The Dow made a new closing high yesterday as it finally broke and closed over 15720 for a 0.8% gain on the day. However the S&P didn’t manage to make its own new high and only finished up 0.4% as it was dragged down by the Nasdaq which fell 0.2% on the day. So it was a day of divergence as the market awaits the IPO for Twitter later today. It is amazing that a company that makes no profit will be valued at approximately $20 billion!
Before the Twitter IPO, all eyes will be on the ECB at 12.45 pm to see whether they will cut rates as many analysts expect and this will be followed at 1.30 pm by Dragi’s press conference.
European stocks are little changed this morning ahead of the ECB announcement with the press conference likely to be the more important event with close attention being paid to what Dragi says and more importantly what the ECB are going to do with the weak economic data that has been coming out over the last month. Ahead of the ECB decision this morning we have Spanish and German Industrial Production and this is followed by the Bank of England latest Monetary Policy release at 12.00 noon. Later from the US at 1.30 pm we have the Weekly Jobless Claims, GDP and Real Consumer Spending. This is followed at 3 pm by Consumer Credit.
December S&P 500
After I posted yesterday morning the S&P was trading at my 1765 sell level and amazingly, despite the huge rally in the Dow, I was not stopped out of my short position and I am still short. Today I am going to raise my stop slightly to 1771 and if I am stopped out I will go short again on any subsequent 5 handle sell off with a stop just above whatever new high is put in. I must say that I am getting concerned for this market as the economic data and earnings do not justify these lofty valuations but against that it is very hard to fight the Fed and this is why stops are so important. I will also be a small buyer on any dip to 1750/1754 with a 1748 stop.
Euro/USD
My long 1.3460 Euro position from Tuesday worked well yesterday as shortly after I posted the market spiked over 1.3540 and I was able to cover my position at 1.3530 and I am now flat. Given that today is ECB day I am going to stay flat and try and react to what Dragi says in his press conference following the ECB Meeting. If the Euro spikes after the meeting I will be a small seller from 1.3570/1.3600 with a 1.3620 stop. I will also still be a small buyer on any dip to 1.3440/1.3470 with a 1.3420 stop.
December DAX
No change as I am still a buyer on any dip to 8980/9000 with the same 8955 stop. I still do not want to be short the DAX at this time.
December FTSE
The FTSE has traded down to my 6705 buy level this morning and I am now long in small with a 6675 stop. If I am stopped out of this long position I will be a more aggressive buyer in front of 6640 with a tight 6620 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
After I posted yesterday morning the Dow was trading at my 15675 sell level before quickly stopping me out of this position at 15720 and I am now flat. I am going to stay flat today as I want to see if the Dow can close again over this 15720 key level because if it can manage to do this it will be very bullish going forward. As you can see I am short the S&P above and I will stay flat the Dow for today to see what happens later.
December BUND
No change as I do not want to chase the Bund lower and I will leave my sell level the same at 141.60/141.90 with the same 142.05 stop.
Gold Rolling Contract
Gold just missed my sell level yesterday at 1323 with a 1322 high before having a nice sell off and I am still flat. Given the huge amount of economic data due on both sides of the Atlantic later this morning and afternoon I am going to increase my Gold sell level to 1327/1332 with a 1335 stop. I will leave my buy level the same at 1295/1302 with a 1288 stop.
Silver Rolling Contract
No change as I am still a buyer from 21.20/21.50 with a 20.95 stop.
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