A more measured last 24 hours trading saw Equity markets recover some of Tuesday ‘s losses. Shanghai finished down small yesterday (-0.2%) ahead of a four day long weekend to mark China’s victory in WWII and while European Bourses had something of a see-saw day closed higher. (The US also has a long weekend coming up with Labour Day on Monday.) So the Dow and the S&P have closed higher on the day, both up 1.8%, but still within the lower ranges set over the past 10 days or so.
For anybody following my new Platinum Service it made 235 points yesterday and is now ahead by 1235 points over the previous four trading sessions.
I have been asked to do a live trading/training day over the now key Non-Farm Payrolls tomorrow in the Royal Irish Yacht Clun Dun Laoghaire from 11.00 am to 5.00 pm. ETX Capital have kindly agreed to sponsor any existing or new client’s trading account to the tune of EUR 150 per person attending the event. If anyone is interested in coming tomorrow please contact Graham on grahammulhern@yahoo.com
The AUD did test its sub 70 cent level again early in the London session with some selling seen against the Euro; carry trade unwinds perhaps. But relative market stability in the overnight session saw Aussie clamber back above 0.70, to around its pre-GDP level, and where it made its way back to within an hour or two after GDP after the initial sticker shock of a low print. Data did not play a big part in market direction yesterday, not that the prints were particularly compelling or enlightening. It was the general tone of equities, and on that score, the market was relatively settled. All tallied up, the Bloomberg US dollar index made some net gains, more notably against EUR, JPY and CAD. Oil continued its whippy story, WTI and Brent up 2% or so, the NOK and RUB currency beneficiaries on the day; the CAD was little changed underperforming after its second negative quarterly GDP print the day before.
The main US data releases yesterday were the ADP Employment Report, Factory Orders and the Fed’s Beige Book. ADP has not been a reliable guide to Payrolls and the market knows that. In the event, it was only shy of 200K expectations at 190K. Factory Orders printed low – a surprise after a good lead in from Durable Goods Order last week – with consumer non-durable orders down for once, likely monthly noise.
The Fed’s Beige Book reported economic activity continued expanding with again nearly all Fed Districts reporting growth was either “moderate” or modest”, whatever the difference is between those two are for you wordsmiths out there. The Beige Book also reported that wages were picking up slightly in selected industries and occupations with input and selling prices stable or up only slightly. That sounds less than moderate or modest. Tomorrow ‘s Payrolls is expected to reveal no trend change in flat average earnings growth and to me that is one of the main reasons why the US is in a sub-par growth phase.
This morning on the economic front we have Euro-Zone Services PMI at 9.00 am. At 9.30 am we have UK Composite PMI and this is followed at 10.00 by Euro-Zone Retail Sales. All eyes will then shift to the ECB who will announce the latest Asset Purchase and Re-Finance Rate. As I go to press ECB President is not due to give a press conference but that may change later this morning. At 1.30 pm we have the US Weekly Jobless Claims and Trade Balance. Finally we have the US Composite PMI and the ISM Non –manufacturing Composite at 2.45 pm and 3.00 pm respectively.
September S&P 500
The S&P plan worked very well yesterday as shortly after I posted the S&P traded lower to my 1922 buy level before having a nice rally which enabled me to cover this position at my 1930 T/P level as outlined earlier to my Platinum Members and I am now flat. Thankfully we had no levels to go short across any of the equity indices that I trade as I do not like to be short the market ahead of a major release such as the Beige Book last night and of course the Non-Farm Payrolls tomorrow. The rollercoaster in stocks is likely to continue for the next six weeks at least and I would not be surprised that last week’s 1830 low print in the S&P is tested over these coming weeks. The ‘Open Gap’ that I mentioned yesterday from 1937/1970 got 50% filled in yesterday’s trading following the Beige Book release and I would not be surprised if the rest of this ‘open Gap’ is filled before the NFP. The last time that we had such a series of ‘Open Gap’s was in September/October 2011 when these Gap’s were a daily event just like now. I intend to go through my Open Gap strategy in more detail at my live training day tomorrow. Today my only interest in buying the S&P is on dip lower to 1938/1943 with a 1932 stop. If I am taken long and subsequently stopped out of this trade I will be a more aggressive buyer in front of 1922 with a 1914 stop. As mentioned above I still do not want to be short ahead of tomorrow’s NFP.
EUR/USD
The Euro traded in a very narrow range yesterday especially after the market traded lower to my 1.1230 buy level. I covered this position at 1.1240 as outlined in a separate email to all my Platinum Members and I am now flat. Today I will again look to buy the Euro on any dip lower to 1.1140/1.1185 with a 1.1110 stop. Despite the negative price action I do not want to be short the Euro at this time.
September Dollar Index
Overnight the Dollar traded higher to my 96.05 sell level. I am still short and today I will lower my stop on this position to 96.40.
September DAX
The DAX plan also worked well yesterday as shortly after I posted yesterday morning the DAX had a nice sell-off to my 9970 buy level before subsequently having a nice rally which enabled me to cover this position at my 10050 T/P level as again outlined earlier to my Platinum Members and I am now flat. The DAX is opening higher this morning taking its lead from the nice late rally in US stocks. Today I will move my buy level higher to 10030/10080 with a 9970 stop. I still do not want to be short the DAX at this time.
September FTSE
The FTSE plan also worked well yesterday as the market was selling off hard as I posted which enabled me to go long near the bottom of my buy range at 6030. Subsequently the FTSE had a nice rally which enabled me to T/P at 6095 as outlined earlier to my Platinum Members and thankfully make up for the small loss on Tuesday and I am now flat. The FTSE has strong resistance from 6190/6230 and today I will be a seller in this area with a 6260 stop. I do not want to be long the FTSE at this time.
Dow Rolling Contract
Very frustrating yesterday as the Dow just missed my 16130 buy level by 3 points before going on to have a 250 point rally and I am still flat. As I mentioned yesterday the Dow is now taking over from the DAX in terms of price movement. Today I will be a small seller on any rally higher to 16520/16580 with a 16630 stop. Given the fact that we are nearly 1200 points higher than last week’s low print I do not want to be long the Dow at this time.
September BUND
No change as the BUND continues to trade in a narrow range. I am still a small seller on any further rally to 153.70/154.10 with the same 154.30 stop. My only interest in buying the BUND is on a dip lower to 152.20/152.60 with a 151.90 stop.
Gold Rolling Contract
Overnight Gold has traded lower to my 1131 buy level. I am still long but only in small size and today I will raise my stop on this position to 1123. If I am stopped out of this trade I will be a more aggressive buyer in front of 1110 with a 1099 stop.
Silver Rolling Contract
Shortly after lunch yesterday Silver traded lower to my 14.50 buy level. I am still long as Silver looks bid this morning and I will raise my stop on this position to 14.20.
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