A letter from Fed Chairman Bernanke to a congressman on Friday, ahead of this weekends Jackson Hole Annual Central Bankers Summit, signalled the Fed’s willingness to do more to support the economy which will lead to more speculation on Q3. In the US, the July Durable Goods Orders Report was another soft one with core orders having fallen in 5 of the last 6 months. The German and French leaders both told the Greek PM over the weekend that the next decisions on funds for Greece will be made at the October EU Summit and after a Troika report on Greece’s progress is published in
the coming weeks. UK GDP came in at -0.5% and China’s MNI Business Sentiment for August fell back to 46.76 from 49.73, as orders and production both weakened. Today is a bank holiday in th UK and, with London closed, the markets will be very illiquid. 

Sept S&P 500

The S&P was trading very weak on Friday until the release of the ‘more support’ letter from Bernanke. This is why the market is so difficult to short as everytime we have what looks like the start of a sell off some Central Banker comes out with the promise to do more and the market rallies. As long as we stay below 1425, the market is short term bearish on the back of the key day reversal that we had last Tues. However a break and close over 1425 will be very bullish and may eventually lead to a test of 1500. I have no position at this time and I will look to go short from 1412/1416 with a 1418 stop which is the high of last Wednesday. I will also look to go long from 1393/1398 ahead of Fridays Jackson Hole Summit.

EURO/USD

Friday was another very quiet trading day. However the Euro traded down to my buy level with a 1.2480 low before having a 90 point rally on the back of Bernanke. It is very important when you have a position to have a pre-set profit order (in this case a sell order) in place, as we rallied to 1.2570 before selling off again back to close at 1.2510. I managed to make a nice 50 points on this move and I am now flat. Today I am still respecting this 1.2450 support level and I want to buy from 1.2470/1.2500 with a 1.2445 stop. If I am taken long I will look to take profit from 1.2540/1.2560.

Sept DAX

I sold the Dax on Friday at 6980 and I will leave my stop at 6995. I will also look to take profit from 6910/6940 because with London closed I dont want to risk a lot on this trade.

USD/JPY

The market just missed my 7840 buy level with a 7845 low. Today I will raise my buy level to 7840/7860 with a 7835 stop if my order is filled.

Oct Crude Oil

Crude is another market that I have not traded for a while. Crude has had a 20 Dollar rally over the last 8 weeks and today I will look to go short in small on any rally to the 9790/9830 with a tight 9860 stop. The 9800/9850 should provide very strong resistance.