US Equity markets rose yesterday whilst US Dollar sentiment faded after weaker than expected US Economic data was seen to support the Fed maintaining its aggressive stimulus measures. US Q1 GDP was revised lower to 2.4% from 2.5%, Weekly Jobless Claims rose 10k to 354k (versus 340k expected) and Pending Home Sales rose just 0.3% in April versus 1.5% expected. US Bond yields failed to push higher and the US Dollar Index slipped from highs above 83.70 to sit around 83.00 this morning. The move was likely exacerbated by long US Dollar positioning which needed to be pared back going into the traditional month-end portfolio re-balancing period. Looking ahead, next week’s Payrolls Data, ISM Manufacturing and key Fed speeches will be crucial to shaping expectations about the timing for tapering QE.
European currencies were the key beneficiary of the lower US Dollar with the Euro moving from a low of 1.2940 to 1.3040 this morning. The Euro was also helped by a better Euro-Zone Confidence reading in May. Overnight the Nikkei rose 1.4% helped by a 1.7% rise in Industrial Production.
This morning on the economic front, we have UK Net Consumer Credit and Mortgage Approvals. The Euro-Zone releases its CPI and Unemployment data followed in the US by Personal Income, Chicago Purchasing Managers Survey and University Of Michigan Confidence Index. Later the Fed’s Pianalto speaks on financial stability in Washington.
June S&P 500
Very unlucky yesterday as the S&P just missed my 1642 buy level with a 1642.25 low before the market rallied up to my sell level at 1657 with a 1660 high. As I mentioned yesterday I was worried about the market trading higher into month end, despite the very poor Economic news released yesterday, as the market now believes the weak news is good for the S&P as it means the Fed will keep up its stimulus. Today I will still look to go short on any rally to 1655/1659 with a 1663 stop. I will also be a small buyer on any dip to 1640/1644 with a 1637 stop. Remember a break and close below 1630 will be bearish.
Euro/USD
The Euro worked well yesterday as, after I posted, it traded down to my 1.2960 buy level with a 1.2940 low. I covered my long position at 1.3010 and I am now flat. The Euro is trading at the 1.3040 resistance level as I write this commentary and today I will only be a small buyer on any dip to 1.2970/1.3000 with a 1.2955 stop. I still do not want to be short the Euro at this time as I still look for it to trade up to 1.32 before sellers return.
June FTSE
The FTSE is under pressure this morning with the market just hovering over the 6580 important support zone. It just missed my 6610 buy level yesterday before the market followed the other Indices higher and I am still flat. Today, even though it is month end, I will be a seller on a break of 6570 with a 6605 stop.
June DAX
The Dax is also under pressure this morning as the market is finding it very hard to break the important 8400 resistance zone. I plan to be a small seller on any rally to 8340/8370 with a 8405 stop. I will also be a small buyer on any dip to 8250/8275 with a 8245 stop. Remember a break and close below 8250 will be very bearish.
June BUND
The Bund worked out this morning as I was able to cover my 143.50 long position at 143.95 and I am now flat. I still like the Bund and I will use any dip to 143.50/143.70 to reset my long position with a 143.40 stop which is just below yesterday’s low. I do not want to be short the Bund at this time.
June Nasdaq 100
The Nasdaq traded up to my 3025 sell level yesterday and I am still short. I will lower my stop to 3030 and I will look to take profit in front of 2980. If I manage to take profit I will use any subsequent rally to 3010/3025 to reset my short position with a 3040 stop.
Silver Rolling Contract
Silver also worked well yesterday as I was able to cover my 22.60 long position at 23.00 and I am now flat. Today I will look to reset my long position on any dip to 22.30/22.60 with a 21.95 stop.
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