It appears markets have run out of oomph. We have gone back to typical summer markets, where there is a drifting of trends but not a lot to get your teeth into. Equities were generally up to flat; but China was lower. Bond Yields drifted a little lower, as did Commodities; Iron Ore being the exception. The US Dollar was higher, but off its peaks around the data. In general, Emerging Market currencies underperformed. We had a smidgen of ok US data, China equities were lower again, but not drastically so, and there are news reports of things not being entirely right with the Greek rescue.
Please note that due to me travelling this weekend and the fact that I have no WIFI available coupled with the fact that Monday is an Irish Bank Holiday, my next Market Commentary will be on Tuesday.
But the pull of the Northern Summer beach appears to be over-riding, and we are likely to see more of the same in the next 24 hours. Happy Friday and long weekend for the financial sector, locally. The US reported its Q2 GDP outcome, and it was better than the Q1, but not as much as expected. Q2 GDP was 2.3%, with expectations at 2.5%, but the Q1 result was revised up to +0.6% from the initial -0.2%. Overall, ok but not stellar. That pretty much sums up the day. The FT is running a story that is getting plenty of airtime, but we’d already heard the news from Germany’s Schaeuble before. The IMF will not be involved in the Greek bailout (ie provide funds) unless there is more explicit agreement on conditions and debt relief. Remember the EU won’t discuss debt relief for some time yet. And it may be difficult for Germany to get approval without IMF involvement. We are likely to hear more before the money is paid and things are settled. On the positive side, Europe’s economic confidence indicator rose, unexpectedly to a new cycle high. So it seems that everything in the World is not too bad at this time.
This morning on the economic front we have Euro-Zone Unemployment and CPI at 10.00 am. This is followed at 1.30 pm by US Employment Cost Index. Finally we have US ISM Milwaukee, Chicago Purchasing Manager’s Index and University of Michigan Consumer Confidence which will all be released at 2.00 pm, 2.45 pm and 3.00 pm respectively.
September S&P 500
My short 2101 S&P position taken after the spike higher in the market following the release of the FOMC Statement worked well yesterday as shortly after the US released its GDP data the market had a nice sell-off which enabled me to cover this position at 2095 as outlined earlier to my Platinum Members and I am now flat. It is incredible that no matter what data is released good or bad the S&P still manages to shake off any sell-off and rebound into the close. As I have mentioned for the last few months until we break and close below the key 2035/2040 major support level and 200 Day Moving Average it is very hard to be short this market for more than a few hours. I have no doubt that this will end in tears and a major sell-off but until we take out this level it is very hard to be short. Yesterday’s GDP data again showed that the US Economy only grew at a 2.3% rate last Quarter and is now up less than 1.5% for the year which is way behind the Fed’s target level. Today given the fact that it is month-end I do not want to be short and I will be a small buyer on any dip to 2092/2097 with a 2087 stop which is just below yesterday’s low print.
EUR/USD
The Euro is basically has gone nowhere over the past three months as it trades in a 1.08/1.12 range with the market still waiting to see when the Fed will start to raise rates and finally gives us some direction for the Dollar. Yesterday after I posted I was stopped out of my long 1.0970 position for a small loss at 1.0930 and I am now flat. Today I will again be a small buyer on any dip lower to 1.0850/1.0890 with a tight 1.0825 stop. Despite the negative price action I do not want to be short the Euro at this time.
September Dollar Index
Yesterday after lunch the Dollar rallied higher to my 97.70 sell level. I am still short and today I will leave my stop the same at 98.20 which is just above the recent resistance and key pivot point at 98.00.
September DAX
The DAX has again failed to follow both the FTSE and US Markets higher. I am still flat and because it is month-end today I am going to fraise my sell level slightly to 11400/11440 with a 11480 stop. I still do not want to be long the DAX at this time.
September FTSE
My short 6590 position did not work out yesterday as shortly before lunch I was stopped out of this position for a small loss at 6630 and I am now flat. I am going to stay flat today especially with the fact it is month-end and because I will not have another update until Tuesday.
Dow Rolling Contract
Unfortunately I covered my short 17760 position on Wednesday too early at 17740 before the market traded another 100 points lower only to turn around and trade back to my original sell level and I am still flat. My only interest in going short today is from 17850/17910 with a 17960 stop. The main reason that I am moving my sell level higher is due to the fact it is month-end. I will also be a small buyer on any dip lower to 17630/17690 with a tight 17580 stop.
September BUND
I am glad that I had moved my sell level higher in the BUND to 154.40 which got hit shortly after the US released its latest GDP Data. I am still short and today I will lower my stop on this position to 154.80. I will also look to exit this position on any drop to 154.10 as the price action in the BUND has been clearly positive over the past 10 days.
Gold Rolling Contract
My Gold plan also worked well yesterday as shortly before lunch Gold traded lower to my 1086 buy level before having a nice rally which enabled me to cover this position at 1094 as outlined in a separate email to my Platinum Members and I am now flat. Today I will again be a small buyer on any dip lower to 1075/1083 with the same tight 1069 stop.
Silver Rolling Contract
No change as I am still a buyer on any dip lower to 14.10/14.55 with the same 13.80 stop.
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