Friday’s tone was set by Fed Chair Yellen’s speech late on Thursday evening. In this, she backed up the Fed speakers post the FOMC, which have reiterated that the Fed are looking to raise interest rates this year. The optimism that started in the European session (on little news, maybe content with the new VW boss), and allowed equities there to rise solidly, didn’t last through the US session, where Equity markets were decidedly mixed. However, the USD and Bond Yields took Yellen’s discussion of higher rates seriously. The USD gained ground across a range of currencies and returned EM currencies to the back foot, after a short positive spell. Bond Yields were also higher across the board.
For anybody following my new Platinum Service it made 120 points on Friday and is now ahead by 2748 points for September. The previous three months saw gains of 2195, 1810 and 3045 points respectively.
US Speaker Boehner announced he would step down at the end of October. This is being seen as making the debt ceiling continuation bill easier to pass this week.
There were a few Fed speakers other than Yellen: Bullard and George (both hawks, 2016 voters) who added to the calls for hikes this year. Two speakers from the ECB were a little unexpected in that both Praet and Weismann were cautious about the need for more QE from the ECB. The ECB also suspended the purchase of ABS backed by VW loans.
This morning we have news that the Catalan regional elections in Spain have been won by the separatist party; which may have a short term negative effect on EUR. There was little data of import, but US GDP was revised higher, as was the University of Michigan consumer Sentiment.
US Equity markets were hit hard into the close on Friday night driven by the Biotechnology Sector which closed over 6% lower, which is now down by over 22% from their 2015 highs.
Overnight the Bank of Japan’s Kuroda has been speaking. He said the BoJ will continue to ease until we hit the 2% inflation target and that he hopes the Japanese Government will continue to take steps to boost growth. However the Nikkei again closed lower by 1.3% to 17645.
This morning we have no economic data due to be released. At 1.30 pm we have US Personal Income/Spending along with the PCE Deflator. At the same time the Fed’s Dudley is due to speak on Monetary Policy. At 3.00 pm we have German Retail Sales and US Pending Home Sales. At 3.30 pm we have the Dallas Fed Manufacturing Index. Finally the Fed’s Evans and Williams will speak on Monetary Policy and Economic Outlook at 6.30 pm and 10.00 pm respectively.
December S&P 500
The S&P which had been trading nicely higher for most of Friday’s trading session as it tries to close the 1936/1964 ‘Open Gap’ from last Monday got slammed into the close as the Biotechnology sector was hit for a sizeable 6% on the day. The S&P made a high of 1942 in Friday afternoon’s Chicago session before getting slammed with the market eventually hitting my 1919 buy level before stopping me out of this position near the low of the day at 1911 and I am now flat. With Month end on Wednesday I do not want to be short the S&P at this time and today I will again be a small buyer on any dip lower to 1905/1911 with a 1898 stop. If I am stopped out of this position I will be a more aggressive buyer on any subsequent drop to 1885/1892 with a 1879 stop.
EUR/USD
No change as I am still a buyer on any dip lower to 1.1080/1.1120 with the same 1.1055 stop. I still do not want to be short the Euro at this time.
December Dollar Index
The Dollar plan worked well on Friday as the Dollar was trading at my 96.80 sell level as I posted. Subsequently the Dollar had a nice sell-off which enabled me to cover this position at my 96.50 T/P level as outlined earlier to my Platinum Members and I am now flat. Today I will again be a small seller on any rally higher to 96.85/97.15 with a 97.40 stop.
December DAX
The DAX plan finally worked out as the market had a nice sell-off on the open last night which enabled me to buy the DAX at 9560. This morning the DAX has rallied having opened lower which has enabled me to cover this position at my 9640 T/P level as again outlined to my Platinum Members and I am now flat. Today I will again be a small buyer on any dip lower to 9490/9550 with the same 9450 stop. I still do not want to be short this market especially with month end on Wednesday.
December FTSE
Unfortunately the FTSE just missed my 6000 buy level with a 6010 low and I am still flat. Today I will raise my buy level to 5990/6020 with a 5965 stop. Just like the other main Indices I do not want to be short the FTSE at this time.
Dow Rolling Contract
The Dow plan worked well as very late on Friday the Dow traded lower to my 16240 buy level before having a nice rally into the close which enabled me to cover this position at my 16330 T/P level and I am now flat. Today I will again look to buy the market on any dip lower to 16180/16240 with a 16130 stop.
December BUND
No change as I am still a seller on any rally higher to 155.95/156.25 with the same 156.50 stop which is just above last Thursday’s high print.
Gold Rolling Contract
Gold is trying to base but is having difficulty in breaking the key 1150/1160 resistance area. I am still flat and with Gold looking heavy this morning I will lower my Gold buy level to 1118/1127 with a 1111 stop.
Silver Rolling Contract
No change as I am still a small buyer on any dip lower to 14.70/14.95 with the same 14.50 stop. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer on any further dip to 14.00/14.40 with a 13.70 stop.
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