Equity markets had a mixed session yesterday with European Markets continuing to rise on expectations that the ECB will cut rates next week. The Dow ended down 0.2% whilst the S&P and Nasdaq both close higher. Bad news in Europe is seen as good news for European equities as the market anticipates the ECB will have no choice but to cut its refinancing rate by 0.25%. The German IFO survey was weaker than expected as the German economy continues to contract. Sterling continues to strengthen against the Euro as the poor economic data from Europe increased the appeal of the UK currency as a safe haven against problems in the Euro-Zone. Overnight Asian stocks closed near a two year high as the market continues to reap the rewards from the Bank of Japan stimulus. Gold is a lot firmer this morning as buyers return to the market after last week’s carnage but will face strong resistance from $1460-$1480 and needs to break this level for the market to look healthy again.
Today, after yesterday’s very quiet session, should be busier as we have a lot more economic data due. This morning from the UK we have GDP and Index of Services at 9.30 am.The German Government is due to release its New Macroeconomic Forecast whilst later in the US we have the Weekly Jobless Claims and the Kansas City Fed Manufacturing Index.The ECB’s Asmussen is also due to speak in London.
June S&P 500
Yesterday was one of the quietest trading days for the S&P this year as the market just went on hold after the fireworks of the previous two weeks. The S&P traded down to my 1571 buy level and I went long at this price and I took a small gain at 1575.5 and I am now flat. The S&P still has a gap left open from April 12th at 1588 and I would expect the market to at least close this gap first before trying to move lower. It is very hard to short the market as the earnings reports have generally been quiet strong. Today I will look to buy
the market at the same level as yesterday from 1567/1571 with the same 1564 stop. I
will also be a seller in small on any rally to 1585/1590 with a 1594 stop which is just above contract highs.
Euro/USD
I was stopped out of my small short 1.3005 Euro position overnight at 1.3040 and I am now flat. Given how strong Gold is today I am not surprised that the Euro is back above the 1.30 level. Today I will look to reset my short position on any rally to 1.3090/1.3110 with a 1.3130 stop. The Euro needs to break and close below 1.2980 for the market to turn bearish.
June DAX
The theme of bad economic news is good news for the Dax continues as the Dax finished with more strong gains. The Dax closed over the important 7700/7725 resistance area and as long as we stay over this level the market will trade higher. I was stopped out of my 7708 short position for a small loss at 7735 and I am now flat. Today I will look to buy the Dax on any dip to 7700/7720 with a 7680 stop. I do not want to chase the market higher from here and I will wait for a pullback to get long. The next resistance level is 7830 and I will be a small seller from 7820/7840 with a 7855 stop.
June FTSE
The FTSE just missed my 6350 buy level before trading higher. Just like the Dax, I do not want to chase the market higher and I will look to buy on any dip to 6340/6360 with a 6325 stop. As long as it can stay over 6300/6330 the market is short term bullish.
June BUND
The Bund just missed my 146.30 sell level before trading lower. Today I will be a seller on any rally to 146.20/146.40 in small with a larger 146.80 stop which is just above contract highs and hence the wider stop. If the Bund can break and close below 145.80 I will be a seller with a 146.10 stop.
Gold Rolling Contract
Yesterday was not my day for fills in the market as Gold just missed my buy level before having a nice rally overnight. Gold need to break the key 1460/1480 resistance area for the bullish trend to reassert itself. Today I will be a small seller on any further rally to 1465/1480 with a 1495 stop.
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