A bad day for the markets yesterday with broad market sentiment lower, commodities softer and bond yields lower across the board. There was little specific news but a continued negative bias as the markets try to assess the next steps to be taken by the Fed, Europe and the issue of China’s growth. We also have quarter end tomorrow which may generate some eratic behaviour. Today we have the important Weekly Jobless Numbers which are expected to be unchanged from last week and we have final GDP from the US with both of these stats released at 1.30pm.
S&P 500
The S&P traded through my break-even stop yesterday afternoon and traded down to 1393 before rebounding back to 1400. As we have quarter-end tomorrow I don’t want to be short here and I want to buy from 1395/1400 with at 1392 stop which is below yesterday’s low looking for a retest of the important 1410/1420 level.
Euro
The Euro is well bid, despite the sell off in Equities, as the market digests the benefits of the long discussed ESM and EFSF. As long as we stay above 1.3280 I think the market is still going to have a run at 1.3450 provided we can take out 1.3370/1.3400 level. I want to buy from 1.3300/1.3325 with a 1.3280 stop looking to target the above levels to take profit.
Bund
I sold yesterday in front of 1.3780 with a 1.3810 stop. If Equities recover from here the Bund should trade down to 1.3720/1.3740 where I will take profit.
USD/JPY
The JPY is a lot stronger this morning as Japan announced much better than expected Retail Sales at +3.5% versus 1.3%. USD/JPY is back down to 82.40 and I still intend to buy from 81.50/81.80.
Natural Gas
Natural Gas has rolled to the May contract with a 15 cent premium. I have moved my buy area to the 2.18 level with a wide 1.70 stop and I will only put on a small position.
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