Markets were trading in a very lacklustre US Thanksgiving Day Session until the results of the OPEC Meeting were released which led to a crash in Oil prices. West Texas Oil is down 7.5% since close of business on Wednesday. The Commodity Cartel’s low-cost producers, namely Saudi Arabia, apparently managed to convince other members that a supply cut was not guaranteed to support the oil price materially. In the medium term OPEC will be hoping that a period of low prices will squeeze higher cost producers and eventually push prices to a higher equilibrium level. Venezuela had been endeavouring to get the cartel to cut production but it was to no avail.
Most major currencies are weaker against the US Dollar, led by oil producers NOK, CAD and the Russian Ruble which has now fallen 10% in the last four days versus the greenback, to a record 49.7. European data should have been Euro supportive though it has lost ground overnight. German inflation for November was unchanged in the month, as expected, while the Euro-Zone’s largest economy had a lower than expected Unemployment Rate at 6.6%. Meanwhile ECB President again spoke stating the Bank’s readiness to purchase any assets necessary to achieve its targets ahead of next Thursday’s Governing Council Meeting.
The only data of note due today is the Euro-Zone Unemployment Rate and CPI at 10.00 am. The US Markets are only open for a half day today with most markets closed by 6 pm.
December S&P 500
With the cash markets closed yesterday for the Thanksgiving Holiday and the the markets only open for a half day trading session today volume should again be on the low side with most traders away from their desks. The S&P Futures market will close at 6.15 pm this evening. Yesterday after I posted the S&P traded higher to my 2073 sell level. I am still short and I will lower my stop on this trade to 2078. I still believe that the S&P is due a decent correction before having its usual Santa Clause rally and for this reason given how overbought and over extended the market market I do not want to be long at this time.
Euro/USD
The Euro is trading lower this morning on the back of the stronger Dollar which is strengthening due to the weakness in Commodity prices. After I posted yesterday morning the Euro eventually traded lower to my 1.2450 buy level. I am still long with the same tight 1.2420 stop. If I am stopped out of this position I will still be a more aggressive buyer in front of 1.2370 with a 1.2335 stop.
US Dollar Index
No change as I am still short at 88.00 with the same 88.30 tight stop. If I am stopped out of this trade I will look to reset on any rally to 88.65/88.95 with a 89.20 stop.
December DAX
After I posted yesterday morning the Dax got a boost from the release of its better than expected Unemployment Rate which came in at 6.6%. In the process I was stopped out of my 9945 short position for a small loss at 9980. The Dax is grossly overvalued as shown by its gap versus the FTSE with the spread between the Indices trading near 3300 points. After I got stopped out of this latest short Dax position I went short again at 9995. I am still short and today I will lower my stop on this trade to 10020.
December FTSE
My suspicions that the FTSE was reluctantly trading higher is beginning to pay dividends this morning. I went short the market yesterday at 6760 and this morning I have covered half this trade at 6690. Now that I have some cushion on this trade I will lower my stop to 6730 on the balance.
Dow Rolling Contract
Unfortunately the Dow just missed my 17880 sell level yesterday morning and I am still flat. I still believe this Dow is also due a decent correction and today I will lower my sell level to 17830/17880 with a 17920 stop.
December BUND
No change as I am still short in small size at 152.70 with the same 153.10 stop.
Gold Rolling Contract
No change as I am still a small buyer on any further dip to 1165/1173 with the same 1159 stop.
Silver Rolling Contract
Having been stopped out of my 16.25 position last night at 16.10, I will still be a buyer on any dip to 15.50/15.80 with the same 14.95 stop.
January NYMEX Crude
What can you say about yesterday’s movement in Crude where an oversold market can lead to a crash and this is exactly what we saw as Crude fell 7.5% and is now down at $68 from its $107 high last May. On the OPEC release yesterday I went long at 71.40 and while Crude tried to hold the $71 level I was quickly stopped out of this trade for a small loss at 70.95. Yesterday’s price action in Crude was another great example of how important it is to have stops in the market. Given how over extended Crude is to the downside, outside its Bollinger Band, bottom of its Williams Index and with an RSI reading near a very oversold 10 I have decided to buy Crude again in small size at 68.50 this morning with a very wide 66.25 stop.
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