The US Dollar continued to strengthen on Friday after Dragi’s press conference last Thursday where he promised to take action to weaken the Euro and inflate the Euro-Zone. The US Equity markets had another wild trading session having been again down early in the session only for the market to rebound into the close.
Ukrainian tensions continue to mount as Pro-Russian groups hailed a large vote in favour of secession in a referendum held in Eastern Ukraine yesterday where 90% backed the breakaway plan however it was dismissed as illegal by Governments in Kiev, the US and Europe. More sanctions are being threatened by the West this week in what is still a very fluid situation.
UK Manufacturing Production continues to strengthen as shown by the latest data where Production rose 0.5% last month versus 0.3% expected. Overnight Chinese shares rose on expectations that the Government will take steps to boost the equity market which so far this year as underperformed.
Today we have no news of note from either side of the Atlantic as the market looks forward to the German ZEW Survey and US Retail Sales tomorrow.
June S&P 500
The S&P had another wild trading session on Friday as the market was again down hard in the afternoon before having a nice rebound into the close and finished up 0.2% on the day. The S&P is still trying to make its mind up as to which way it is going to break from here. A break and close over 1893 will be bullish, possibly leading to the S&P finally taking out the key 1900 resistance level to the 1920/1950 area that I have been mentioning over the last few weeks. On the other hand if it breaks 1850 and closes below 1840 the market will quickly turn bearish with it then possibly testing the key 1800 support level. A break and close below 1800 will be very bearish.
The plan worked well on Friday as shortly after I posted the market was trading at my 1868 buy level with a 1861 low before having a nice rally into the close which enabled me to cover this position at 1874 and I am now flat. Today I will again be a small buyer on any dip to 1867/1872 with a 1859 stop which is just below last Friday’s low. If I am taken long and subsequently stopped out of this position I will again be an aggressive buyer on any dip to 1848/1853 with a 1843 stop. My only interest in selling the S&P is still on a rally to 1895/1900 with a 1902 stop.
Euro/USD
Shortly after I posted on Friday the Euro started to sell-off and traded down to my 1.3785 buy level. As I mentioned on Friday 1.3760 is key support for the Euro. This morning it is trading at the bottom of its Bollinger Band and Williams Index and I am still long and I will leave my stop the same at 1.3740 on this position.
US Dollar Index
The Dollar Index has had a nice rally since I went long last week at 79.20. On Friday I covered half my position at 79.90 and I will raise my stop on the other half to 79.50 as the Dollar is overbought at these levels. If I am stopped out of the rest of my position I will again be a buyer on any dip to 79.10/79.30 with a 78.80 stop.
June DAX
The DAX continues to hold in despite the increased tensions in the Ukraine. As I have mentioned over the last few weeks the 9630/9660 is key resistance for the Dax however I expect this resistance level to be broken at some point. I am still flat and I will leave my buy level the same at 9530/9560 with a 9495 stop. I still do not want to be short the Dax at this time.
June FTSE
No change as I am still a small seller on any rally to 6815/6835 with the same 6850 stop. The FTSE is overbought on a short term basis as it approaches key resistance. A break and close over 6850 will be bullish.
Dow Rolling Contract
The Dow plan worked well on Friday as shortly after I posted it traded down to my 16510 buy level before having a nice rally which enabled me to cover this position at 16580 and I am now flat. I expect the Dow to eventually break this key 1660/16640 resistance level and today I will again be a buyer on any dip to 16500/16540 with a 16475 stop which is just below last Friday’s low.
June BUND
The Bund traded in a very narrow range on Friday. I still like this market and today I will be a small buyer on any dip to 144.25/144.45 with a 144.10 stop. I do not want to be short the Bund at this time.
Gold Rolling Contract
Gold continues to trade in a very narrow but whippy range. Unfortunately I was stopped out of my long 1295 position overnight at 1283 and I am now flat. It made a low of 1277 and is now back trading at the the 1290 level. I still like Gold long term and the question is will the market have another shake-out before starting this rally. Today I will be a small buyer from 1279/1285 with a tight 1273 stop.
Silver Rolling Contract
Unfortunately I was also stopped out of my long 19.50 position at 19.10 on Friday. I really like Silver at these levels and for this reason I decided to re-instate my long Silver position this morning at 19.20. I will leave a 18.80 stop and if I am stopped out of this position I will be a more aggressive buyer in front of 18.50 with a 17.90 stop.
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