The US Dollar closed higher across the board yesterday, helped by a steady-as-she-goes FOMC Statement on Wednesday. Amongst the biggest losers was the Australian Dollar which closed 2% lower. The FOMC Statement had something for everyone but overall, it confirmed to me the notion that the Fed is on track for rate increases in 2015. There were notable positives. The FOMC upgraded its view of jobs from ‘solid’ to ‘strong’ and introduced wording to stress how they view the drop in Oil prices a net positive for the US Economy. Indeed being long the US Dollar seems to be the only game in town but as I mentioned frequently over the last two weeks, I am increasingly nervous about the pace of recent gains. The Dollar was helped yesterday by the Weekly Jobless Claims which beat expectations with a drop to 265K, which is the lowest Weekly level since 2000, and within spitting distance of the 40 year low at 259K. On the flip side Pending Home Sales came in much worse than expected at -3.7%.
In Europe, Germany’s Headline Inflation fell more sharply than expected to -0.3% y/y, again underlying what a difficult job the ECB have in trying to reflate the Euro-Zone.
After the recent up-move in Gold and Silver over the last few weeks, this run came to an abrupt end yesterday with Gold closing 2% lower, while Silver was hit for almost 7%.
This morning on the economic front we have UK Net Consumer Credit at 9.30 am. This is followed at 10.00 am by Euro-Zone Unemployment and CPI. At 1.30 pm the US will release its GDP for Q4. Finally we have the Chicago Purchasing Manager’s Survey and University of Michigan Consumer Confidence at 2.45 pm and 3.00 pm respectively.
March S&P 500
The S&P had yet another wild trading session yesterday as emotion in all markets seems to have risen a few notches so far this year compared to 2014. The S&P plan worked out well as shortly after I posted the S&P traded higher to my 2000 sell level before having a nice sell-off to a 1987 low which enabled me to cover this position at 1992. Late in the afternoon the S&P started to rally hard and rallying almost 34 handles into the close, with the last spike higher coming on the back of Amazon’s better than expected earnings results. I went short at 2018 and given the fact that today is Month-End I have decided to cover this position at 2010 this morning and I am now flat. Today I will again be a small seller on any rally back to 2017/2023 with the same 2027 stop. My only interest in buying the S&P is on a drop to 1970/1975 with a 1963 stop.
EUR/USD
My long 1.1270 Euro position from early yesterday morning worked out very well as the Euro had a nice rally in the afternoon which enabled me to cover this position at 1.1330 and I am now flat. Given how oversold and under-loved the Euro is, my strategy is still to keep buying dips with a tight stop. Today I will again be a small buyer on any dip to 1.1270/1.1310 with a 1.1245 stop. Again if I am taken long and subsequently stopped out I will be a more aggressive buyer from 1.1180/1.1210 with a 1.1145 stop. My only interest in going short the Euro is still on any rally to 1.1530/1.1580 with a 1.1620 stop.
US Dollar Index
No change as I am still short at 94.85 with the same 95.30 stop.
March DAX
The DAX has been unbelievably resilient so far this year with January poised to be one of the best month’s in the history for the DAX, with the market up almost 11%. By the time that I posted yesterday morning it was trading at my 10710 sell level and after a small sell-off in the afternoon, I was able to cover this position at 10660 and I am now flat. Today my only interest in selling the DAX is on a further rally to 10850/10890 with a 10930 stop. My buy level remains unchanged at 10380/10440 with a 10330 stop.
March FTSE
The FTSE was also trading at the top of my sell level at 6750 by the time I posted yesterday morning and after a small sell-off in the afternoon, I was able to cover this position at 6720 and I am now flat. Today my only interest in selling the market is on a rally to 6795/6830 with a 6860 stop. Just like the DAX, my buy level will remain unchanged at 6630/6660 with a 6595 stop.
Dow Rolling Contract
The Dow plan did not work out so well yesterday with the market having a huge 300 point rally in the afternoon which saw me go short the market at 17300, only to be stopped out of this trade at 17380 and I am now flat.Today I will again be a small seller on any further rally to 17490/17540 with a 17570 stop. My only interest in buying the Dow is just below yesterday’s low at 17050/17110 with a 16990 stop.
March BUND
My short 159.00 Bund position worked out well yesterday as after a nice sell-off late in the session, I was able to cover this trade at 158.60 and I am now flat. Today I will again be a small seller on any rally back to 158.95/159.35 with a 159.55 stop.
Gold Rolling Contract
Thankfully I moved my buy level lower in Gold yesterday as yet again the Bollinger Band and Williams Index proved what valuable trading signals they are as both were showing that Gold was overbought and due a correction. This duly happened with Gold off nearly $60 from last week. Yesterday’s drop saw me buy it at 1262. I am still long and I will leave my stop at 1249 which is just below yesterday’s low.
Silver Rolling Contract
Silver got hit badly yesterday with a near 7% drop. I went long at 17.30 and I will leave my stop the same 16.70 which is just below yesterday’s low. There is a fair chance that I will get stopped out of this trade today, and if this occurs, I will be a more aggressive buyer in front of 16.40 with a 15.90 stop.
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