The negative tone of consumer sentiment is continuing as President Obama confronts a fractured Congress over the Fiscal Cliff. The data flow in Europe provides ongoing evidence of recession and negotiations over the Greek bailout continue. Some good earnings news from Cisco and Abercrombie were not enough to keep markets in positive territory as the US Equity markets were down hard in the last hour of trading. The Fed released minutes from their last FOMC meeting which showed a number of FOMC participants favoured more QE after Operation Twist is completed. Many saw risks from
Fiscal Cliff and weakness in Europe and the Global Economy generally. They saw the Housing recovery as underway and Inflation at or below the 2% target. Importantly participants generally favoured an approach of tieing the interest rate outlook to numerical measures of inflation and unemployment rather than the current approach of specifying a calendar date for the end of the Zero Rate Policy. US Retail Sales came in flat and UK
Unemployment dipped to 7.8% from 7.9% while Euro-Zone Industrial Production fell 2.5% after an 0.9% rise last month.
This morning we have Euro-Zone GDP and UK Retail Sales. Later in the US we have the Weekly Jobless Nos, CPI plus the Empire Manufacturing and Philly Fed Surveys.
Dec S&P 500
The S&P had another wild day and for the third day in a row has closed on its lows. The market traded between 1362 and 1368 for a few hours before breaking 1360 in the final hour. I got stopped out of my small 1364 long position at 1356 and I am now flat. As I have been saying for the last two weeks I am only trading in half my normal size due to this volatility. The McCellan Oscillator is finally approaching oversold levels and closed at -268 last night. When this indicator falls to -250/-320 I am on the lookout for a snapback rally to relieve the downside compression. When this rally comes it will be sharp and swift. This morning I will be a buyer on a scaled level between 1348 and 1338 with a 1334 stop.
NASDAQ 100 Daily Rolling Contract
Despite the huge fall in the Dow and S&P, the Nasdaq has held up quite well with Apple closing at $536 well above the $528 support level. I went long the Nasdaq at 2558 and I am going to lower my stop to 2510. Resistance comes in at 2605/2630 and I will look to take profit in this area.
Dec FTSE
I bought the FTSE at 5720 and I was stopped out at 5690 where we are trading this morning. The Ftse is very oversold and I will look to reset my long position from 5640/5660 with a 5625 stop.
Euro/USD
I have been very unlucky in the Euro as the market again just missed my 1.2710 buy level. Despite the very weak Equity markets the Euro is performing very well especially against Sterling and the Yen. This morning I will raise my buy level to 1.2710/1.2730 with a 1.2690 stop which is the low made early yesterday morning.
GBP/USD
Sterling has traded very heavy over the last week and we are now at the bottom of the Bollinger Band and Williams Index. I am a small buyer from 1.5820/1.5840 with a 1.5780 stop.
Dec BUND
The Bund continues to trade heavy and I am a seller from 143.30/143.50 with a 143.70 stop.
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