Markets on Friday were on the defensive overall with European Equities closing lower whilst the US Market was little changed for most of the session before a late sell-off with some reports pointing to some net selling from end of month re-balancing of portfolios. In the currency markets the US Dollar was in the ascendancy for most of last night ahead of today’s Manufacturing ISM and next Friday’s Weekly Payrolls, both US Dollar sensitive releases should they report levels far from expectations. Last Friday’s session was marked by a further rise in US Treasury Yields with the 10 Year reaching 2.21% before retracing late as stocks went into reverse.
The data out of the US was Dollar supportive, with the Chicago PMI jumping 10 points coupled with an upward revision in Consumer Sentiment and growth in Consumption in April. In the Euro-Zone, Unemployment continued to trend higher, as expected, to 12.2% from rising rates in the periphery with Spain at 26.8% and Greece at 27%. Overnight the Nikkei lost another 2.5% but at the moment is holding support at 12800/13000.
Today is another busy day for economic data. This morning we have UK and Euro-Zone PMI Manufacturing followed in the US by Construction Spending, ahead of the very important ISM Manufacturing at 3.00 pm. The Fed’s Williams is due to speak on the economy In Stockholm.
June S&P 500
The US Stock market generated a new ‘Hindenburg Omen’ observation on Friday leading to a fall of over 30 handles in the S&P from an intra-day high of 1658. These Hindenburg Omens are rare and are essentially a set of converging market conditions which have previously led to significant sell-offs in the market when they occurred. There is an interesting explanation of it, spelling out the conditions, on Wikipedia at this link http://en.wikipedia.org/wiki/Hindenburg_omen
The S&P plan worked well on Friday as after I posted the market dropped down to my 1643 buy level with a 1639 low before having a huge rally after the Chicago PMI was released. I covered my long position at 1650 and then the market then rallied to my 1655 sell level. I took gain on this short position way too early at 1646 as it turned out, before the market fell another 20 handles in the last thirty minutes of trading, and I am now flat. The cash S&P closed at the important 1630 support level. The market still has a Gap left from the May Payroll data at 1594/1603 and I will be a very aggressive buyer the first time we test this level.
Today I will be a seller on any rally to 1635/1640 with a 1642 stop and,given the fact it is the beginning of the month and we should see some institutional buying, I will be a small buyer on any dip to 1620/1624 with a 1617 stop. If I am taken long and subsequently stopped out I will look to buy the market again from 1605/1612 with a 1599 stop.
Euro/USD
My plan on Friday of not being short the Euro proved to be correct but unfortunately I was stopped out of my 1.2975 long position near the low of the day at 1.2955 before the market rallied strongly and following through this morning. I still like the Euro and I still believe we will test the 1.3200 area before sellers return. Therefore this morning I will be a buyer on any dip to 1.2980/1.3010 with a 1.2965 stop. I will also look to sell the Euro in small on any rally to 1.3090/1.3120 with a 1.3140 stop.
June DAX
The Dax worked perfectly on Friday as the market traded up to my 8360 sell level with an 8402 high before sellers returned and I was able to cover this position this morning at 8290 and I am now flat. The Dax has broken the important 8250 support zone this morning and I will be a small seller on any rally back to 8270/8290 with a 8310 stop. I do not want to be long at this time.
June FTSE
The FTSE broke my 6570 level to go short which I did but unfortunately I got stopped out of this position at 6605 and I am now flat. The FTSE subsequently got hammered and today I will be a seller on any rally back to 6550/6580 with a 6620 stop which is just above the high made on Friday afternoon before the market sold off.
June BUND
The Bund traded down to my 143.60 buy level. I am disappointed how weak the Bund is trading considering how weak the Equity markets are and I have covered this position this morning at 143.70 and I am now flat. I am going to stand aside here and let the market settle before making my next trade.
June Nasdaq 100
The Nasdaq plan worked well on Friday as I covered my original short position at 2887 before the market rallied back to my 3015 sell level again. After the market sold off on Friday I kept this position over the weekend and I have covered this short this morning at 2978 and I am now flat. Today if the Nasdaq rallies back to 2990/3000 I will go short again with a 3015 stop.
Silver Rolling Contract
Silver traded down to my 22.40 buy level and I am still long with the same 21.95 stop. I will look to take profit on any rally back to 22.80/23.10
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