After markets last week ended with a whimper rather than a bang, things have already heated up this morning with news on Sunday evening from Brussels that the latest talks aimed at bridging the differences between Greece and her creditors have collapsed. Further pension reforms, and higher VAT on electricity, appear to remain the key sticking points, while Greece’s pleas for a commitment to debt relief (and which offers the best (only?) chance of the Greek government saving some face with its own electorate if it chooses to cave on pensions and VAT, continues to be rebuffed.
For anybody following my New Platinum Service it made 50 points on Friday for a weekly gain of 600 points. The previous week the Platinum Service generated a 955 point gain.
The Euro has opened over half a cent lower, seemingly to the benefit of other non-USD currencies. If market volatility picks up as markets get into their stride, that won’t last. On Friday, with no fresh news on Greece to digest, the US dollar finished the day flat overall while Bond Yields in the U.S. and Germany showed only minor 24-hour moves (Treasuries marginally higher, Bunds fractionally lower). Equities fell again in both Europe and on Wall Street, though Shanghai earlier posted a new record high, +0.87% on the day and now 60% up year to date. This was despite news (Bloomberg citing EPFR data) that Emerging Market equity funds saw record outflows of $9.2bn in the seven days through Wednesday (Wednesday was when we learned China would not be included in the MSCI world index before 2017).
Neither US PPI (core +0.1% as expected but the broader core measures that also excludes erratic trade services prices as well as food and energy -0.1%) nor the UoM Consumer Sentiment Index (a market beating 94.6 up from 90.7) troubled the scorers much, even though they were the sources of much of the intra-day volatility in Bond Markets. In FX, EUR/USD fully recovered from a sharp drop (to 1.1157) after German Chancellor Angela Merkel was reported saying that “a too strong Euro makes reforms harder for Ireland and Spain”. AUD finished Friday -0.31% to 0.7731 and NZD -0.41% to 0.6984%. In commodities iron ore fell – $0.48 to $65.13 (up from $64.45 a week ago).
This morning on the economic front we have no UK data while the only Euro-Zone economic release is the Trade Balance at 10.00 am. However we have to be on alert for any positive/negative news to hit the newswires re Greece. Later this afternoon the US will release its latest Industrial Production and the NAHB Housing Market Index at 2.15 pm and 3 pm respectively. Finally just before the close at 9.00 pm we have the Total Net TIC Flows.
June S&P 500
This is the last few days for trading the June Contract which expires on Friday. For a change I was lucky with my S&P call on Friday as shortly after I posted the market traded lower to my 2103 buy level before having a quick rally which enabled me to cover this position at the day’s high at 2109 as outlined in my New Platinum Service before the market got hit on more negative Greek news. That theme has continued this morning with the S&P opening down hard on the breakdown of the Greek talks in Brussels last night. However with the Fed Meeting starting tomorrow and concluding on Wednesday along with the post Meeting press Conference with Fed Chair Janet Yellen I am loathe to get too bearish this week, especially with the June Contract Expiration on Friday. For this reason shortly after the US Markets opened last night I bought the S&P in small size at 2081.50. I will leave at 2074 stop on this position and if I am stopped out I will use my ‘5 Handle Rule’ to go long again with a stop below whatever new low is printed. Despite the negative price action I do not want to be short the market at this time.
EUR/USD
The Euro plan also worked out very well as following comments from Merkel the Euro traded lower to my 1.1180 buy level before having a nice rally which enabled me to cover this position at 1.1230 again as outlined in my Platinum Service and I am now flat. Today I will again be a small buyer on any dip lower to 1.1150/1.1180 with a 1.1115 stop. If I am taken long and subsequently stopped out I will be a more aggressive buyer in front of 1.1080 with a 1.1035 stop. I still do not want to be short the Euro at this time.
September Dollar Index
My Dollar plan also worked well as the Dollar had a nice rally shortly after I posted which enabled me to go short at 95.70. Subsequently the Dollar sold off which enabled me to cover this position at 95.20 as outlined in my Platinum Service and I am now flat. Today I will again be a small seller on any rally higher to 95.70/96.00 with a 96.30 stop.
June DAX
Whatever luck that I used up in my S&P evaporated in the DAX on Friday as shortly after I went long at 11170 the DAX three times missed my 11240 Take/Profit level by just 3 points before getting slammed and eventually stopped me of this trade for a loss at 11090 and I am now flat. Thankfully as mentioned all last week I am only trading the DAX in very small size as there is no rhyme or reason to most of the DAX moves at this time. I still believe that the Greek situation will be resolved at least temporarily as the ramifications of a no-deal are too great. Today I will again try to buy the market on any dip to 11010/11060 with a 10950 stop. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer in front of 10880 with a 10820 stop.
June FTSE
My short 6860 FTSE position from last Thursday worked well on Friday as shortly after the European Markets opened the FTSE traded lower which enabled me to cover this position at 6820 as outlined in my Platinum Service. Early this morning the FTSE opened at my 6740 buy level. I am still long and today I will lower my stop slightly to 6695 on this position.
Dow Rolling Contract
The Dow plan did not work out so well on Friday as shortly after I went long the market at 10950 I was very quickly stopped out of this position at 10880 and I am now flat. The Dow has big support from 10710/10760 and today I will be a small buyer in this region with a 10660 stop. Despite the fact that the Stock Market generated another confirmed Hindenburg Omen last Thursday I do not want to be short the market this week for reasons outlined in my S&P commentary above.
September BUND
Unfortunately the BUND just missed my 149.80 buy level by 13 points after the markets opened on Friday before going on to rally over 100 and I am still flat. The BUND has good resistance from 151.10/151.40 and today I will be a small seller in this area with a 151.65 stop. Remember there are a lot of Hedge Funds and Pension Funds who are trapped very long above the market so the upside is limited.
Gold Rolling Contract
Gold just missed my 1175 buy level on Friday before rallying strongly and I am still flat. Today I will raise my buy level slightly to 1172/1180 with a 1163 stop.
Silver Rolling Contract
No change as I am still long at 15.90 with the same 15.40 stop.
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