Equity markets, having made small gains yesterday, are on the defensive this morning after Japanese exports fell and reports that China’s manufacturing may contract for an 11th month in a row thus adding to concerns that the global economic slowdown is deepening. Japanese exports fell 5.8% in August from a year earlier, the third straight decline on weakness in demand from the Euro-Zone and China. Despite the Bank of Japan increasing the size of its asset purchase program to 80 trillion Yen from 70 trillion, the Yen is stronger across the board with Euro/Yen and USD/Yen down 200 and 100 pips respectively from the highs made after the BOJ announcement. In the US, the good news out of the US Housing Sector continues. Existing Home Sales rose 7.8% in August against expectations of 2% to an annualised pace of 4.82m, the highest level in over two years.
On the economic front, following on from the weak Chinese PMI, we have European advance estimates of manufacturing and services PMIs. Later this afternoon we have the Weekly Jobless Nos from the US and the Philly Fed Survey. We also have speeches from Lockhart and Pianalto.
Dec S&P 500
The market dropped to the 1451 level and I was able to cover my 1462 short at 1452. The S&P then rallied to 1459 on the back of the good housing stats only for the market to sell off in the last 30 minutes into the close. This morning we have entered my 1443/1448 buy zone with a 1445 low so far. I have gone long at 1446 and I am I going to leave a 1442 stop on this position. Remember, tomorrow is the quarterly ‘triple-contract’ expiration which will add to the volatility and if I am stopped out I will be an aggressive buyer from 1430/1435 with a 1427 stop. I will look to take profit at 1455 on my existing long.
Sept DAX
The Dax worked really well as I was able top take profit at 7353 on my 7400 short sale. The market opened weak this morning on the poor Chinese PMI nos and we entered my buy zone so I have gone long at 7305. The low so far is 7289 and I will leave my stop at this level. I will look to take profit from 7350/7370 and I will still look to go short again in front of 7400 with a 7430 stop.
Dec BUND
The Bund traded up to my sell level at 140.00 and I went short at 139.95 and I was able to take profit before the close at 139.50. The Bund is now back over 140.00 and I have gone short again in small at 140.20. As I said yesterday I don’t want to push my luck and I will leave 140.50 stop on this position.
Sept FTSE
The FTSE has also entered my buy zone and I have gone long at 5850 and I will leave a 5830 stop on this position as the FTSE, having looked really bid yesterday, seems the opposite this morning . I will look to take profit from 5880/5900 on my long position.
Nov Crude Oil
Crude has got hammered over the last two days. Having made a high of over US$100, we have traded down below US$91 this morning. This is a six week low and Crude was hit after US Inventories rose by 8.5million barrels last week, much higher than the expected rise of 1million barrels. However Crude is now through the bottom of its Bollinger Band and Williams Index and I will attempt a small long from 9080/9120 with a 9020 stop. Again only trade in small given how volatile the Crude market is.
EURO/USD
The Euro is very weak this morning and I was stopped out of my 1.3030 long for a breakeven. I am very surprised at how weak the Euro is and how easily we broke through the 1.30 level. I have no view here and I am going to stand aside and see how we trade over the next 24 hours.
Recent Comments