European markets were in a grim mood yesterday as Angela Merkel said she won’t be making any decisions on Greece until at least mid September when the German Constitutional Court rules on the bailout fund and after the Troika report on the finances of Greece. Euro stocks and the Dax slumped in response.
Then out came the FOMC Minutes from the August 1st meeting which gave a strong signal they are expected to boost the economy saying this would be needed unless there was a substantial and sustainable pick up in growth. This is the clearest signal yet that they are ready to do QE3 and will move at the next meeting on the 13th September. Ben Bernankes’ Jackson Hole speech on August 31st will be important. After the announcement, the S&P 500 reversed earlier losses and the USD moved sharply lower.
Later today, Samaras meets Merkel. It is also a big day for data releases as we have Consumer Confidence from the Euro-Zone and in the US we have the Weekly Jobless No’s, New Home Sales,and the preliminary PMI report.
Sept S&P 500
The S&P was weak initially on the back of the key day reversal in the market on Tuesday but reversed course after the release of the FOMC Minutes. The market never reached my sell level yesterday and today I have gone short in small at 1417 with a wider 1425 stop. I have had a good week trading so far this week and I am prepared to risk more on this position against the very significant 1420/1425 resistance area. Again, as I have said before, a closing break over 1425 could potentially see a move back to the 1500 level by Christmas.
EURO/USD
I am so glad that I respected a closing break of the 1.2450 resistance level and the the Euro dropped down to my buy level with a 1.2430 low. I have taken profit this morning at 1.2550 and I am now flat.The Euro is short term overbought here and that is why I have closed my position. The 1.2450/1.2490 will now be strong support and I will use any sell off to this area to reset my long position with a 1.2445 stop. I do not want to be short the Euro given the big breakout that has happened over the last few days.
Sept BUND
The Bund worked really well as after I posted we made a new low to the 141.70 level and I went long. I have taken a 100 point profit this morning at 142.80 and I am now flat. Yet again the Bollinger Band and Williams Index has worked really well. Today I only want to reset my long position on any dip to the 142.30/142.60 area.
Sept DAX
The Dax also worked really well yesterday as late in the morning the market dropped down to my 7010 buy area and I took profit last night at 7060. I do not like the way the DAX is trading and I will look to go short from 7060/7090 with a stop above this mornings high at 7113.
USD/JPY
Unfortunately I was stopped out of my 7910 long at 7870 and I am now flat. I still believe that the Yen must weaken and I will look to reset my long position from 78.20/.7820 with a 7810 stop
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