Last Friday the EUR/USD traded on 1.12, 1.13, and 1.14 handles, in the now familiar, red headline-driven drama that was the latest emergency session between Greece and her Euro-Zone counterparts. The end result was a deal, struck after European markets finished for the week but ahead of the New York close, that grants Greece a four-month extension of the existing bailout.
The deal is subject to Greece detailing its reform plans by today to the Committee formerly known as the Troika, with EZ Finance Ministers meeting to approve the list on Tuesday, in which case national parliaments will then vote on ratification ahead of the 28 February current bailout expiry date. If approved, this would allow Greece to call on EUR7.2bn of remaining bailout funding and remove the risk of the ECB pulling the plug on ELA funding for Greek banks.
Ratification of the in-principle accord is not yet assured, but the news meant that EUR/USD ended the New York trading session much nearer the top than the bottom of the day’s 1.1275 to 1.1420 range at 1.1394. Together with a strong rally in all things CHF, the Dollar Index closed -0.16% at 94.25.
US equities made good gains on Friday, with both the Dow and S&P 500 both closing at record highs as the stock markets were aided by the Greek bailout news. Commodity markets closed mostly lower with Oil closing down another $1 to $50 a barrel.
Euro-Zone PMI data was better than expected thanks to strength in the service sector readings. The Pan Euro-Zone Composite PMI rose to 53.5 from 52.6 and above the 53.0 expected, while the US Manufacturing PMI rose to 54.3 versus 53.9 last month.
This morning on the economic front we have the German IFO Survey at 9.00 am. At 3.00 pm we have the US Existing Home Sales. Finally at 3.30 pm the Dallas Fed Manufacturing Index will be released.
March S&P 500
Initially the S&P plan worked very well on Friday as shortly after I posted the S&P traded lower to my 2083 buy level before having a 28 handle rally which enabled me to cover this position at 2095. After I covered my long position the S&P subsequently traded higher on the Greek deal to my 2102 sell level before stopping me out of this position for a small loss at 2107 and I am now flat. The S&P is overbought on both a Daily and Weekly basis after its massive 140 handle rally over the last three weeks despite mainly poor economic data releases. However as I mentioned last week as long as the S&P can stay over 2067/2072 the market is fine. Today I will raise my buy level to 2093/2098 with a 2087 stop. My only interest in selling the market is on a further rally to 2116/2122 with a 2126 stop.
EUR/USD
Just as I posted on Friday I was stopped out of my long 1.1360 position at 1.1315. Thankfully the Euro subsequently traded lower to my 1.1280 buy level before having a very nice rally on the Greek deal which enabled me to cover this position at 1.1380 and I am now flat. This morning the Euro is opening lower and today I will again be a small buyer from 1.1270/1.1310 with a 1.1250 stop. I still do not want to be short the Euro at this time.
US Dollar Index
My short 94.60 position from last Thursday worked out well on Friday as after I posted the Dollar Index traded lower on the Greek deal which enabled me to cover this position at 94.20 and I am now flat. Today I will again be a seller on any rally back to 94.80/95.20 with a 95.50 stop. I still do not want to be long the Dollar at this time.
March DAX
Unfortunately the DAX plan did not work out on Friday as after the Greek deal was announced the DAX spiked higher to my 11060 sell level before very quickly stopping me out of this position at 11120 and I am now flat. The DAX has very strong resistance between 11220/11320 and even though this is a wide range I will be a small seller in this area with a tight 11350 stop. Given how overextended the DAX is currently trading I do not want to be long the market at this time as one negative comment out of Greece will see the DAX accelerate hard to the downside.
March FTSE
My long 6835 FTSE position worked out very well on Friday as the FTSE traded higher for nearly all of Friday which enabled me to cover this position at 6890. Subsequently the FTSE traded higher to my 6900 sell level. I am still short and I will leave my stop the same at 6930. I will also look to go long the FTSE again on any move lower to 6825/6855 with a 6795 stop.
Dow Rolling Contract
Following the Greek bailout announcement the Dow spiked higher to my 18090 sell level. I am still short and I will leave my stop the same at 18130. If I am stopped out of the trade I will be a more aggressive seller in front of 18180 with an 18230 stop. Despite the very positive price action I do not want to be long the Dow at this time.
March BUND
The Bund plan also worked out well on Friday as shortly after I posted the Bund traded higher to my 159.05 sell level before having a nice sell-off which enabled me to cover this position at 158.60 and I am now flat. I will continue with my strategy of selling rallies as I really believe the upside for the Bund is limited especially with Bond Yields trading at historically low levels. For this reason I will again be a small seller from 158.75/159.05 with a 159.30 stop.
Gold Rolling Contract
The recent sell-off in Gold continues this morning with Gold now trading at my 1193 buy level. I am still long and I will leave my stop the same at 1183.
Silver Rolling Contract
Silver is also selling off this morning with the market also trading lower to my 16.20 buy level. I am still long and I will leave my stop the same at 15.70.
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