Yesterday was a day of very little news and yet the S&P and the DOW both made new all time closing highs, as the NASDAQ led the markets higher by closing up an impressive 1.8%. The US Bond Yields were also higher with the 10-Year Bond rising 3 basis points to 2.65%. The US Dollar has flat-lined as it looks to consolidate its recent break above 79.50.
Developments in Ukraine are ostensibly risk-negative but to no avail as the VIX fell nearly a full point to 12.16 and is so close to its post financial crisis low back in 2009. As for Ukraine, Russia has offered its endorsement of Sunday’s Referendum results in two Eastern Provinces by saying that they show the ‘real mood’ in this region. Meanwhile the EU and US are reportedly hatching plans to broaden sanctions against Russia to include the export of new energy technologies.
This morning on the economic front we have UK BRC Sales followed at 10.00 am by the eagerly awaited German ZEW Survey. Later at 1.30 pm we have the US Retail Sales and the NFIB Small Business Optimism Index.
June S&P 500
As expected, the S&P finally made new all time closing highs as the market broke and closed over the 1892.5 previous high made on April 4. This rally whilst far from being straight forward is really frustrating the ‘bears’ of this world and proves again how difficult and pointless it is to keep fighting the Fed. None of my parameters were hit yesterday and I am still flat.
This morning the S&P is trading at the top of the Bollinger Band and Williams Index and as we are so near the 1900 resistance level I would at least expect a test of this level. Today given how overbought the S&P is trading I will be a small seller from 1898/1903 with a 1907 stop. My only interest in buying the market is on a drop to 1882/1887 with a 1878 stop.
Euro/USD
No change as I am still long the Euro from last Friday at 1.3785. After the fireworks of the previous two days the Euro traded in a very narrow range yesterday. I will leave my stop the same at 1.3740. Given how oversold the Euro is trading I do not want to be short the market at this time.
US Dollar Index
No change as I am still long half my position at 79.20 from last week having covered the other half last Friday at 79.90 I will leave my stop on my remaining position at 79.50 and if I am stopped out of this position I will again be a buyer at 79.30 with a 78.80 stop.
June DAX
The Dax has finally broken the key 9630/9660 resistance level and there is now a good chance that it can now trade up to the next resistance level at 10000/10200 where if this should happen I will be looking to put on a more macro bearish position. This morning the Dax is now trading at the top of its Bollinger Band and Williams Index as the market approaches its contract highs near 9820. Today given how overbought it is trading I will be a small seller from 9810/9840 with a 9860 stop. I will also move my buy level higher to 9620/9650 with a 9595 stop.
June FTSE
I am amazed at how weak the FTSE is trading in relation the other indices. They keep making new highs whilst the FTSE is still shy of its 2000 high at just over 7000. This morning the market traded up to my 6830 sell level and I am now short with a 6860 stop on this position. The 6840/6860 is key resistance as a break and close over this level opens up the possibility of a test of the 2000 highs.
Dow Rolling Contract
Just like the Dax, the Dow finally broke its key level yesterday at 16600/16640. Thankfully we have not been short the Dow for the last 7 weeks as every dip has been bought . This morning it is overbought and at the top of the Williams Index and, coupled with the very weak VIX, it makes it very difficult to be long at these levels. If the Dow rallies to 16750/16780 I will be a small seller with a 16820 stop. I will also be a small buyer on any dip to 16590/16630 with a 16560 stop.
June BUND
No change as I am still a buyer on any dip to 144.25/144.45 with a 144.10 stop.
Gold Rolling Contract
No change as I am still a small buyer on any dip to 1279/1285 with a 1273 stop.
Silver Rolling Contract
My 19.20 Silver long position worked well yesterday as the market had a nice rally which enabled me to cover this position at 19.60 and I am now flat. Today I will again be a small buyer on any dip to 19.05/19.30 with a 18.80 stop.
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