Quieter trading was evident yesterday as America remembered the September 11 terrorist attacks 12 years ago. Equity markets continued to strengthen on the back of President Obama delaying a Congressional Vote on a possible military strike on Syria in order to see if the Assad Regime would hand over its chemical weapons. The Dow started off the session weaker but ended the day strongly to close up 0.9%. However the Nasdaq was was weaker as Apple shares lost over 5%.
Oil prices having been coming off all week but consolidated yesterday during the European session whilst Bond markets had a good day with the 10 Year Treasury Note and German Bund both finishing a lot higher as yields fell. Markets are now awaiting news from a scheduled meeting between US Secretary of State, John Kerry, and his Russian counterpart, Sergei Lavrov, in Geneva later today on Moscow’s plan to secure and destroy Syria’s chemical weapons.
This morning on the economic front the Euro-Zone publishes its Monthly Report and releases its latest Industrial Production data. This is followed by the latest Weekly Jobless Claims from the US at 1.30 pm and these numbers will be closely watched ahead of next weeks FOMC Meeting. The US also releases its Monthly Budget Statement.
September S&P 500
The S&P rose again yesterday to close up for the seventh day in a row as complacency begins to set in. I read this morning that 100 million VIX contracts, the abstract measure of fear in the stock market – the lower the VIX the higher the stock market and vice versa, were sold in the last seven weeks.
I would have preferred if this recent rally had happened next week ahead of the FOMC Meeting on Wednesday. This is because recent evidence has shown that it is very hard for the market to fall in advance of such meetings despite how overbought the market is trading. For this reason and the fact the DAX and other European equities are so bid I cut my short 1682 position at 1678 yesterday afternoon and I am now flat. The S&P continues to trade at the top of the Bollinger Band and Williams Index whilst the market, with Tuesday’s up-move, has left a small gap from 1670/1675. Today I will raise my sell level to 1692/1697 in small size with a 1704 stop. I will also be a reasonable buyer on any dip to 1673/1678 with a 1669 stop. Given how high the S&P is trading we have to use wider stops to allow for volatility at these high prices.
Euro/USD
The Euro continued to trade higher yesterday with the market now over 200 points higher than the low made last Friday. The Bollinger Band and Williams certainly gave a fantastic buy signal and shows how important this indicator is. The Euro just missed my buy level before trading higher and today I will raise my buy level to 1.3260/1.3290 with a 1.3240 stop. I still do not want to be short the Euro at this time.
September DAX
The DAX traded up to my 8500 sell level yesterday. I stayed short overnight however as the market refuses to trade lower I have decided to cover this position for a small loss at 8506 and I am now flat. Today I will raise my buy level to 8400/8430 with a 8380 stop and my only interest in selling the DAX is on a rally to 8560/8590 with a 8610 stop.
September FTSE
For a change I was lucky in the FTSE yesterday as the market traded down to my 6560 buy level with a 6559 low and after a nice rally overnight I have covered this position at 6600 and I am now flat. Today I will leave my buy level the same at 6535/6560 with a 6525 stop. I do not want to be short the FTSE at this time.
December 10 Year Treasury Bond
The Bond had a nice rally yesterday after a very strong Auction where demand was very strong. The market just missed my buy level at 122.80 with a 122.90 low before having this rally and today I will raise my buy level to 122.90/123.20 with a 122.75 stop which is just below this weeks low.
December BUND
The Bund worked very well as I was able to buy the market at 136.80 and after a nice rally I was able to cover this position at 137.30 and I am now flat. Today I will raise my buy level to 136.90/137.10 with a 136.75 stop. I will also be a small seller on any rally to 137.70/138.00 with a 138.20 stop.
Gold Rolling Contract
No change as I am still long at 1365 with the same 1349 stop. I will give this market one more day to rally and if it does not and I am not stopped out I will stand aside.
Silver Rolling Contract
Silver worked well yesterday as after a nice rally I was able to cover my 22.90 long position at 23.25 and I am now flat. Today I will be a small buyer on any dip to 22.30/22.55 with a tight 2210 stop.
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