US Equities extended the gains made on Tuesday with the Dow adding another 0.4%
yesterday. Bigger gains were made in other asset classes as both Treasury Yields and the US Dollar continue their march higher. US Data has had a hand in driving up both stock markets and Bond Yields as the ADP Employment data rose a higher than expected at 198k which augurs for a strong Non Farm Payroll Number tomorrow. The Fed’s Beige Book says the economy overall expanded at a modest to moderate pace so far in 2013 with the labour market showing a little improvement. Sterling was the weakest performer on the Foreign Exchange markets and will probably weaken further if the BOE at today’s meeting announces additional QE. Yesterday the Bank of Canada left its policy rate unchanged at 1% and stated that rates will remain steady for a period of time. This morning should be quiet ahead of the BOE and ECB Rate Announcements as the market looks to see whether the BOE will sanction any additional QE whilst the press conference from Dragi at 1.30pm has the potential to move markets.
On the economic data front, German Factory Orders will be released this morning followed in the US by the Weekly Jobless Nos which will be closely watched after yesterdays strong ADP and ahead of tomorrow’s Non Farm Payrolls. The US also releases Consumer Credit, Non Farm Productivity and Trade Balance. Later the Fed’s Plosser speaks on Economic Outlook.
March S&P 500
The S&P continues its relentless march higher as traders continue to buy any dip in the market and this will continue until we get a sell extreme followed by another down day and so far while we have had three sell extremes this year, it has never followed through the next day. The market just fell short of my 1535 buy level before buyers took the market higher. Today I am not going to chase the market higher and I will leave my buy level the same at 1529/1535 with the same 1524 stop. 1525 is the key level to watch for a downside break. If the S&P continues to rally from here I will be a seller from 1550/1555 with a 1557 stop.
Euro/USD
The Euro dropped down to my 1.3010 buy level and I am long in very small. I am not confident with this position but as it is a small trade I will leave my stop the same at 1.2965. If I am stopped out I will look to rebuy the Euro more aggressively on any dip to 1.2900/1.2930 with a 1.2870 stop. This 1.2875/1.2900 is key support and a break and close below 1.2870 will be very bearish.
March DAX
The Dax worked really well as after I posted yesterday morning the Dax traded up to my sell level at 7970 with a 7977 high. I went short at 7970 and I took a nice gain at 7925 and I am now flat ahead of the ECB today. If the Dax rallies from here I will look to go short again from 7970/8000 with a 8020 stop. I will also look to buy the Dax on any dip to 7850/7870 with a 7840 stop. The 7850 area should act as good support.
March Dow Rolling Contract
No change as I am still short from 14260 in small size as I am trying to test the market with the same 14350 stop. If I am stopped out I will be a more aggressive seller in front of 14400 with a tight 14430 stop.
GBP/USD (Cable)
Cable traded down to my 1.5060 buy level before quickly stopping me out of this position at 1.5020 and I am now flat. As today is the BOE rate announcement and decision day on whether the BOE will do anymore QE I am going to stand aside and wait before making my next trade.
Silver Rolling Spot
Silver is trying to put in a bottom and I am a buyer in small size on any dip to 28.40/28.80 with a 2785 stop which is just below the low made last week. Silver has the potential to trade up to 30.50/31.00 before sellers return to the market.
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