The US ADP Employment numbers were solid showing that 215k private jobs were added in November, beating expectations for a 170k rise. In addition, October jobs were revised upwards to 164k from 130k. This data series does not have a strong pattern of correlation with Non Farm Payrolls but nevertheless points to some upside risk to tomorrow’s 185k Employment forecast. The market saw it as increasing the likelihood of a December start to QE Tapering by the Fed resulting in US Equity markets in negative territory for most of yesterday’s session and only showing some strength after the ISM Services Index fell to 53.9 in November, from 55.4 versus 55.0 expected.
Meanwhile the Fed’s Beige Book contained few surprises saying the economy is expanding at a moderate pace with Manufacturing data solid in most districts. The Aussi Dollar continues to weaken after weaker than expected GDP release of just 0.6% versus 0.8% expected whilst surprisingly the Euro is very strong ahead of today’s ECB Rate decision and press conference with Dragi at 1.30 pm. The Euro had initially dropped to 1.3530 on the weaker than expected GDP and PMI Services from the Euro-Zone only to rebound and is currently trading at 1.3630.
This morning on the economic front we have the Bank of England rate decision at 12 noon in which it will outline their latest Asset Purchase target. At 12.45 pm we have the ECB rate announcement at which no change is expected and this is followed by Dragi’s press conference. Also at 1.30 pm we have the US Weekly Jobless Claims, GDP and Factory Orders. Later this afternoon the Fed’s Lockhart and Fisher both speak on the economy at different times and venues.
December S&P 500
The S&P had a wild trading session yesterday as volatility returns to the markets after last weeks non event. The market was weak all morning and, after it traded down to my 1788 buy level, the market exploded higher on the weaker ISM data which saw it challenge the 1800 level again. It then dropped to make a new low at 1778 on the Beige Book release before trading higher into the close and eventually settled at 1792. I covered my long 1788 position at 1795 and I am now flat. I am impressed at how well the S&P bounced off the 1778 level and we will need a break and close below here for me to look for lower levels. Today I will leave my buy level the same at 1785/1789 with a 1777 stop. As I mentioned yesterday especially with the Non Farm Payroll data tomorrow my only interest in shorting the market is between 1806/1810 with a 1815 stop.
Euro/USD
The Euro plan worked well yesterday as shortly after I posted it fell on the weaker GDP Nos enabling me to cover my 1.3595 short position at 1.3545. The market then fell further to my 1.3540 buy level before exploding higher and I was able to cover this long position at 1.3600 and I am now flat. I am going to stay flat this morning ahead of the ECB rate decision and press conference form Dragi. There is no doubt that given Dragi’s tone at his last two press conferences that he wants to see a weaker Euro but so far the market is ignoring him. Today rather than short the Euro I will be a small buyer of the Dollar Index on any further dip to 80.00/80.30 with a 79.80 stop. My only interest in buying the Euro is on a drop to 1.3490/1.3520 with a 1.3470 stop.
December DAX
Shortly after I posted yesterday morning the Dax traded down to my 9200 buy level before quickly stopping out of this position at 9170 and I am now flat. Yesterday was another example of how important it is to have stops in the market as the Dax subsequently traded down to 9065 for an incredible 350 point sell-off in two days.
The DAX/FTSE spread continues to trade lower and today I will lower my 2750 stop on my 2818 short position from Tuesday to 2680. I will also be a small buyer of the Dax from 9050/9080 with a 9015 stop.
December FTSE
The FTSE continues to trade at the bottom of the Bollinger Band but interestingly the Williams Index has given a small buy signal after yesterday’s route in the market. Shortly after I posted I was quickly stopped out of my long 6632 position for a small loss at 6605 and I am now flat. Today I will be a reasonable buyer on any dip to 6470/6490 with a 6450 stop. Given how oversold the market is trading I do not want to be short the FTSE at this time.
Dow Rolling Contract
It was another wild day for the Dow but the 13 year trendline has so far held and led to a nice sell-off over the last few days. I was stopped out of the remainder of my 16140 short position for a stop profit at 15950 and I am now flat. The Dow has traded from the top of its Bollinger Band to the bottom of the band in just a few days and today I will be a small buyer on any dip to 15800/15830 with a 15770 which is just below yesterday’s low.
December BUND
The Bund is still trading heavy and eventually traded down to my 140.45 buy level yesterday afternoon. I am still long and as I only have a small position I will leave my stop at just below the crucial 140.00 support level at 139.95.
Gold Rolling Contract
Gold worked well yesterday as just after I posted the market traded down to my 1212 buy level before having a strong rally and I was able to cover this position at 1235 and I am now flat. Gold having been hammered over the last three weeks has finally found some support and I would not be surprised to see it back at the 1300 level over the next couple of weeks. Today I will be a small buyer from 1228/1235 with a 1222 stop.
Silver Rolling Contract
No change as I am still long at 19.25. Today I will raise my stop to a breakeven and if I am stopped out I will be a more aggressive buyer on any dip to 18.50/18.80 with a 18.25 stop.
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