The stock market rally, inspired by ECB President Dragi, continued on Friday on hopes of policy action in Europe and perhaps from the Fed later this week. German Chancellor Merkel and French President Hollande issued a statement about the Euro saying they are determined to do everything to protect it, echoing Dragi’s Thursdays comments. German Finance Minister Schauble also made a statement in support of the ECB. Meanwhile Spain’s unemployment rate hit 24.6% in Q2, up from 24.4%. The rate for under 25’s rose to 52.1%. All eyes thie week will be on the Fed meeting on Wednesday and the ECB meeting on Thursday after Dragi’s comments last week. On Friday we have the all important Non Farm Payolls. Later today we have Eurozone Consumer Confidence and UK Mortgage Approvals, followed by the Dallas Fed Manufacturing Activity.
Sept S&P 500
I had the correct call since last Tuesday in deciding not to be short the market as we were oversold and at the bottom of both the Bollinger Band and the Williams Index. Yet again these two signals worked really well. The market just missed my buy level at 1349 with a 1352 low on Friday and then rallied 30 handles to bury all the shorts and to close above the important 1370/1375 resistance that has capped the market over the last month. This 1370/1375 will now be strong support and I want to go long from 1373/1378 with a 1368 stop again, only in small size given the wider stop. I think we will challenge the 1400 over the next couple of weeks.
Euro
The Euro worked really well on Friday as we entered my 1.2220/1.2260 buy area with a 1.2240 low. The market then rallied to just below 1.2400 and I was able to take profit. Today I want to go long between 1.2250/1.2290 with a stop at 1.2235 which is just below Friday’s low.
Sept DAX
The Dax also worked well as we entered my 6520/6560 buy zone with a 6512 low. I bought the market at 6525 and I took profit too early at 6630 before the market rallied to 6780. We are now very overbought and at the top of the Bollinger Band (BB). Amazingly we have gone from the bottom of the BB to the top of the BB in three days. Today I will look to got short on any rally to 6820/6850 with a 6875 stop. If I enter the short I will look to take profit from 6750/6780.
USD/JPY
The USD/JPY dropped into my buy area with a .7810 low, so I went long at .7820 and I will leave a breakeven stop as I look for a retest of the .7900 area over the next week.
Sept BUND
The Bund has had a large sell off over the last week as Equities have rallied. Today I will look to go long from 142.50/142.90 with a 142.30 stop as I look for a retest of the important 143.50/144.00 resistance zone.
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