US and European stock markets closed lower on Friday despite better than expected economic data as Ukrainian tensions rose. Pro-Russian separatists continue to hold some OSCE European observers against their will. They have taken control of a regional Ukrainian TV station whilst the US and Europe have taken more sanctions against Russian individuals and companies close to President Putin. The Geneva April 17 Accord looks to be in tatters as the Russian Ruble and stocks continue to lose ground.
Meanwhile US economic data released on Friday showed the University of Michigan Consumer Sentiment was revised higher to 84.0 from a preliminary reading of 82.6 whilst the UK reported stronger Retail Sales than expected.
This morning on the economic front we have UK Lloyds Business Barometer and the Nationwide House Price Index. We have no data of importance due from the Euro-Zone today whilst this afternoon we have US Pending Home Sales and the Dallas Fed Manufacturing Activity which will be closely watch by the Fed which starts its two day FOMC Meeting tomorrow, with results due at 7pm on Wednesday.
June S&P 500
The S&P had a nasty finish to the week as the market lost 0.8% but interestingly, it started to rally off its lows in the last 15 minutes of trading and this theme has continued this morning. We have a two day FOMC Meeting starting tomorrow, making it very difficult to short the market. After I posted on Friday the S&P traded down to my 1866 buy level before quickly stopping me out of this position at 1859. I bought the S&P again at 1855 as the market made a low of 1853.25 and crucially held the key 1850 level before rallying into the close. I have covered this long position at 1863 this morning and I am now flat. As long as the S&P can stay over 1850 this market is fine but a break and close below here will the first warning sign of trouble and opens up a retest of the now key 1810 support level which was tested twice 10 days ago. Today I will be a buyer from 1853/1859 with a 1847 stop. Given the fact that the FOMC Meeting is starting tomorrow I do not want to be short the market at this time.
Euro/USD
The Euro just missed my 1.3810 buy level with a 1.3817 low before trading higher and I am still flat. One of the main reasons why I am finding it so hard to get bearish on the stock market is the fact that the Euro will not fall as every dip just gets bought. Today I will raise my buy level slightly to 1.3795/1.3825 with a 1.3770 stop on any long position as I still look for the Euro to trade higher.
US Dollar Index
No change as I am still a buyer on any dip to 79.20/79.50 with a 78.80 stop.
June DAX
The Dax, having been weak all day on Friday, refused to trade lower after the cash market closed despite the US markets being hit and for the moment has found support at the crucial 9360/9400 support zone. After I posted on Friday the Dax traded down to my 9435 buy level before having a small rally which enabled me to cover this position at 9475 and I am now flat. Today I will again be a buyer on any dip to 9380/9415 with a 9340 stop. I still do not want to be short the Dax at this time. Note that a break and close over 9660 for 2/3 days opens up the possibility of a move to 10,000/10,200.
June FTSE
After I posted on Friday the FTSE started to trade higher after the UK Retail Sales were released and which came in better than expected. It finally traded up to my 6675 sell level and I am still short with the same 6715 stop.
Dow Rolling Contract
The Dow plan worked well on Friday as shortly after I posted it traded down to my 16340 buy level before having a nice rally which enabled me to cover this position at 16390 and I am now flat. As I have mentioned over the last few weeks as long as the Dow can stay over 16250 the market is fine but a break and close below 16250, and especially if we close below 16050, it will be very bearish. Today I will again be a buyer on any dip to 16330/16370 with the same 16280 stop. Given the fact that the FOMC Meeting starts tomorrow I still do not want to be short the Dow at this time.
June BUND
The Bund continues to rally as the market just missed my buy level on Friday and I am still flat. Today I will raise my buy level slightly to 143.85/144.10 with a 143.55 stop which is just below last week’s low.
Gold Rolling Contract
Gold is trying to consolidate over its 100 Day Moving Average at 1290 with any escalation of tensions in the Ukraine leading to ‘flight to safety’ by investors into the Gold market. I do not want to chase this market higher but today I will raise my buy level slightly to 1290/1297 with a 1285 stop.
Silver Rolling Contract
No change as I am still a buyer on any dip to 19.20/19.50 with a 18.90 stop which is just below last week’s low.
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