At last we had better news out of Europe yesterday with the release of the stronger than expected Euro-Zone PMIs. The German PMI came in at much stronger than expected, 52.5 versus 50.7, whilst the German Manufacturing PMI rose to 50.3 from 48.8 last month. For the Euro-Zone, as a whole, the PMI rose to 50.1 from 48.8 last month. If this trend continues there is some prospect that the Euro-Zone might record a rise in GDP for the third quarter. German and French Equities rose 0.8% and 1% respectively on the back of this news.

In the US it was the ‘now the familiar story’ that good news is bad as good data turns into a lower stock market because it means the Fed”s plans to start tapering sooner remains live. US New Home Sales bounced to 497k the highest since May 2008 and well above expectations of 484k. The preliminary measure for US PMI rose to 53.2 from 52.8, resulting in 10 Year Bond Yields rising by 8 basis points.

This morning on the economic front we have the German IFO and UK GDP. This data is followed in the US by Durable Goods and the Weekly Jobless Claims.

September S&P 500

The S&P worked really well as the expected struggle in the 1692/1697 resistance area saw sellers return to the market. The market was heavy all morning as it could not go higher despite the European Equity markets trading higher. I went short at 1694 and I was able to cover my position at 1684 and I am now flat. Today I will be a seller on any rally to 1690/1695 with a 1697 stop, which is just above yesterday’s high, and if I am taken short and subsequently stopped out I will be a larger seller from 1705/1710 with a 1713 stop. As I mentioned yesterday my only interest in buying the market is on a dip to 1670/1674 with a 1665 stop.

Euro/USD

The Euro dropped down to my 1.3180 buy level and as I did not want to have a position overnight I covered this position before the close for a small profit at 1.3200 and I am now flat. Today I will be a buyer on any dip to 1.3130/1.3160 with a 1.3115 stop and I will also be a seller on any rally to 1.3270/1.3300 with a 1.3320 stop.

September FTSE

The FTSE also worked well yesterday as the market traded up to my 6595 sell level and just missed my 6620 stop with 6617 high. The FTSE quickly followed the US market lower and I was able to cover this position at 6550 and I am now flat. The market came back well late yesterday and today I will be a buyer on any dip to 6530/6550 with a 6515 stop. I will also be a seller on any rally to 6620/6640 with a 6655 stop.

September DAX

The Dax traded up to my 8400 sell level with a 8417 high before also having a nice sell off and I was able to cover this position at 8355 and I am now flat. Like the FTSE, I am impressed at how well the DAX traded yesterday despite the weak S&P and so today I will move my buy level up to 8330/8350 with a 8310 stop. I do not want to be short the DAX today.

September BUND

Yesterday was another great example of how important it is to have stops in the market as I was quickly stopped out of my 143.70 long position for a small loss at 143.45 and I am now flat. The Bund then fell over a 100 points after breaking and closing below 143.30, a bearish move, but I must admit I did not see it falling so far so quickly. Today I will be a small buyer on any dip to 142.00/142.30 with a 141.80 stop. I will also be a seller on any rally to 142.70/143.00 with a 143.35 stop.

Gold Rolling Contract

Gold. having hit the top of the Bollinger Band on Tuesday, had a nice sell off yesterday and the market traded down to my 1320 buy level with a 1311 low. I am still long in small and I will leave my stop the same at 1308. If I am stopped out I will be a more aggressive buyer on any dip to 1290/1296 with a 1285 stop.

Silver Rolling Contract

No change as I am still long from 20.20 with the same 19.95 stop. If I am stopped out I will be a more aggressive buyer on any subsequent drop to 19.50/19.70 with a 19.30 stop.