We had a mixed bag of US Economic data last Friday but equity markets chose to accentuate the positive with the S&P making a new record closing high to finish +0.33% at 2003. European stocks were also higher with the exception of the German Dax. The upside surprise in the Final University of Michigan Consumer Confidence reading and also the Chicago Manufacturing PMI trumped disappointment at the unexpected 0.1% fall in July PCE.
In currencies, anticipation of month-end Dollar selling from Fund Managers failed to materialise as it rose pretty well across the board, led by a further 0.50% drop in the Euro, to 1.3125, ahead of this Thursday’s ECB Meeting. On Saturday, ECB Executive Board Member, Benoit Coeure told Greek newspaper Ta Nea that the ECB ‘is ready to further adjust the direction of Monetary Policy’
This morning on the economic front we have Euro-Zone Manufacturing PMI at 9.00 am and the UK equivalent at 9.30 am. We have no US data today as the American markets are closed for Labor Day.
September S&P 500
The S&P plan worked well on Friday as shortly after the US markets opened the S&P traded down to my 1994 buy level with a 1992.25 low. It then had yet another low volume rally into the close as the strong seasonal factors again kicked in which enabled me to cover this long position at 1999 and I am now flat. The Cash Market is closed today but the S&P Futures will trade until 4.30 pm so I plan to be a small seller from 2005/2009 with a 2013 stop. My only interest in buying the market today is on a dip to 1991/1995 with a 1987 stop.
Euro/USD
I was finally stopped out of my long 1.3190 position at 1.3160 on Friday and I am now flat. The Daily Sentiment Index continues to print single digit sentiment towards the Euro and if history is anything to go by everytime this happens we tend to get a counter-trend rally in the Euro. This rally may not happen until Thursday when we finally get to see how Dragi and the ECB are going to try and get inflation back into the Euro-Zone. Given how oversold the Euro is trading I do not want to be short at this time and today I will again be a small buyer from 1.3090/1.3115 with a 1.3075 stop.
US Dollar Index
The Dollar finally traded up to my 82.75 sell level overnight. I am still short given how overbought the Dollar Index is trading. I will leave my stop the same at 83.30 on this position.
September DAX
The Dax had a nice rebound on the open this morning which enabled me to cover my long 9460 position from Thursday at 9500 and I am now flat. The market continues to under-perform the other major Indices and this is very understandable given the political situation in Russia and Ukraine. Today I will be a buyer on any dip to 9400/9440 with a 9375 stop as I would expect the Dax to rally ahead of Thursday’s ECB Meeting.
September FTSE
Finally after days of trying, the FTSE finally traded down to my 6780 buy level on Friday. It then followed the US markets higher into the close which enabled me to cover this position at 6815 and I am now flat. Today I will again be a buyer on any dip to 6750/6780 with a 6730 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
The Dow plan also worked well on Friday as the market was trading at my 17130 sell level as I posted. I went short at this level and after a nice sell-off I was able to cover this position at 17070 and I am now flat. Today I will again be a seller from 17130/17170 with the same 17205 stop. I still do not want to be long the Dow at this time.
September BUND
No change as I am still a small buyer on any dip to 150.85/151.15 with a 150.65 stop. I will also lower my sell level to 151.85/152.15 with a 152.30 stop.
Gold Rolling Contract
No change as I am still a buyer from 1278/1284 with the same 1269 stop.
Silver Rolling Contract
Shortly after I posted on Friday ,Silver again traded down to my 19.40 buy level. I am still long and I will raise my stop on this position to 19.10. If I am stopped out I will be a more aggressive buyer in front of 18.70 with a 18.25 stop.
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