After Asian markets, for the most part, managed some gains on Friday, European and US Equities went into reverse again as negative sentiment persisted despite the prospect of military action over Syria receding. The VIX Index (measure of expected volatility in the market and also known as the ‘fear index’) rose another 1.2% and the highest for two months although it closed off its intra-day high. There were also a mixed set of US Economic reports released on Friday showing Consumer Spending stalling in real terms in July but there was a somewhat better than expected and upwardly revised Consumer Sentiment in the final University of Michigan August Survey.
The Equity markets are a lot higher this morning as the possibility of military action from the US over Syria has, at a minimum, been delayed as President Obama, whilst announcing he is in favour of a strike against Syria is seeking Congressional approval before proceeding and this vote is due next Monday, September 9th. The US markets will be quiet today as they are closed for Labor Day however European markets will be volatile later this morning as UK, Euro-Zone and German PMI’s are all released.
September S&P 500
Friday was not a good day as the market whilst initially looking very strong was halted, just after the New York open, when the press conference by US Secretary of State, John Kerry was announced for later at 5:30 pm. Market activity died and just drifted all the way up to the press conference. It was only in the last 15 minutes of trading that the S&P, which was trading at 1626 at 9 pm, began to move and closed at 1632 before opening at 1640 last night. I entered a trade in my buy zone at 1636 however I was subsequently stopped out of this position at 1627 and I am now flat.
As it currently stands, the market is trading around the 1644 level and I still believe the Gap from 1645/1654 will at least be filled before the market trades lower. Today I will still be a seller on any rally to 1653/1657 with a 1661 stop. I will also be a small buyer on any dip to 1634/1638 with a 1631 stop. The main support for the S&P comes in at 1620/1625 and it will need a break of this level for me to get bearish.
Note: The futures market closes at 4.30 pm today for the Labor Holiday and the cash markets are all closed.
Euro/USD
After the Kerry press conference was announced all markets were hit and as a result I was quickly stopped out of my 1.3220 long position from Thursday at 1.3190 and I am now flat. The Euro made a low of 1.3172 but unfortunately just missed my 1.3160 buy level. The Euro is still very oversold and needs to break and close below the 1.3170/1.3200 support zone for me to turn bearish. Today I am a small buyer from 1.3190/1.3210 with a 1.3165 stop. Given how oversold the Euro is I still do not want to be short this market.
September DAX
The Dax, having been the weakest of the main Equity markets, was trading the best on Friday and whilst it was trading lower was doing so in a reluctant fashion going by the price action. It traded down to my 8130 buy level and, having been stopped out of my S&P and FTSE positions, I kept this trade over the weekend however I have covered this position this morning at 8210 and I am now flat. The Dax needs to break and close over 8262 to give it a more positive footing and today I will be a small seller on any rally to 8250/8270 with a tight 8285 stop. I will also be a buyer on any dip to 8160/8190 with a 8145 stop.
September FTSE
The FTSE was also in my buy zone after I posted on Friday and after I bought the market at 6430 I was stopped out at 6395 and I am now flat. The FTSE is back approaching the key 6500/6520 resistance zone and I will be a small seller in this zone with a 6530 stop.
December 10 Year Treasury Bond
No change to the plan as I am still a small buyer on any dip to 123.30/123.50 with the same 122.95 stop.
September BUND
I have no position as the Bund is in the process of rolling to the December Contract and I want to see how the market behaves first before making my next trade.
Gold Rolling Contract
Gold worked well overnight as the market dropped down to my 1380 buy level and after a small rally I have been able to cover this position at 1395 and I am now flat. Today I will still be a small buyer on any dip to 1365/1375 with a 1359 stop.
Silver Rolling Contract
Overnight Silver has traded up to my 24.20 sell level with a 24.40 high. I will leave my stop the same at 24.50 on this position.
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