The markets had a wild ride yesterday as Apple shares continued to fall, leading to a 6.5% or $38 drop in their share price. The other US Indices followed suit only to turn on a dime amid optimism that US Lawmakers will reach a Budget settlement this month. The Euro is weaker overnight as Standard and Poors cut Greece to a selective default rating. In addition, French unemployment rose to 10.3% from 10.2% in numbers released this morning. These numbers will not help the Euro and coupled with the Greek downgrade has the Euro on the defensive. In the US, a few dozen Republicans joined a bipartisan push to break an impasse between President Obama and House Speaker John Boehner, over taxes to the highest earning Americans, by signing a letter calling for openness to all options. In Japan, the Japanese Yen continues to weaken ahead of next weeks election pushing the Nikkei to a seven month high.
This morning we have Euro-zone GDP which is forecast to fall 0.1% confirming Europe is back in recession for the second time in four years. The ECB and BOE hold their meetings today and the press conference from Dragi at 1.30pm will be a market mover. In the US we have the Weekly Jobless Nos which will be closely watched ahead of Non
Farm Payrolls tomorrow but these numbers are still affected by Hurricane Sandy.
Dec S&P 500
I was very unfortunate yesterday as I was stopped out of my 1404 long position at 1399 before the market, having made a new low at 1397, turned and traded all the way up to 1414. Today I want to share a new rule that I follow. If and this trade only works once, I am stopped out of a long position and we subsequently get a five point rally off whatever low is put in I will re-buy my position and I will leave my stop one handle lower than the previous low. For example yesterday the S&P made a low at 1397 and then rallied 5 points at which point I went long at 1402 with a 1396 stop. The S&P proceeded to rally a further 12 handles before stopping. The same lesson happened two weeks ago when the S&P stopped me out at 1385 before making a new low at 1383.5 and then reversed to rally 25 handles. NOTE: this second trade only works once and if you are stopped out a second time you close up until the next trading day (I will post a more detailed piece with illustrations in the Education section over the coming days). In yesterday’s trading the Dow made a new recovery high but the S&P and Nasdaq did not as these indices were affected by the large fall in Apple Shares. This morning I am a buyer on any further dip to 1395/1399 with 1393 stop and I am only interested in going short from 1420/1424 with a 1426 stop. As I said yesterday a break and close over 1425 will be very bullish.
Dec DAX
The Dax worked really well as I was able to take profit on my 7500 short position at 7460 and then the market traded down to my 7435 buy level. I was not stopped out of this position and I took a nice gain at 7480 on this long and I am now flat. I am very impressed at how well the Dax is trading and today I will look to reset my long position on any dip to 7450/7470 with a 7427 stop which is just below yesterdays low. Even though we are overbought the price action is telling me not to short the Dax at this time.
Dec FTSE
The FTSE just missed my sell level yesterday and I am still flat. Today I will look to go short on any rally to 5920/5935 with a 5945 stop.
Nasdaq 100 Rolling Contract
After the heavy fall in both Apple and the Nasdaq yesterday I fancy the Nasdaq to recover and close the 2667 open GAP left from yesterday morning. Today I am a buyer from 2620/2630 with a 2605 stop and If I am taken long I will look to take profit in front of 2670.
Gold Rolling Spot
Gold has had a nice fall over the last week and is approaching the bottom of its Bollinger Band and Williams Index. We also have support at the 1673 low made a few weeks ago. Today, for a trade I am a buyer on any dip to 1670/1680 in small size with a 1658 stop.
Euro/USD
I was stopped out of my 1.3080 long at 1.3060 on the Greek downgrade and I am now flat. I still believe the Euro will trade into the 1.3250/1.3400 area before the end of the year but I am going to stay flat and observe for the next 24 hours
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