US Equity indices made new highs on Friday but it was a much quieter session for bonds and currencies than witnessed on Thursday. Technology led the way with the Nasdaq closing up 1.2% to 3914 which is it’s highest closing level in 13 years led by strong gains in Google and Apple shares whilst the Dow again lagged only closing up 0.2%. US Treasuries closed within 1 basis point of their Thursday closing whilst the US Dollar Index was virtually unchanged.
Currencies continue to be crushed and in some cases are now back down to levels that prevailed prior to the spike induced by the Fed tapering talk back in May whilst moves in US Treasuries lately have left markets under priced for the risk of QE tapering in December or January 2014. However the immediate risk ahead is that a mediocre US Payrolls Report tomorrow will fast produce some further slippage.
Fed watcher and journalist from the Wall Street Journal John Hilsenrath said last Friday that the Fed were unlikely to do anything substantive at the FOMC Meeting next week given that disruptions to Government data will muddy the their assessment of the economy for months.
This morning on the economic front we have the UK Rightmove House Price Index and German PPI. Later at 1.30 pm we have the US Existing Home Sales and this is followed at 3pm by the Chicago Fed National Activity Index.
December S&P 500
Last Friday was one of the quietest trading sessions of the year so far as the market goes on hold ahead of tomorrow”s Non Farm Payroll data. The S&P continues to trade at the top of the Bollinger Band and Williams Index and is now overbought on both a Daily and Weekly basis. This trend can continue for a while longer and we need something dramatic to happen to knock the market down.
The S&P traded up to my 1739 sell level on Friday and, as I did not want to have a position ahead of the weekend, I covered this trade at 1737 near the close and I am now flat. As I mentioned on Friday I believe the S&P will put in a medium term top somewhere between 1745/1770 over the next few weeks. Today I will be a small seller from 1743/1748 with a 1751 stop,whilst I will raise my buy level to 1729/1734 with a 1727 stop which is just below Friday”s low.
Euro/USD
No change as I am still short from 1.3680 with the same 1.3720 stop. I will give the Euro one more day to sell off or else I will stand aside. If I am stopped out I will be a more aggressive seller on any rally to 1.3760/1.3790 with a 1.3810 stop.
December DAX
After I posted on Friday the Dax sold off and I was able to cover my short 8850 position at 8820 and I am now flat. The market continues to trade at the top of the Bollinger Band but interestingly the Williams Index has given a sell signal this morning. Today I will be a small seller from 8850/8880 with a 8895 stop. If I am taken short and subsequently stopped out I will be a very aggressive seller on any rally to 8945/8975 with a 9010 stop. I will still be a small buyer on any dip to 8750/8780 with a 8735 stop.
December FTSE
No change as I am still a buyer on any dip to 6520/6550 with the same 6495 stop on any long positions taken. I do not want to be short the FTSE at this time.
Dow Rolling Contract
The Dow continues to lag the other US Indices. I am still a small seller on any rally to 15440/15470 with a 15495 stop. I will also be a small buyer on any dip to 15280/15310 with a 15260 stop.
December BUND
Today I will raise my buy level to 139.50/139.70 with a 139.35 stop. I still do not want to be short the Bund at this time.
Gold Rolling Contract
Gold just missed my 1310 buy level with a 1311.75 low before having a nice rally and I am still flat. Today I will raise my buy level to 1308/1314 with a tight 1305 stop. A break and close over 1330 will be very bullish and will open up a test of the recent 1375/1400 major resistance zone.
Silver Rolling Contract
Silver also just missed my 21.70 buy level before having a nice rally and I am still flat. I still like Silver and today I will raise my buy level to 21.90/22.10 with a 21.70 stop which is just below last Friday”s low.
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