Negative headlines about China’s growth prospects weighed on Asian markets yesterday morning which spilled over into substantial declines in European Markets after I posted. Plenty of negative corporate news out of Europe, from the likes of Unilever, Orange and BSF, added to the downbeat tone of European stocks. However sentiment improved as the day progressed but still the Eurostoxx ended the day down by 0.5%. The decline in Europe was despite some positive news, including a slightly better than expected IFO Survey from Germany, a fall in Spanish Unemployment to 26.3% from 27.2% (the first fall since June 2011) and a rise in UK GDP of 0.6%, the second consecutive rise although in line with expectations.
In the US, Durable Goods Orders rose by a stronger than expected 4.2% which was way above expectations of 1.4%. Also the closely watched Weekly Jobless Claims data showed initial Claims of 343k, just above the 340k expected and still pointing to positive gains in next weeks Non Farm Payrolls. US stocks were boosted late in the day by news reports suggesting that the Fed might paint a relatively dovish picture about the outlook for interest rates at its FOMC Meeting in September which helped the S&P to close up 0.3%.. For the same reason the US Dollar fell against all currencies in the G10 basket after comments from Wall Street Journalist and Fed watcher, John Hilsenrath, suggesting that the Fed might change the guidance wording with the potential for suggesting it might not raise rates even if the Unemployment Rate falls below 6.5%.
This morning Italy is to sell Bonds whilst the only data of note is from the US which has its latest University of Michigan Consumer Confidence numbers at 3 pm.
September S&P 500
The S&P was very kind today as shortly after I posted the market was trading on the lows of the day and spent the rest of the day grinding higher and was helped into the close after comments from Fed watcher John Hilsenrath. I bought the S&P at 1674 and was I able to cover this position at 1684 and I am now flat. I am impressed at how well the market was able to bounce off the 1670/1674 support zone. Today I will be a small buyer on any dip to 1681/1686 with a 1677 stop. My only interest in selling the market is on a rally to 1700/1704 with a 1707 stop.. The real level that I want to get short is from 1720/1725 which I believe will happen before this market runs into trouble.
Euro/USD
Very unlucky today as the Euro just missed my 1.3160 buy level before the market rallied 130 points up to my 1.3290 sell level. I am still short and I will leave my stop at 1.3330. I am amazed how many traders are still short the Euro and this market continues to operate on a ‘buy on dips’ strategy which has existed all year. Today I will be a buyer on any dip to 1.3220/1.3250 with a 1.3190 stop. If I am stopped out of my short position I will be a more aggressive seller in front of 1.3400 with a 1.3440 stop.
September FTSE
The FTSE dropped down to my 6540 buy level as I was posting yesterday’s commentary and unfortunately I had my stop to tight and I was stopped out of this position for a small loss at 6515 and I am now flat. The FTSE then staged a very nice rally into the New York close. I still like the FTSE and I believe the Central Banks will do whatever they can to keep this party going. They certainly do not want the stock markets to fall as this will hinder the economic programme that they have engineered. Today I will still be a buyer on any dip to 6530/6560 in small with a wider 6485 stop which is just below yesterdays low. I do not want to be short the market today.
September DAX
Yesterday after I wrote my commentary and by the time it was posted the DAX was already trading on its lows and well below my buy and stop levels and as a result I did not do a DAX trade and I am still flat. It was unfortunate as after I posted the DAX spent the rest of the day trading higher. I still like the DAX and especially that we closed again above 8300. Today I will be a small buyer on any dip to 8290/8330 l with a wider 8260 stop which is just below yesterday’s low.
September BUND
The Bund worked well yesterday as the market traded down to my 142.20 buy level. We then had a nice rally and I was able to cover my position at 142.60 and I am now flat. I still like the Bund as long as we can stay over 142.10 and today I will be a small buyer on any dip to 142.20/142.35 with a 142.05 stop which is just below yesterdays low. I will also be a small seller on any rally to 143.15/143.30 with a 143.45 stop.
Gold Rolling Contract
Having been close to being stopped out of my 1320 long Gold position at 1308 yesterday I decided to take profit overnight at 1335 and I am now flat. I still like Gold and I believe, just like the Euro, that dips are to be bought. Today I will look to reset my long position on any dip to 1316/1326 with the same 1308 stop.
Silver Rolling Contract
Unfortunately I was stopped out of my long 20.20 position at 19.95 and I am now flat. I am going to stand aside in Silver and I will wait until Monday to make my next trade.
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