Markets were weaker yesterday after opening strongly ahead of todays very important FOMC meeting. European markets lost ground after Germany’s Finance Ministry said it sees no need to give the ESM a banking license that would give it access to ECB funding. Disappointing earnings from BP and UBS further weighed on markets. European data did not help. Unemployment remained at a record high of 11.2% for June. Spain reported a budget deficit of 4.04% of GDP in the first half of the year resulting in its 10 Year Yields rising 15 basis points to 6.75%. The negative sentiment continued for the US session despite some good Economic data. US Consumer Confidence, House Prices and Chicago PMI all beat expectations.
All eyes will be on the main event later this evening. With the ongoing weakness in the labour market and retail sales, the probability has risen that the FED will announce new measures or some policy tinkering. If they don’t, the markets will be very disappointed and will probably lead to a large sell off in equities and a rally in the US Dollar. This morning we have PMI from the Eurozone and the UK.
Sept S&P 500
The S&P dropped down to my buy area at 1377 and then rallied to 1383. As I said yesterday, my plan was that if I saw 5-7 handles then I would take profit and be square for the FOMC tonight. I took profit at 1382 but I went long again at 1376 and was stopped out when the market broke 1373 and I am now flat. If the FED do nothing tonight the market will get hammered and I feel this is one of the most important Fed meetings in a long time. The press conference afterwards will also add to the volatility. If The Fed do nothing I will be a buyer in front of 1350 in small with a 1339 stop however I do feel that the Fed will have to do something in order to placate the markets. So let’s wait and see!
Sept DAX
The Dax worked very well as we traded up to my sell area with a 6830 high, after I posted, and I went short at 6825. I took profit at 6780 and am now flat. Once again I do not want to have a position ahead of tonight and I will stay flat and try to react afterwards. However we still have the ECB meeting to come tomorrow so I will probably stay flat for the next 24 hours.
Silver
Silver dropped down to my buy level and I am long from 28.00. I will leave my stop the same at 27.65 and I will look to take profit on any rally back to the 28.50/28.80 area.
EURO/JPY
The Eur/Jpy has not dropped down to my buy area. I am going to raise my buy level to .9540/.9570 with a tight .9520 stop. I really feel that this currency pair is trying to put in a medium term bottom.
EURO/USD
I am flat the Euro and the only interest I have is to sell in front of 1.2400 with a 1.2440 stop or to buy in front of 1.2200 with a 1.2160 stop. If these levels are not hit I will stay flat as it is to dangerous and reckless to have a position ahead of tonight and tomorrows ECB meeting.
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