On Friday, the US Dollar rose for a sixth day in a row as US Treasuries slid. This resulted from faster than forecast growth in Manufacturing which fueled speculation that the Federal Reserve will begin tapering Bond Purchases. US Stocks climbed after a two day drop whilst the S&P GSCI Index of Commodities sank to a four month low. The US Dollar Index closed up 0.4% whilst 10 Year Treasuries rose 7 basis points to 2.62%, the highest level in two weeks. The S&P closed up 0.3% whilst Crude fell nearly 2% to close below $95 for the first time since June. The Euro weakened to 1.3490 on speculation that the ECB will cut rates when it meets next Thursday.
Manufacturing grew in October at a faster pace than forecast, showing that US factories were a source of strength for the economy at the start of the Fourth Quarter. Fed Policy makers said on October 30th that the economy showed signs of underlying strength even as they maintained their $85 billion of monthly bond purchases. Over the weekend China reported that its Non Manufacturing Purchasing Managers Index rose to its highest level this year in October.
This morning on the economic front we have Euro-Zone Manufacturing PMI. We also have UK Construction PMI and the latest Euro-Zone Sentix Investor Confidence. As the US changed their clocks over the weekend we are back to normal time for US Economic releases and today at 1.30 pm we have Factory Orders followed by the New York ISM Manufacturing data. Later this afternoon Fed member Rosengren is due to speak on the economy.
December S&P 500
The S&P had another fluctuating day on Friday before finally closing up 0.3%. The positive seasonal sentiment start dissipating after the close today and as long as the S&P does not break the 1773 high made last Wednesday the market should start to turn lower. The S&P plan worked well as shortly after New York opened the market fell to my 1751 buy level with a 1748.5 low before trading higher and I was able to cover my long position at 1757 and I am now flat. Today I will be a seller on any rally to 1763/1768 with a 1771 stop. I will also be a small buyer on any dip to 1744/1748 with a 1741 stop.
Euro/USD
I took profit on my long 79.15 US Dollar Index after the open last night at 80.70 as the Index is now overbought and at the top of the Williams Index as the market has now priced in a ECB rate cut next Thursday. I also bought the Euro on Friday as the market traded down to my 1.3540 buy level shortly after I posted before stopping me out of this position at 1.3510 and I am now flat. The next big support for the Euro is 1.3460 and as long as it does not close below this level the market is ok but a break and closer below 1.3460 will be bearish. Today I will be a small buyer from 1.3450/1.3475 with a 1.3440 stop. I will also be a seller on any rally to 1.3550/1.3580 with a 1.3610 stop.
December Dax
I was very unlucky on Friday as the Dax just missed my 8990 buy level with a 8995 ,low before having a nice rally – I am still flat. Today I will leave my buy level the same at 8960/8990 with a 8935 stop. I still do not want to be short the Dax at this time.
December FTSE
The FTSE worked well on Friday as shortly after I postedit traded down to my 6700 buy level before having a nice rally and I was able to cover this position at 6730 and I am now flat. Today I will leave my buy level the same at 6680/6700 with a 6660 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
I was extremely unlucky on Friday as the Dow just missed my 15650 sell level by 2 points before falling 100 points – I am still flat. Today I will leave my sell level the same at 15650/15680 with the same 15710 stop. I still do not want to be long the Dow at this time.
December BUND
The Bund opened and followed the US Treasury market lower on Friday. Today I will lower my sell level to 141.70/142.00 with a 142.25 stop which is just above Fridays high. I still do not want to be long the Bund at this time.
Gold Rolling Contract
Gold just missed my 1330 sell level before falling hard on Friday and I am still flat. Today I will lower my sell level to 1327/1334 with a 1338 stop. I will also be a small buyer on any dip to 1295/1302 with a 1288 stop.
Silver Rolling Contract
No change as I am still a buyer from 21.20/21.50 with a 20.95 stop. I do not want to be short of Silver at this time as I am still looking for it to put in a major bottom in front of 17.00.
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