Equities spent most of the day in the red but spiked after the release of the Fed’s Minutes from the last FOMC meeting. They then fell again before stabilizing ahead of Bernanke’s speech in Boston after which they went crazy with US Equity Futures markets catching a bid which has followed through to Europe this morning where all European Indices are opening stronger.
The Fed Minutes showed that ‘many members indicated that further improvement in the outlook for the labour market would be required before it would be appropriate to slow the pace of asset purchases’. However some members said that they would want to see more evidence that the projected acceleration in economic activity was actually happening before taking action. But ‘several members judged that a reduction in asset purchases would likely soon be warranted’. The bottom line is that a September tapering is still on if the economy continues to perform as forecast and the latest Payroll data suggest it is on track. Bernanke’s speech said very little about the economic outlook but in the Q&A session afterwards he stressed that a very accomodative policy (ie not tightening) would be necessary for quite a long period ahead. This comment sent the Euro soaring and the US Dollar weakening across the board with the Euro trading as high as 1.3210 at midnight before sellers returned.
Overnight the Australian Jobs report came in very weak whilst this morning the ECB publishes its Monthly Report. Later at 1.30pm we have the Weekly Jobless Claims from the US along with the Monthly Budget Statement, however all eyes will be on the cash markets reaction to Bernanke’s Q&A session late last night.
September S&P 500
This extreme volatility continues in a relentless fashion with every word from Bernanke or indeed any Fed Member causing havoc. Yesterday after the FOMC Minutes were released the S&P spiked to my 1652 sell level before having a nice selloff and I was able to cover this position at 1644 and I am now flat. I stayed flat into Bernanke”s speech and the market spiked higher on his comment in the Q&A Session that rates will stay low for a considerable time.
The S&P is very overbought here and is above the important 1660 resistance area but has left a large Gap from last nights close. The key today is whether the market can close over 1660 and today I will be a small seller on any further rally to 1665/1670 with a 1673 stop. The key support zone is at 1620 and today I will be a buyer from 1647/1651 (we closed at 1648.50 last night) with a 1643 stop. Remember 1660 is the key level to watch going forward and it will interesting to see if we close above this level this evening.
Euro/USD
The 1.2750 critical support level for the Euro/USD proved itself in no uncertain terms yesterday as the Euro spiked to a 1.3210 high at midnight on Bernanke’s ‘rates will stay lower for a long time’ comment before sellers returned. The last few days again showed why it is so important not to chase a market and instead to wait for a break to happen before following this break and I am so annoyed that I did not stay with my 1.2760 long position from Tuesday but at least we were not short. Today I have to respect the spike in the market and the fact we are now over the important 1.3000 resistance level which now should act as good support. I will be a buyer in small size on any dip to 1.2995/1.3020 with a 1.2975 stop. I do not want to be short at this time.
September DAX
The Dax continues to trade the heaviest of the major Equity Indices and after the market spiked to my 8095 sell level on the FOMC the market had a nice selloff and I was able to cover this position at 8060 as I wanted to be flat ahead of Bernanke. Today the Dax opened a lot higher at 8200 and has sold off since the open and I will be a small seller on any rally to 8185/8210 with a 8225 stop. My only interest in buying the Dax is in front of 8060 with a 8030 stop.
September FTSE
The FTSE never hit my sell level before the market closed ahead of Bernanke’s speech and I am still flat. The FTSE having spiked higher when it opened overnight has spent the rest of the night and this morning selling off and is now down 80 points from these overnight highs at 6605. The FTSE is still outside the top of the Bollinger Band but the Williams Index has given a sell signal and today I will be a seller on any rally to 6530/6560 with a 6610 stop.
Gold Rolling Contract
Gold, having just missed my 1242 buy level, had a $50 rally and traded up to my 1295 sell level. I have taken profit on this position this morning at 1284 and I am now flat. Today I will look to reset my short position on any further rally to 1300/1310 with a 1318 stop.
Silver Rolling Contract
My hunch that Silver is trying to put in a long term bottom is beginning to follow through. I have covered half of my 19.15 long position this morning at 20.10 and I will raise my stop to 19.50 on the other half. I will add to my long position on a break of 20.70 with a 20.25 stop on the whole position. I will also look to reset my other half position on any dip to 19.60/19.80 with the same 19.50 stop.
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