There was still no deal over the weekend between the Obama Administration and the Republicans to give passage to Budget funding and raise the debt ceiling. Talks between the main protagonists, President Obama and House Republican leader Boehner, broke down on Saturday with talks between Senate Republicans and Democrats continuing yesterday and overnight. There have been some expressions of hope and optimism from various members of Congress in press commentary and media interviews, Democratic Senator Harry Reid for example, in talks with Republican Senator Mike McConnell said he is confident that the Government will be re-opened and the debt ceiling raised. Optimism is one thing, a deal is another and we are not there on that front so we continue to watch the headlines until a deal is struck.
Prior to the continuing impasse on the weekend, Friday’s markets continued the risky theme that was sparked by Bohner’s offer, which was seen as something of a breakthrough, to increase the debt ceiling for six weeks. European and US Equity markets closed higher on Friday with Gold falling 2.2%. Over the weekend China released its latest Trade data and again disappointed the market. The Trade Surplus shrank as a result of a slower rate of annual exports growth which came in at -0.3% year on year, well below the 5.5% forecast.
This morning on the economic front we have the latest inflation data from China and Euro-Zone Industrial Production. We have no data releases from the US due to the Columbus Day Holiday with Cash Bond markets closed. However the US Stock market is open for trading as usual.
December S&P 500
The S&P ended the week last Friday with a large outside-up week with a lower low,higher high and a higher close than the prior two weeks thus opening the way for the S&P to make new highs once the Budget impasse and debt ceiling issues are sorted. After comments from John Boehner the stock market soared on Friday and the S&P traded up to my 1695 sell level with a 1699.5 high. The market closed on its highs and after talks broke down over the weekend the Futures markets got slammed on the open last night and I was able to cover my short 1696 position at 1685 and I am now flat. We have a large gap down this morning in the S&P and my plan is to be a small buyer on any dip to 1676/1681 with a 1672 stop. I have to use wider stops given the volatility. I will also be a small seller on any rally to 1698/1702 with a 1705 stop.
Euro/USD
The Euro just missed my 1.3590 sell level on Friday before having a nice sell off and I am still flat. Today I will be a small seller on any rally to 1.3600/1.3630 with a 13650 stop. I will still be a buyer on any dip to 1.3480/1.3500 with a 13465 stop.
December DAX
The Dax had a very quiet trading session on Friday with none of my parameters being hit. Today I will still be a buyer on any dip to 8620/8650 with a 8595 stop. I will also be a small seller on any rally to 8770/8800 with a 8820 stop.
December FTSE
I still like this market and today I will raise my buy level to 6390/6420 with a 6380 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
The Dow closed an incredible 540 points higher on Friday than the low made last Wednesday. It traded up to my 10165 sell level with a 10180 high before having a small sell off to 10125 before spending the rest of the day trading higher to close at 10260 after Boehner”s comments. I was lucky on Friday as I covered my 10165 short position at 10135 and I am still flat. Today I will be a small buyer on any dip to 15070/15100 with a 15040 stop. I will also be a small seller on any rally to 15250/15280 with a 15305 stop.
December BUND
The Bund worked well on Friday as shortly after I posted the market traded down to my 139.55 buy level and after a nice rally this morning I have covered this position at 139.88 and I am now flat. I still like the Bund and I will look to reset my long position on any dip to 1.3940/139.60 with a 139.25 stop. I still do not want to be short the Bund at this time.
Gold Rolling Contract
Gold was hit again on Friday as finally the 1280/1290 support zone was breached. I bought the market at 1281 and I was quickly stopped out of this position at 1275 and I am now flat. I am going to stand aside today to see how the market trades as it is trading very heavy in relation to Silver and I want to observe the price action now that we have broken this very important support.
Silver Rolling Contract
Silver traded down to my 21.15 buy level on Friday and I am still long. I will leave my stop the same at 20.85 on this position. If I am stopped out I will be a more aggressive buyer in front of 20.10 with a 19.60 stop.
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