US equity markets closed higher yesterday reversing some of Tuesday’s losses with a 0.3% gain for the Dow and a 0.4% gain for the S&P 500. With little economic data to focus on, the rally was supported by Apple which rose 3.1% following the launch of its new products and Twitter which closed 4.5% higher. The rise in Tech stocks saw the NASDAQ close up 0.8%. The stock market gains came despite ongoing speculation about what the Fed might say next week regarding the timing of interest rate increases and further concerns over the outlook for Chinese growth. Premier Li’s comments that Money Supply Growth eased in August to 12.8% ,from July’s 13.5%, again highlights that Chinese growth is slowing. Overnight China reported its latest CPI data which only rose 2.0% versus 2.2% expected.
Meanwhile Sterling rebounded strongly yesterday after a poll by The Daily Record showed the ‘No’ vote was leading by 53/47 which helped Sterling rise above 1.6200 last night from a low of 1.6052 yesterday morning leading Sterling to have a Key Day Upward Reversal in yesteday’s trading session.
Meanwhile in a speech overnight US President Obama said the US would be aided by a broad coalition of partners in their efforts to take out the Islamic State extremists.
This morning on the economic front we have already had the UK RICS House Price balance which came in lower than expected. The ECB’s Noyer has just been on the airwaves saying the Euro must be go lower in order to fight Inflation. At 9.00 am the ECB will publish its Monthly Report and later the US will release its latest Weekly Jobless Claims at 1.30 pm.
September S&P 500
The S&P plan worked well yesterday as shortly after I posted the market was trading at my 1991 sell level and following a nice sell-off after the US markets opened I was able to cover this position at 1985. I am still short my small macro position at 2001 from Tuesday and I will leave a break-even stop on this trade. The rally in the market is getting narrower and narrower with very few shares participating. One of the shares is Apple which now accounts for almost 5% of the S&P and nearly 18% of the NASDAQ which is giving a mis-leading interpretation for the main Indices. Today I will again be a seller from 1995/1999 with a 2003 stop. Given how over extended this market is trading I still do not want to be long the S&P at this time.
Euro/USD
The Euro had a nice bounce yesterday but is being hit this morning following the comments from ECB Member, Noyer. The Euro’s Daily Sentiment Index has been below 10% for four straight days and the 10-Day Average has fallen to its lowest level in 4 1/2 years. The decline does not necessarily have to end but there will likely be at least a relief spike higher as the slope of the decline cannot be sustained much longer. Today I will raise my buy level slightly to 1.2855/1.2885 with a 1.2835 stop. I will still be a small seller on any rally back to 1.2990/1.3020 with a 1.3040 stop.
US Dollar Index
No change as I am still a seller on any rally to 84.50/84.80 with the same 85.10 stop.
September DAX
The Dax had a nice sell-off yesterday but unfortunately just missed my 9595 buy level with a 9635 low before having a 100 point rally. As I mentioned yesterday the Dax is getting more difficult to trade as I do not want to be short the market given the fact that the ECB is starting their own version of QE but I am also worried at the impact that the ending of QE and the start of the Fed increasing rates in the US will have which makes it difficult to be long the Dax. Today I will raise my buy level slightly to 9610/9640 with a 9585 stop. I still do not want to be short the market at this time.
September FTSE
The FTSE has reacted favourably to the Daily Record Poll on the Scottish Referendum. As I have mentioned over the last few months the FTSE has totally underperformed versus the other major indices thus making it very difficult to short the market. As long as the it stays over 6780 the market is fine. Today I will raise my buy level to 6795/6820 with a 6770 stop.
Dow Rolling Contract
The Dow plan worked well yesterday as shortly after I posted it was trading at my 17040 sell level and after a nice sell off I was able to cover this position at 16090 and I am now flat. Today I will move my sell level slightly higher to 17090/17130 with a 17160 stop. Given how over-extended the Dow is trading I still do not want to be long at this time.
December BUND
The Bund just missed my 147.90 buy level and as expected is rebounding nicely this morning. I will still be a small seller on any further rally to 148.90/149.20 with a 149.55 stop. I will also raise my buy level to 147.90/148.15 with a 147.75 stop.
Gold Rolling Contract
Gold is finding it very difficult to get anything going on the upside but in my opinion after last night’s speech by US President Obama the geo-political risks are only going to increase going forward. After I posted yesterday Gold traded down to my 1250 buy level with a 1244 low. I am still long and I will leave my stop the same at 1237 which is just below the 1241 low made earlier this year.
Silver Rolling Contract
No change as I am still a buyer on any dip to 18.50/18.85 with a 18.25 stop.
GBP/USD
My long 1.6125 Cable position worked out well yesterday as by the time I posted it was trading at 1.6070 and after a very nice rally following the Daily Record Poll I was able to cover this position at 1.6218 and I am now flat. In the process Sterling had a Key Day Reversal to the upside, again highlighting what a great technical indicator the Bollinger Band and Williams Index are. I have no trading plan for Sterling today but will keep an eye on potential opportunities going forward.
Recent Comments