Not much happened Friday amid an absence of US data and with no significant developments – at least not in public view – ahead of today’s all-important EU Summit. The Greek cabinet met Sunday and according to the FT, in a series of phone calls between Greek PM Tsipras, German chancellor Merkel and French President Hollande last night, Tsipras was told not to expect high level negotiations today over the substance of a reform plan. But, the FT says, he was told that if Athens were able to strike a deal in advance of the summit (based, presumably, on a new offer from Athens that Eurozone Finance Ministers – meeting ahead of the summit – can agree to) then leaders would be willing to discuss including debt relief as part of a new third bailout.
For anybody following my new Platinum Service it made 120 points on Friday for a total of 1000 points last week. Over the previous two weeks the Service generated 600 and 955 points respectively.
The ECB provided a further EUR1.75bn of ELA assistance to Greek banks on Friday in the face of a reported further EUR1.5bn deposit outflow (and bringing the week-to-date outflow to 5bn) but this was only half the 3.5bn reportedly requested by the National Bank of Greece. The big test of ECB resolve to continue keeping the banking system afloat will come in the immediate wake of the Summit outcome. The US Dollar was little changed Friday (DXY +0.05%, the broader BBDXY +0.15%) with EUR/USD ending the NY session -0.06% at 1.1352 – it has opened this morning slight higher.
In Bonds, the 10 year Bund was -5.6bps to 0.752%, suggesting safe-haven flow in front of today’s Summit. 10yr Treasuries finished -7.7bps at 2.2577%, also likely reflecting safe-haven buying and given relatively hawkish Fed member comments (see below) and an absence of new economic data. In stocks, after Shanghai finished down 6.4% (and 13.3% on the week, the biggest weekly drop in over 7 years) the Eurostoxx 50 actually eked out a 0.15% gain despite the German Dax dropping 0.54%. Spain (+0.7%) and France (+0.25%) benchmark country indices both rose. The S&P500 ended -0.53% (and the VIX +0.77 to 13.96). The Dow closed -0.55% and the NASDAQ -0.31% CFTC FX data for the week ended Tuesday 16 June shows a sharp contraction in the overall USD speculative long vs. G10 currencies, to 215.6k from 312k, its smallest since the week ended 19 May (194.9k). This was EUR, JPY and AUD led with short positions in all three currencies pared significantly. San Francisco Fed President John Williams said Friday that he expects the Fed to raise rates twice this year (so revealing) his ‘dot point’ to be at the median of FOMC members).
While saying he continues to be in ‘wait and see’ mode ‘until I have more confidence that inflation will be moving back to 2%’, he added ‘we are getting closer and closer’ to raising rates’. ‘My own forecast would be having us raise rates two times this year…but that would depend on the data’. (Bloomberg reporting). Cleveland Fed President Loretta Mester meanwhile said ‘I think the economy can support a 25-point increase in interest rates. However, I also understand the argument that getting a little more confirming data’ before taking action ‘is reasonable as well’. She says ‘I’m probably a little more optimistic about economic developments’ relative to some, and if events play out as expected ‘we are going to start to move rates up this year, while adding it’s ‘hard to determine at this point how many rates increases’ will happen in 2015. (WSJ reporting)
This morning on the economic front we have no data of note due from the Euro-Zone or the UK while at 1.30 pm we have the Chicago Fed National Activity Index. Finally at 3.00 pm we have the US Existing Home Sales MoM.
September S&P 500
My idea that we get a decent rally in the S&P did not materialise on Friday but after the market traded lower to my 2106 average buy level I did not get stopped out on Friday and last night the market opened above this level and I am still long. Today I will raise my stop on this position to 2101 and if I am stopped out of this trade I will use my ‘5 Handle Rule’ to go long again with a stop below whatever new low is printed. It is interesting that the DAX held I on late Friday despite the other main Indices trading lower. As I have mentioned countless times over the past few weeks I still believe the S&P will make another run higher as long as we hold the 2065/2070 major support. I still do not want to be short this market and remember a break and close over 2118 for the September Contract will be at least short-term bullish.
For anybody following my new Platinum Service it made 130 points on Friday for a total of 1010 points last week. Over the previous two weeks the Service generated 600 and 955 points respectively.
EUR/USD
The Euro plan worked well on Friday as shortly after the US Markets opened the Euro traded lower to my 1.1325 buy level. The Euro opened higher last night with the market trading higher to my take profit level at 1.1385 as outlined in my new Platinum Service and I am now flat. Today I will again use any dip to 1.1290/1.1330 to go long again with a 1.1260 stop. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer in front of 1.1230 with a 1.1180 stop.
September Dollar Index
The Dollar traded higher to my 94.60 sell level after the European Markets opened last Friday. I am still short and today I will lower my stop on this position to 94.90.
September DAX
The DAX plan also worked well on Friday as the DAX had a nice sell-off to my 11030 buy level before opening nicely higher this morning which has enabled me to cover this position at 11100 as outlined to my Platinum Members in Friday’s email and I am now flat. I still believe that Greece will get a deal and this is why I am only a buyer of dips in this market. Today I will again be a small buyer on any dip lower to 10980/11030 with a wider 10930 stop.
September FTSE
No change as I am still a buyer on any dip lower to 6600/6635 with a 6570 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
Very late in last Friday’s trading session the Dow traded lower to my 18020 buy level. I am still long and today I will leave my stop the same at 19970. Despite the confirmed Hindenburg Omen last Wednesday I do not want to be short the Dow at this time as I still believe we will have at least one more new high in this market before we trade lower.
September BUND
I am glad that I have stayed flat in the BUND over the past two trading sessions. However you have to respect the momentum that the market has been able to build on since last Wednesday. For this reason today I will be a small buyer on any dip to 151.40/151.75 with a 151.15 stop.
Gold Rolling Contract
Gold traded in a very narrow range on Friday and today I will still be a small buyer on any dip lower to 1185/1193 with a 1179 stop.
Silver Rolling Contract
After I posted on Friday Silver eventually traded lower to my 15.90 buy level. I am still long and today I will leave my stop the same at 15.50.
Recent Comments