Despite the continuing tensions in Syria, US equity markets edged higher yesterday with a 0.3% gain for the Dow and S&P 500. The Energy sector led the gains with a 1.2% increase, whereas airline stocks were hit amid fears of higher fuel prices. In currency markets, the US Dollar has been solid, gaining ground against all of the major currencies over the past 24 hours. Sterling was also strong yesterday after Bank of England Governor Carney’s first speech, where he reinforced the previous forward guidance which said that the MPC would would wait until the Unemployment Rate fell from its current 7.8% to 7% before even beginning to consider whether to raise the Base Interest Rate. But markets failed to listen as the GBP/USD rate surged to 1.5540 from 1.54840 with some traders attributing this to Carney’s relaxation of capital restrictions on UK Banks.
Today is a very busy day for economic data. This morning from the Euro-Zone we have the ECB’s Nowntry and Mersch giving key note speeches on the Euro-zone Economy and Central Bank crisis Management whilst later, from the US, we have Weekly Jobless Claims and GDP. This is followed tonight by the Fed’s Bullard and Lacker speaking on the US Economy.
September S&P 500
The S&P managed to stage a nice rally off the 1624.75 low but unfortunately it missed my 1624 buy level first. As I mentioned yesterday the next few days are a seasonally strong time of the year as we approach the Labor Day Holiday Weekend. On Tuesday all of the main traders in hedge funds and banks will be back at their desks after their summer break. We will then get a real insight into where the stock market is going over the next few weeks. I still like the market here and today I will be a small buyer from 1628/1633 with a 1619 stop. I have to leave a wider stop as 1620/1625 is key support for this market going forward as a break and close below 1620 will be very bearish. I am still looking for the market to close the two Gaps left over the last two weeks at 1645/1654 and 1669/1682 before the market trades lower. As a result I do not want to be short the market at this time.
Euro/USD
After I posted yesterday morning the Euro was trading at my 1.3340 buy level. The Euro had a small rally and when I saw Gold and Silver getting hit I covered my long Euro position at 1.3360 and I am now flat. This morning the Euro is trading below 1.33 and the key level for the Euro going forward is 1.3200 as a break and close below here will be very bearish. Today I will be a small buyer on any further dip to 1.3200/1.3230 with a 1.3190 stop. If we break 1.3170 I will go short with a 1.3210 stop.
September DAX
I was very lucky in the Dax as after the market traded down to my 8140 buy level it just missed my stop by one point and after a nice rally in the afternoon I was able to cover this position at 8170 and I am now flat. The Dax has traded heavily relative to the other main Indices and really needs to break back above 8265 for the market to look positive again. This morning, given the strength of the FTSE and S&P, I have bought the Dax again at 8175. I will leave a 8145 stop on this position and I will be a small seller on any rally back to 8240/8265 with a 8280 stop.
September FTSE
Very unlucky yesterday as the FTSE just missed my buy level before having a nice rally. This market has traded the best of the major indices over the last two weeks as the market really likes the new Bank of England Governor Carney, given his track record in his previous job as head of the Canadian Central Bank. Today given that it is month end I will be a buyer on any dip to 6430/6450 with a 6415 stop. I do not want to be short the FTSE at this time.
December 10 Year Treasury Bond
This contract has now rolled from September to December at a discount of just over 100 points. Today I will be a buyer on any dip to 123.40/123.60 with a 122.95 stop as I am still looking for the market to put in a major bottom over the next two weeks.
September BUND
The Bund dropped down to my 140.50 buy level before stopping me out for a small loss at 140.30 and I am now flat. Today I will be a buyer on any dip to 139.90/140.10 with a 139.75 stop. (Note: The Bund will roll to the December Contract until next week).
Gold Rolling Contract
Gold just missed my 1440 sell level before having a nice sell off over the last 24 hours as the tensions in Syria ease for the markets. Today I will lower my sell level to 1420/1430 with a 1435 stop which is just above yesterdays high. My only interest in buying Gold is on a dip to 1355/1365 with a 1349 stop.
Silver Rolling Contract
Silver worked really well as we had a nice sell off from my 25.00 short position taken yesterday morning and I was able to cover this position at 24.40 and I am now flat. Silver continued to trade lower overnight and today I will be a small seller on any rally back to 24.30/24.60 with a 24.95 stop.
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