Restrained price action across asset classes on Friday meant that there was no follow-through from Thursday’s sharp equity market slide and drop in 10-Year Treasury Yields to below 2.5%.The US Indices closed up an average of 0.4% whilst the VIX dropped by 0.73 to 12.44 which is near the bottom of last week’s range of 12.1 to 13.7 whilst the 10-Year Treasury Yields rose 4 basis points to 2.53%. In Currencies, none of the G-10 currencies moved by more than 0.25% versus the US Dollar with the Euro especially awaiting next month’s key ECB Meeting.
US data was mixed, Housing Starts punching the lights out with a 13.2% jump versus 3.6% expected whilst the University of Michigan’s Preliminary Consumer Confidence reading was disappointing at 81.8 compared to 84.1 in April and an expected rise to 84.5. The jump in Housing Starts was entirely a Multi-Family affair with building permits rising by an impressive 8.0%.
There were relatively hawkish comments from St Louis Fed President James Bullard late on Friday who said that the US economy is within sight of the Federal Reserve’s inflation and employment goals and is expected to grow at a robust pace for the rest of the year. The Fed is much closer to its policy goals than it has been in the last 5 years’ Bullard told a banking conference and it is in fact closer to those goals than it has been for much of the time since 1960.
Markets are opening slightly weaker this morning as news of further evidence of a deflating property bubble in China was released over the weekend leading to another fall in Chinese equities.
Today is a very light day for economic data with the only news of note coming out of the UK which releases its Rightmove House Price Index.
June S&P 500
The S&P again found support at the key 1860 level twice on Friday as the market just missed my 1861 buy level with a 1861.25 low. It also tried to rally but to no avail until the last hour of trading following Bullard’s comments. The S&P is supported by 1860 on the downside and 1878 on the topside as a break of either level will lead to an accelerated move. Last night, after the US Futures market opened I went short the S&P at 1877 and I am still short with a tight 1881 stop. A break and close over 1878 will see me look to set up a long position again with the VIX posting such a low reading it is very difficult to get too bearish on the market despite the wild swings that we have seen over the last three months. Today I will also be a small buyer on any dip to 1859/1864 with a 1857 stop which is just below last week’s low.
Euro/USD
On Friday the Euro again traded in a very narrow range as the market awaits next month’s key ECB Meeting. After I posted, it traded down to my 1.3695 buy level and I am still long and I will raise my stop to 1.3675. If I am stopped out of this position I will again be a buyer from 1.3640/1.3660 with a 1.3625 stop. Given how oversold the Euro is trading I do not want to be short at this time.
US Dollar Index
No change as I am still a buyer on any dip to 79.50/79.80 with the same 79.25 stop.
June DAX
The Dax plan worked well on Friday as the market had a nice sell-off after I posted with the market trading down to my 9600 buy level before having a nice spike on the US Housing Starts, which enabled me to cover this position at 9650 and I am now flat. Today I will again look to buy the Dax on any dip to 9550/9580 with a 9525 stop. I still do not want to be short the market at this time as I still believe we will eventually break the key 10000 resistance level.
June FTSE
No change as I am still long from Thursday at 6820 with the same 6795 stop which came close to being hit on Friday which posted a 6796 low. If the FTSE leaves a sell extreme from the 6830/6850 resistance level it will be bearish and I will then look to set up a short position. This is why I have left such a tight stop on my long 6820 position.
Dow Rolling Contract
The Dow just missed my 16380 buy level before staging another strong rally. Today I will raise my buy level slightly to 16370/16410 with a 16340 stop. As long as it can stay over the key 16250 support level I do not want to be short the market.
June BUND
My short 146.68 position worked well on Friday as the market had a nice drop which allowed me to cover this position at 146.30 and I am now flat. The key level for the Bund going forward is 145.85 and as long as we can stay over this level the market is still bullish. Today I will be a small buyer from 145.90/146.20 with a 145.70 stop. My only interest in selling the Bund is on a rally back to 146.70/147.00 with a 147.20 stop.
Gold Rolling Contract
It was frustrating as Gold just missed my 1285 buy level with a 1287 low before trading higher this morning and I am still flat. As I mentioned on Friday, Gold really needs to break 1310 for me to turn bullish and today I will leave my buy level the same at 1279/1285 with a 1273 stop as I do not want to chase this market unless we break this key 1310 resistance level.
Silver Rolling Contract
One of the reasons that I am not chasing Gold higher this morning is the fact that I am still long Silver at 19.40. Finally Silver found support on Friday with the market now trading above my buy level. I will still leave my stop the same at 18.90 on this position.
Recent Comments