There was no Bernanke press conference or forecast update after the FOMC Meeting that concluded last night. The next such ‘all bells and whistles affair’ will be at the upcoming Sepember 18 meeting. Instead we just had the formal post-meeting statement.
The market was looking for any specifics on when QE tapering might begin however none was provided. The fact the Fed will closely monitor incoming information on economic and financial developments in coming months suggests that the September 18th meeting is by no means set in stone as the start of tapering. It is now less than 50 days away and there are only two rounds of monthly economic data to be released before that date. ‘Data dependent’ is still the best description of the Fed’s stance but the language is designed to limit any back-up in long bond yields or premature rate hike expectations.
Esther George, a monetary hawk, continued as a dissenter emphasing the dovishness of the statement whilst James Bullard who last time wanted more policy emphasis on low inflation risks did not comment, again emphasing the dovishness of the statement.
US data released earlier was ‘mixed to positive’, the ADP Employment report printing stronger than expected ahead of tomorrows Non Farm Payrolls, whilst second Quarter GDP was also stronger than expected. Weekly Mortgage Applications to purchase new homes fell further signalling a cooling in mortgage demand. German Retail Sales released earlier in the morning were very weak.
This morning on the economic data front we have UK PMI Manufacturing ahead of the rate announcement from the Bank of England, while we also have PMI Manufacturing from the Euro-Zone ahead of the ECB rate announcement at 12.45pm. This is followed at 1.30pm by the US Weekly Jobless Claims, Construction Spending and ISM Manufacturing.
September S&P 500
Yesterday was one of the wildest trading days for the last three weeks as the market zig-zagged up and down in a large range right from the open. The Dow managed to make a new all time high but closed on the low of the day which is bearish. The S&P having trading up to 1694 after the Fed announcement then fell 14 handles to 1680 before having a late rally and closed flat. None of my levels were hit in the S&P and I am still flat. I still believe the market is trying to put in a top and the Fed is doing everything in its power to prevent this from happening.
Today I will be a small seller from 1686/1691 with a 1695 stop which is just above yesterday’s high. IF I am taken short and subsequently stopped out I will be a larger seller from 1702/1707 with a 1710 stop. My only interest in buying the S&P is on a dip to 1666/1670 with a 1663 stop.
Euro/USD
I was very unlucky in the Euro yesterday as the market just missed my 1.3200 buy level with a 1.3202 low before trading 140 points hgher. At least my bias over the last few weeks is for the Euro to trade higher and as I mentioned yesterday my only interest in selling the Euro is on a rally to 1.3370/1.3400 with a 1.3420 stop. Today I will raies my buy level to 1.3200/1.3230 with a 1.3185 stop. A break and close below 1.3200 will be bearish.
September FTSE
The FTSE, having been very quiet for the last week, really worked well yesterday as the market had a nice rally and I was able to cover my 6525 long position at 6570. It then traded up to my 6600 sell level and I was able to cover this position at 6565 before the FOMC announcement and I am now flat. I still like the FTSE and I believe all dips for the moment are to be bought. Today I will be a small buyer on any dip to 6520/6550 with a 6510 stop. Given the Bank of England rate decision this morning I do not want to be short the market.
September DAX
The DAX also worked very well as the market traded down to my 8230 buy level before having a nice rally and I was able to cover this position at 8280 before the FOMC and I am now flat. Today I will still be a buyer on any dip to 8200/8230 with a 8185 stop. I will also be a buyer on any rally over 8330 with a 8295 stop.
September BUND
The Bund plan worked well yesterday as the market dropped down to my 142.00 buy level with a 141.85 low. The market then had a huge rally and I was able to cover my long position at 142.65 before the FOMC and I am now flat. Today I am a small seller on any rally to 143.10/143.30 with a 143.45 stop. I am also a buyer on any dip to 142.30/142.60 with a 142.15 stop.
Gold Rolling Contract
Gold also had a wild day. It traded down to my 1615 buy level and, having nearly stopped me out, put in a 20 Dollar rally into the New York close. I covered my position last night at 1325 and I am now flat. Today I be a small buyer on any dip to 1311/1317 with a 1305 stop. I do not want to be short at this time.
Silver Rolling Contract
Silver traded down to my 19.50 buy level before having a nice rally. I am still long Silver and I will raise my stop to 19.40.
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