The US Equity markets rose yesterday despite significant weakness in European markets caused by rising peripheral bond yields on political instability in Portugal and as Greece again struggles to meet conditions associated with its bailout. The heavy flow of US data also caused US Bond yields to go higher but without upsetting equities which are still benefiting from the positive seasonal factors surrounding the 4th July celebrations. The US Non Manufacturing ISM fell short of expectations at 52.2 from 53.7 but the employment sub-component bounced smartly. ADP Employment, at 188k, beat expectations and together these releases leave markets travelling in high hopes for a decent Non-Farm Payroll number tomorrow. Sterling was the best performing currency after a big jump in the UK Service PMI to 56.9 from 54.5 resulting in it being 1% higher versus the Euro since the start of the week.
Later this morning with the US markets closed for the 4th July Independence Day celebrations, we get the ECB’s latest policy decisions and the post meeting press conference at 1.30 pm from President Dragi. The Bank Of England MPC holds its first policy meeting under new Governor Mark Carney.
September S&P 500
I am very impressed with how well the S&P traded yesterday given how weak the European markets were. It traded down to my 1597 buy level and after a nice rally I was able to cover this position at 1606. The market then rallied up to my 1612 sell level and I am now short in small with a 1619 stop. The Futures Market closes today at 4.30 pm and with Non Farm Payrolls tomorrow I will not hold this position into these numbers and I will look for an opportunity to cover this short position provided I have not been stopped out first.
Euro/USD
The Euro is probably one of the hardest markets to trade as we are not privy to the level of major flows between banks and hedge funds until after the price moves. Yesterday I was stopped out of my 1.2990 short position at 1.3020 and now we are back down to 1.2970 which is very frustrating. I am now flat and I firmly believe the Euro has to fall in order to help the periphery countries get more competitive. However today is ECB day and over the last few meetings the Euro has tended to rise after Dragi finishes his press conference and for that reason I am a small buyer on any dip to 1.2910/1.2940 with a 1.2880 stop.
September DAX
After I wrote my commentary yesterday, but before it had been posted, the Dax traded down to my 7740 buy level but unfortunately the market did not drop back again to this buy level before following the S&P higher in the afternoon and again this morning. I shorted the Dax at 7850 in small and I have been stopped out this morning at 7885 and I am now flat. The volatility in the Dax is incredible at the moment making it very difficult to trade. My only interest in selling the Dax is if we rally to 7985/8030 with a 8050 stop, otherwise I am going to stand aside and observe.
September FTSE
The FTSE worked out very well yesterday as the market dropped down to my 6140 buy level before having a nice rally and I was able to cover this position at 6190 and I am now flat. The FTSE has gapped higher this morning in anticipation of a favourable reaction to Governors Carney’s first policy meeting. Today I am a small seller on any further rally to 6245/6275 with a 6305 stop.
Gold Rolling Contract
Gold just missed my buy level before trading higher. The key level for Gold is 1210 and as long as we stay over this the market is fine, however a break and close lower will be very bearish. Today I will raise my buy level to 1225/1240 with the same 1208 stop.
September BUND
The Bund worked well yesterday as the market traded up to my 142.50 sell level. I covered this position at 142.20 and I am now flat. Today I will look to reset my short position on any rally to 142.40/142.70 with a 142.95 stop.
Silver Rolling Contract
No change as I am still a buyer on any dip to 19.00/19.30 with a 18.80 stop.
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