The S&P rose again yesterday leaving the Index poised for it’s best annual gain since 2003 as weaker than forecast economic data fueled bets that the Federal Reserve will maintain stimulus at it’s two day meeting which gets under way later this afternoon. The S&P which rose 0.1% yesterday is now up 23.6% this year.The market rose despite disappointing earnings from Apple which closed down 2.2%. Pending Home Sales slumped 5.6% which exceeded all estimates and was the biggest drop in 3 years after a 1.6% fall in August. Otherwise it was a very quiet trading day as the market is on hold pending the latest FOMC announcements.
Today is another busy day for economic data. This morning we have UK Mortgage approvals followed by German and French Consumer Confidence. Ahead of the two day FOMC Meeting we have US Producer Prices and Retail Sales at 12.30 pm in the US. This is followed at 2 pm by Consumer Confidence and Business Inventories.
December S&P 500
The week started on a mixed note with the Dow closing down slightly whilst the S&P closed higher. However more stocks closed down versus up on each of the NYSE, the S&P and the NASDAQ markets, showing signs that this rally is finally tiring. The latest FOMC two day meeting starts today and concludes at the early time of 6 pm tomorrow where no change in policy is expected.
Given that the next two days will be dominated by the FOMC Meeting I decided to cover my short 1755 position as I do not want to be short going into such a significant event. I covered it on the close last night at 1757 for a small loss and I am now flat. Today I will still be a buyer on any dip to 1745/1749 with a 1743 stop.
Euro/USD
No change as I am still a seller on any rally to 1.3870/1.3900 with a 1.3920 stop. I am still long the US Dollar Index at 79.15. I will leave my stop the same at 78.70 as the market has gone quiet to firm and I am hoping that this trade will turn into a more macro position. Again if I am stopped out of this trade I will be a more aggressive buyer from 78.30/78.50 with a 77.95 stop.
December DAX
The Dax traded up to my 9010 sell level and after a nice sell off I was able to cover this position at 8965 and I am now flat. I am surprised that the Dax can’t seem to fall further but it is probably influenced by the fact that the FOMC Meeting is on today and tomorrow and traders, including myself, are reluctant to be short ahead of this event. Today I will raise my sell level to 9060/9090 with a 9110 stop. I will also be a small buyer on any dip to 8930/8960 with a 8895 stop.
December FTSE
The FTSE also refuses to trade lower and for this reason I also covered my short 6700 position for break even and I am now flat. The market is still overbought but we are in a seasonally strong time of the year. Today I will move my buy level higher to 6635/6660 with a 6620 stop. I do not want to be short the FTSE at this time.
Dow Rolling Contract
No change as I am still a small seller on any rally to 15660/15690 with a 15720 stop.
December BUND
Today I will raise my buy level to 140.50/140.75 with a 140.35 stop. I still do not want to be short the Bund at this time.
Gold Rolling Contract
Gold just missed my 1343 buy level before trading higher. I do not want to chase this market higher and I will leave my buy level the same at 1337/1343 with a 1333 stop.
Silver Rolling Contract
Silver continues to under-perform Gold and for this reason I covered my long 22.40 position from last Friday at 22.65 and I am now flat. Today I will lower my buy level to 22.00/22.30 with a 21.80 stop on any long position. If I am stopped out I will be a more aggressive buyer on any dip to 21.40 with a 20.95 stop.
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