US stock markets finished down 0.4% yesterday after the Fed released its latest FOMC Minutes from the Oct 29/30 meeting..The Fed stated that they generally expect that the upcoming economic data would prove consistent with the Committee’s outlook for ongoing improvement in labour market conditions and would thus warrant trimming the pace of Bond purchases in the coming months. Retail Sales released earlier showed an unexpected rise of 0.4%.
In a volatile trading day across all markets the Euro fell hard against the US Dollar after the ECB announced that it is considering introducing a minus 0.1% interest rate on Deposits. Members of the ECB Council who are holding a mid-month meeting in Frankfurt this week have said that a negative interest rate is a potential tool for warding off deflation. They have also cautioned that the consequences of such a unprecedented measure are not yet clear. The Euro fell nearly 1% on this news whilst European Stock which rose on this news subsequently got sold off.
Today is another busy day for economic releases. This morning we have UK Public Sector Borrowing at 9.30 am. This is followed at 10.00 am by Euro-Zone PMI Manufacturing/Services and Consumer Confidence. The ECB President Dragi is due to speak in Berlin and it will be interesting to see what his take on negative rates is. Later at 1.30 pm the US will release its latest Weekly Jobless Claims and PPI. This is followed by the Philly Fed Survey. The Fed’s Lacker and Bullard are both due to speak on the economy later this afternoon.
December S&P 500
The S&P generated another Hindenburg Omen yesterday which is amazing when stock markets are near all time highs. The one concern that I have had about the stock market over the last month is the fact that the McClellan Oscillator has had a negative reading despite the market making new high after new high day after day. After the ECB announced it was considering introducing a negative interest rate on deposits, stock markets spiked but unfortunately the S&P just missed my 1796 sell level with a 1794.5 high before having a large sell-off on the release of the FOMC Minutes. The market traded down to my 1778 buy level and I am still long. I will leave a 1773 stop on this position. As I mentioned over the last week, a break and close below 1775 will be bearish and I would expect the market so mount some sort of a rally off this important 1775 support. I will also be a small seller on any rally to 1789/1793 with a 1796 stop which is just above yesterday’s high.
Euro/USD
The Euro worked really well, as after the ECB made their surprise announcement, the market dropped hard and I was able to cover my short 1.3565 position from early yesterday at 1.3480. The Euro then traded down to my 1.3420 buy level and I have decided to cover this position for a small gain at 1.3430 this morning as I want to be flat ahead of Dragi speaking later today. On the charts the Williams Index has given a nice sell signal and today I will be a small seller on any rally to 1.3460/1.3490 with a 1.3510 stop. My only interest in buying the Euro is on a drop to 1.3280/1.3300 with a 1.3260 stop.
December DAX
The futures market for the Dax ended the day with a small key day reversal as the market made a higher high (compared to Tuesday) after the ECB announcement and then it made a lower low after the FOMC released its latest Minutes. The Dax traded up to my 9235 sell level and unfortunately I covered this position too early at 9195 as I wanted to be flat ahead of the FOMC . I am still flat and today I will be a seller on rallies especially after we got this key day reversal yesterday. This is the second reversal in the last two weeks which is another warning sign for the bulls. Today I will be a small seller from 9160/9190 with a wide 9240 stop which is just above the spike high we had on the ECB news yesterday. I do not want to be long the Dax at this time.
December FTSE
The FTSE worked well yesterday as after the market spiked on the ECB news I was able to cover my long 6665 position from yesterday morning at 6700 and I am now flat. I do not like the fact that the FTSE has broken the key 6660 support this morning and today I will be a small seller from 6650/6670 with a tight 6685 stop. I do not want to be long the market at this time.
Dow Rolling Contract
The Dow just missed my sell level yesterday before trading lower and I am still flat. Today I will be a small buyer on any further dip to 15750/15780 with a 15720 stop. I will also be a small seller on any rally to 15950/15980 with a 16010 stop.
December BUND
The Bund worked well yesterday as shortly after I posted it traded down to my 140.95 buy level before having a nice rally and I was able to cover this position at 141.35 and I am now flat. The market traded as high as 141.60 before following the US Treasury market lower. Today I will still be a buyer on any dip to 140.60/140.85 with a 140.40 stop.
Gold Rolling Contract
After I posted yesterday morning I was quickly stopped me out of my long 1271 position at 1263. After the FOMC Minutes were released Gold traded down to my 1250 buy level before also stopping me out of this position at 1243 and I am now flat. This market now looks very bearish on the charts especially considering the fact we closed below the important 1250 level . If Gold cannot manage to break back above 1250 today I will then look for it to trade back to the June lows at 1180. My only interest in buying the market is from 1175/1195 with a 1165 stop otherwise I am going to stand aside and observe the market for the next 24 hours.
Silver Rolling Contract
Silver is now extremely oversold after yesterday’s move which stopped me out of my 20.40 long position at 19.95 and I am now flat. As I have mentioned over the last few months I expect Silver to put in a major bottom somewhere between 17.00/20.00. Today given how oversold Silver is I will be a small buyer from 19.25/19.60 with a 18.95 stop.
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