The markets reversed previous days losses helped by Spain unveiling its latest budget plan and the increasing speculation that China will implement more stimulus to support their economy. One of the PBOC officials said that China had severely underestimated the extent of the global economic slowdown and that interest rates would be cut if this deteriorates further. It follows yesterdays news that the PBOC had injected 365billion Yuan into the countrys banking system this week. In Spain, the Government’s in it’s latest budget, plans a further €40 billion in spending cuts. Ministry Budgets have been cut by 9% and public sector wages frozen for a third year as the Government aims to cut the Budget deficit from its goal of 6.3% of GDP this year to 4.5% in 2013. Greek leaders have also agreed to a €12billion package of austerity measures late yesterday which will be presented to the Troika when they return to Athens next week.
Market sentiment was solid despite some weak US economic data as the the theme of not fighting the central banks continues. Durable Goods fell 13% in August due to a large fall in aircraft and defense orders. Meanwhile Q2 GDP was revised down to 1.3% from 1.7% and pending Home Sales were also lower down 2.6% in August.
Today is also a busy one for economic releases as this morning we have Consumer Confidence and September CPI for the Euro-Zone, followed by Q2 GDP from France and, later in the US, we have Personal Income, Chicago PMIand finally University of Michigan Survey.
Dec S&P 500
The S&P worked really well as we just entered my buy zone before we rallied all the way to my sell zone. I went long at 1430 and then I covered my long position and went short at 1440. This morning, as the theme of not fighting the Central Banks continues and the fact that it is Quarter End I have covered my short position at 1442 and I am now flat. As I said yesterday as long as we stay over the 1420/1425 area the market is bullish and I will move my sell level to the 1451/1455 with a stop above 1458 which is just above Tuesdays high. I will still look to go long from 1431/1435 with a 1428 stop which is is just below yesterday’s low.
Eur/USD
The Euro worked really well as both my orders were filled as I was able to go long at 1.2835 and then the market rallied back to my sell level at 1.2930. I am not happy been short and I will leave a 1.2960 stop on this position as I can afford to do this after the nice profit made on my long position. Today I will look to cover and go long on any dip to the 1.2870/1.2900 area with a 1.2850 stop on any new long position.
Dec FTSE
The mantra of ‘I do not want to be short the FTSE’ continues and I was able to put a nice long position when the FTSE dropped to my 5740 buy level. I still like this position and I am going to leave a 5760 stop profit as I look for the FTSE to break through the 5800 level. If this happens I will look to take profit from 5800/5820.
Silver
I went short Silver yesterday when it hit my 34.70 sell level. I will leave my stop at 35.25 which is just above last weeks high. Again I am only trading in small size given the volatility.
Dec Bund
The Bund has had a very big rally over the last week and we now approaching the very important 141.75 resistance level. Today I will look to go short from 141.45/141.75 with a 141.90 stop.
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