After opening the week trading in the 0.7660/0.7680 region, the AUD took a hit shortly after I posted yesterday morning after the release of much weaker than expected Chinese export figures for March. Annual export growth slumped from +48.9% y/y for Jan/Feb to -14.6%, a huge miss from the +8.2% consensus forecast. It was so big in fact that several analysts expressed some disbelief with the figures as reflecting some special factor, seasonal, statistical or otherwise. It will be interesting to see how much of this export weakness is reflected in today’s China growth reports.
The mood for the AUD was not helped by an article in the China People’s Daily newspaper that the Chinese economy faces increasing downward pressure with the resources sector facing stronger downward pressure, according to Pan Jiancheng, an official with China’s statistics bureau. Anyone that has had at least half an eye on the resources/bulk commodities space will more than understand the gist of these comments, with Iron Ore and now Coal under downward trend pressure.
The AUD was knocked off its perch and gapped lower by nearly 1.0% to around 0.7590 this morning. The US Dollar Spot Index is a net 0.3% higher though this looks to be mainly the AUD effect, with the Euro steady below 1.06 at 1.0550.
With no economic data yesterday the only other news of note was an article in the Financial Times newspaper reporting that Greece is preparing for debt default if talks with creditors fail.
This morning on the economic front we have UK CPI at 9.30 am. This is followed at 10.00 am by Euro-Zone Industrial Production. At 1.30 pm we have US Retail Sales where the consensus is for a 1.0% rise after the previous month’s -0.6% fall. Also at the same time we will have US PPI. Finally at 2.00pm we have the NFIB Small Business Optimism. This afternoon the Fed’s Kocherlakota speaks at an open forum in Minnesota.
June S&P 500
It took a while but my 2096 short sale from very late on Friday finally worked out as the S&P had a nice sell-off into the close last evening which enabled me to cover this position at 2087 and I am now flat. I will continue with my strategy of selling rallies with a tight stop as there is no doubt that this market is overbought on both a Daily and Weekly basis. However until we break last week’s 2035/2040 now major support level I will not look to put on a more long-term short position. Today I will again look to go short on any further rally to 2096/2101 with the same 2104 stop. Again if I am taken short and subsequently stopped out of this position I will use my ‘5 Handle Rule’ to go short again with a stop above whatever new high is printed. I will also be a small buyer on any dip lower to 2076/2081 with a tight 2072 stop.
EUR/USD
The Euro plan worked out very well yesterday as by the time that I posted the Euro was trading near the lows of the day at my 1.0540 buy level before having a nice rally shortly after the US markets opened which enabled me to cover this position at 1.0590 and I am now flat. With sentiment still at extreme levels towards the Euro I will continue with my strategy of buying dips with a tight stop as this strategy has worked out very well so far in 2015. For this reason I will again look to buy the Euro on any further dip to 1.0480/1.0520 with a 1.0450 stop which is just below the 1.0460 low made last month. Despite the very weak price action I still do not want to be short the Euro at this time.
June US Dollar Index
The Dollar plan also worked well yesterday as shortly after I posted the Dollar was trading at my 100.10 sell level before having a nice sell off shortly after the US markets opened which enabled me to cover this position at 99.70 and I am now flat. Today I will again be a seller on any further rally to 99.95/100.30 with the same 100.50 stop.
June DAX
It took a while but just before the New York close the DAX finally traded lower to my 12320 buy level. After a nice rally on the open this morning I have covered this position at 12360 and I am now flat. There is no doubt that the DAX has major resistance at the 12395/12435 area after the near 27% rally in the DAX so far in 2015. Today I will be a small seller in this area with a 12470 stop. I will also move my buy level lower to 12240/12280 with a 12190 stop.
June FTSE
Just like the DAX above the FTSE finally traded lower to my 6990 buy level as we approached the New York close and after a nice rally at the open this morning I have been able to cover this long position at 7030 and I am now flat. Today I will again look to buy the FTSE on any dip to 6970/6990 with the same 6955 stop. I will leave my sell level unchanged at 7060/7085 with a 7105 stop.
Dow Rolling Contract
The Dow plan also worked very well yesterday as the idea of selling rallies with a tight stop continues to pay dividends. Shortly after the US markets opened the Dow rallied to my 18080 sell level before having a nice sell-off into the close which enabled me to cover this position at 17990 and I am now flat. As most members know I am scared to be long this market especially with three confirmed Hindenburg Omen’s on the clock and today I will again look to go short on any further rally to 18080/18120 with an 18160 stop.
June BUND
No change as I am still a small seller on any further rally to 159.65/159.95 with an 160.20 stop.
Gold rolling Contract
The Gold plan worked well yesterday as just as I posted Gold was trading at my 1198 buy level before having a nice rally before lunch which enabled me to cover this position at 1206 and I am now flat. Gold is opening heavy this morning and today I will again look to buy the market on any further dip to 1180/1187 with a 1173 stop.
Silver Rolling Contract
No change as I am still long from last week at 16.40 with the same 15.90 stop. If I am stopped out of this position I will be a more aggressive buyer in front of 15.60 with a wider 14.90 stop.
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