Greece news and chatter continues to permeate markets as Greece gets closer to the first payment to the IMF due June 5. Reports of continued losses at Greek banks and deposit outflows continues to weigh on sentiment as liquidity remains at a premium. Christine Lagarde, Managing Director of the IMF, has weighed in with her comments telling a German newspaper that a Greek exit from the Euro-Zone was possible but that this would probably not herald the end of the Euro Currency. She said such a step would “not be a walk in the park” but would “probably not” mean the end of the Euro. US Treasury Secretary Lew has also offered his two cents worth, saying in a speech in London to the London School of Economics that “it’s a mistake to think that a failure is of no consequence outside of Greece …… we don’t know the exact scope”.
The Euro has been choppy but remains in the mid 1.09s. Equities eased back both in Europe and in the US also against the background of no particularly compelling data. The Eurozone Business Climate Indicator was somewhat softer but US Weekly Jobless Claims popped a little higher, countering to better then-expected Pending Home Sales in April.
There have also been more Fed speakers, and from both ends of the policy spectrum. Fed President Kocherlakota, from the dovish end said that lower inflationary expectations were a drag on growth and that a 2015 Fed rate rise would imperil the Fed’s inflation credibility. James Bullard, more to the hawkish end spoke of the “fantastic” improvement in the labour market and that the Fed’s base case is for rates to rise this year. He said that unemployment below its natural rate could boost wages and he expects growth to pick up to 3% in the second half, helped by lower gas prices.
Neither of these views is a surprise. Major currency pairs did not break new ground. The US Dollar has been trying to rally further but with little net progress. After yesterday’s dour Capex report scuttled the AUD, it’s been sold lower yesterday, trading this morning at around 0.7650, it would be susceptible should today’s RBA credit and HIA home sales show any unexpected weakness.
This morning on the economic front we have Euro-Zone M3 YoY and the consensus is for a 4.9% rise from 4.6% last Month. This is followed at 1.30 pm by US GDP revision and the consensus is for a fall of 0.8% after the initial reported 0.2% rise. Finally on what has been a very busy week we have the Chicago Purchasing Manager’s Survey and University of Michigan Consumer Sentiment at 2.45 pm and 3.oo pm respectively.
June S&P 500
The S&P plan worked very well yesterday as the market which was very heavy for most of the day and this enabled me to buy the market on average at 2115 before having a very nice rally into the close resulting in me covering this position at 2122 and I am now flat. This 2120/2126 is short-term resistance and a break and close over this level opens up the possibility of the final move higher to the 2180/2210 next major resistance level that I have been mentioning over the last few weeks. Today I will again be a small buyer on any dip lower to 2114/2119 with a 2108 stop which is just below the 2110 low made yesterday. I still do not want to be short the S&P at this time and if we break and close over 2126 this evening I will then look to buy the market at a higher level if I am not already long.
EUR/USD
The Euro plan also worked very well yesterday as the Euro had a nice drop before lunch to my 1.0880 buy level before having a nice rally into the New York close which enabled me to cover this position at an average of 1.0950 as outlined in my Platinum Service and I am now flat. I will continue with my strategy of buying dips until we get to my 1.1060/1.1110 sell level. Today I will again be a small buyer on any dip lower to 1.0880/1.0920 with a 1.0850 stop which is just below yesterday’s low. I will still be a small seller on any rally higher to 1.1060/1.1100 with a wider 1.1160 stop.
June Dollar Index
The Dollar plan also worked out very well yesterday as shortly after the European Markets opened the Dollar traded higher to my 97.60 sell level before having a nice sell-off into the New York close which enabled me to cover this position at 97.10 and I am now flat. Today I will again be a small seller on any rally higher to 97.45/97.75 with the same 98.10 stop.
June DAX
Thankfully I had a low buy level in the DAX yesterday as the market had a nice sell-off on more Greek woes which enabled me to go long at my 11630 buy level. Subsequently the DAX had a very nice rally which enabled me to cover this position at 11710 and again this was outlined in my Platinum Service and I am now flat. Today I will again be a small buyer on any dip lower to 11590/11640 with the same 11530 stop. My only interest in selling the DAX is still on a rally higher to 11870/11920 with a 11960 stop. I still believe that we will get some sort of Greek deal as the ramifications of not getting this over the line are too great.
June FTSE
No change as I am still a small buyer on any dip lower to 6970/7000 with a 6945 stop. My only interest in selling the FTSE today is still on a rally higher to 7085/7115 with a 7140 stop.
Dow Rolling Contract
No change as I am still a small seller on any rally higher to 18270/18320 with an 18360 stop. I will for a change also be a small buyer on any dip lower to 18040/18090 with a 17980 stop.
June BUND
Unfortunately the Bund keeps missing my buy level before trading higher with yesterday’s low just three points away from my 154.75 buy level. Even though I expect the Bund to have one more rally higher before we start to see some real selling again I am going to leave my buy level the same at 154.45.154.75 especially with the revised US GDP due at 1.30 pm. My only interest in selling the BUND is still on a rally higher to 156.40/156.70 where I will be a reasonably aggressive seller with a 157.10 stop.
Gold Rolling Contract
No change as I am still long at 1190 with the same 1179 stop on what was a very quiet trading session for Gold.
Silver Rolling Contract
Also no change on what was an equally quiet trading session for Silver. I am still long at 16.65 and I will leave my stop the same at 16.20.
Recent Comments