A dramatic day on Wall Street yesterday with both the S&P and the Dow making new closing all time highs after Chair Nominee Janet Yellan released a prepared statement ahead of her testimony in front of Congress this afternoon. Yellen said the US economy and jobs market ‘are performing far short of their potential and a strong recovery will ultimately enable the Fed to reduce stimulus’. This led to the Dow, S&P and the NASDAQ gaining 0.4%, 0.8% and 1.2% respectively. The S&P is now up an incredible 400 handles off its 1383 low last December.
In other news the UK released its Quarterly Inflation Report and upgraded its growth target to 1.6% from 1.4% for 2014. It brought forward the timing of unemployment falling to 7% to the 4th Quarter 2014 from it’s August forecast of 7% being reached in Q3 2016. The Bank of England also cut its Inflation forecast indicating it would fall below its 2% target by the end of 2015. The Bank stressed that the 7% unemployment level is no trigger and it expects spare capacity to enable it to hold an exceptionally stimulative policy for a long time ahead. On currency markets the US Dollar ended the day weaker across the board after Yellen released her prepared statement.
This morning on the economic front we have UK Retail Sales and German GDP. The Euro-Zone publishes its latest Monthly Report whilst at 1.30 pm we have the latest US Weekly Jobless Claims and Trade Numbers. At 3pm Janet Yellen is due to testify in front of Congress on her proposed nomination as Fed Chair and the market will certainly react to any of her comments. Bernanke is also due to speak today.
December S&P 500
A very frustrating day yesterday as the market just missed my 1754 buy level with a 1754.50 low before the S&P rallied nearly 30 handles off the low on comments from Janet Yellen. The rally in the S&P carried over the 1774.75 high made last Thursday and in the process negated the Key Day Reversal that we had in that trading session. As I mentioned yesterday a break and close over 1775 will be very bullish and opens up the possibility of a test of 1800/1810 and possibly even 1830/1840. I went short the market near the close at 1772 only to be quickly stopped out of this position at 1777 and I am now flat. The S&P is very overbought this morning and is back to the top of the Bollinger Band and Williams Index and I am going to stay flat ahead of Yellen’s testimony in front of Congress. If the S&P trades lower I will be a small buyer from 1772/1776 with a 1769 stop. I have to respect the fact that we closed over 1775 and for this reason my only interest in shorting the market is on a spike to 1790/1795 with a 1798 stop.
Euro/USD
After I posted yesterday morning the Euro tried the downside before buyers returned and the Euro followed the S&P higher after Yellen’s statement was released. The Euro traded up to my 1.3480 sell level and I am now short in small size with a 1.3510 stop. If I am stopped out I will be a more aggressive seller in front of 1.3570 with a 1.3610 stop. If the Euro trades down near 1.3440/1.3450 ahead of Yellen’s testimony I will go flat.
December DAX
The Dax worked really well as the market made a low at the 8980 support level that I mentioned yesterday. After I posted yesterday morning the Dax was trading at my 9015 buy level and after a nice rally I covered my position to early at 9070 and I am now flat. The market has opened higher this morning and today my only interest in selling the Dax is on a further rally to 9170/9195 with a 9210 stop which is just above the high made after the ECB rate cut last Thursday. Today I will move my buy level higher to 9060/9080 with a 9035 stop.
December FTSE
The FTSE just missed my sell level yesterday morning before having a nasty sell off. It is rebounding this morning but is still trading heavy in comparison to the Dax and S&P. Today I will leave my sell level the same at 6695/6720 with a 6735 stop. I will only look to buy the FTSE if we break and close back above 6720.
Dow Rolling Contract
The Dow is the one market that I am finding the hardest to trade at the moment. Having been stopped out of my small short Dow position taken last night I am going to stand aside for the next 24 hours as I want to observe Yellen’s testimony to Congress today before making my next trade.
December BUND
The Bund has left another buy extreme off the 140.60 low made over the last two days. Today I will move my buy level higher to 140.90/141.20 with a tight 140.75 stop. I still do not want to be short the Bund at this time.
Gold Rolling Contract
The buy signal that the Williams Index generated for Gold yesterday morning is really beginning to work. I am still long from 1266 which was taken on Tuesday and today I will move my stop up to 1275.
Silver Rolling Contract
After I posted yesterday morning Silver traded down to my 20.50 buy level. Silver just like Gold above has given a small buy signal on the Williams Index and this morning I have cut half my position at 20.85 and I will leave a 20.60 stop on the other half as I look for Silver to break back above 21.00. If Silver breaks 21.20 I will move my stop up to 21.00.
Recent Comments