was able to cover my 22.55 long position at 22.85 and I am now flat. Today I will still be a buyer of the market from 22.20/22.50 with a 21.95 stop.
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