Initially yesterday was a choppy trading session for markets, carrying on with last week’s risk-off mood with Oil initially testing new lows and European stocks heavy. A measure of calm returned, Oil bounced off its lows, as did the Aussie dollar which is trading this morning closer to 0.7250. Iron ore prices broke higher for once, up $US0.76, up 1.9% to $US39.06. And so, the AUD sits atop the FX leader board.
For anybody following my new Platinum Service it made 490 points yesterday and is now ahead by 1225 points for December. The previous six months saw gains of 1510, 1600, 2833, 2195, 1810 and 3045 points respectively. If anyone is interested in my Platinum Service please email on bryan@tradernoble.com for details.
US bond yields moved back up while the BUD again found tough resistance at the 159.00 now key price level. There was little to no data of any consequence yesterday.
ECB President Draghi has been speaking at a conference in Italy, talking the good talk that he expects ECB stimulus will raise Euro area inflation “without undue delay”. He continued: “There is no doubt that, if we had to intensify the use of our policy tool to reach our price stability objective, we would do so”. Take from that what you will as far as any further ECB action given how expectations for ramping up monetary stimulus in an aggressive fashion were dashed earlier this month.
Bank of England Deputy Governor Shafik has also been speaking (seen as in the monetary hawk camp) and says that while the BOE’s next move is likely to be to raise rates, she would “proceed with caution”.
This morning on the economic front we have UK CI and PPI at 9.30 am. This is followed at 10.00 am by the very important German ZEW Survey which will definitely have an impact on the markets. At the same time the Euro-Zone will release its latest Employment Report. At 1.30 pm we have US CPI and Empire Manufacturing. Next up we have the NAHB Housing Market Index. Finally just before the close at 9.00 pm we have the TIC Flows Data. This afternoon the Fed will start its two day Meeting with eagerly awaited result due at 7.00 pm tomorrow,
December S&P 500
The S&P plan worked very well yesterday as just before lunch the S&P got slammed down to my average 2005 buy level before having a nice rally which enabled me to cover this position at 2012. Subsequently the S&P got hit again making a new low at 1992.50 which enabled my Platinum Members to go long again at 2000. This position was kept overnight and cut this morning at 2024 and I am now flat. Internally the market got hit again despite both the Dow and S&P closing flat as the McClellan Oscillator continued to weaken closing at an extremely oversold level at -294 compared to last Friday’s close at -257. As I mentioned at length yesterday when I see the MO with such a negative reading I am on the lookout for a large rally in the US Stock market. One of the main reasons why I have refused to sell the S&P lately is in the last two years the S&P has rallied nearly 120 Handles in the last two weeks in December as the Santa rally kicks in. I am not saying the same thing is going to happen his month but when the MO is so negative I certainly would not be short. Today I will again look to buy any dip lower to 2013/2020 with a 2007 stop. Again if I am taken long and subsequently stopped out I will use my ‘5 Handle Rule’ to go long with a stop below whatever new low is printed.
EUR/USD
Unfortunately the Euro just missed my buy level after I posted yesterday and I am still flat. The Euro continues to build support over the now key 1.0850 area especially with last night’s close over 1.10. Today I will raise my buy level to 1.0940/1.0980 with a 1.0915 stop but only in small size.
March Dollar Index
I am still flat the Dollar and today I will lower my sell level to 97.90/98.20 with a 98.50 stop.
December DAX
The DAX plan worked well for anyone who bought the market after it fell following yesterday’s posting. As all my Indices hit my buy level at nearly the same time I covered my long 10220 buy position too early at 10245 as I had to cut my risk level as I was already long the S&P, Dow and FTSE. This morning although the DZX is trading higher it is struggling on the back of the stronger Euro. Today I will again look to buy the market on any dip lower to 10180/10240 with a 10145 stop. Given how oversold the DAX is trading I do not want to be short the market at this time.
December FTSE
My long 5940 FTSE position taken early yesterday morning worked well as shortly after I posted the market traded higher to my 6000 T/P level. Subsequently the market traded lower to my second buy level at 5945 before again rallying which enabled me to cover this position at my 5975 T/P level as outlined earlier to my Platinum Members and I am now flat. Today I will again look to buy the market on any dip lower to 5910/5940 with a 5875 stop. Given how oversold the FTSE is trading I do not want to be short the market at this time.
Dow Rolling Contract
My Dow plan also worked well yesterday with the Dow trading lower to my 17240 buy level shortly before lunch before having a nice 100 point rally which enabled me to cover this position at 17280 and I am now flat. Given how oversold the MO is I will again look to buy any dip lower to 17280/17340 with a 17240 stop. Naturally despite the negative price action I do not want to be short the market at this time.
March BUND
My BUND plan also worked well yesterday as shortly after the Equity markets sold off the BUND traded higher to my 159.20 sell level before having a nice 100 point sell-off this morning. Unfortunately as literally all my trades hit at nearly the same time yesterday I covered this short position too early at my 158.95 T/P level and I am now flat. It is now clear that the 158.80/159.20 area is now key resistance and with so many Hedge Funds/Pension Funds trapped long over 160 it is going to be very difficult for the BUND to trade higher in my opinion. Today I will look go short on any rally higher to 158.70/159.00 with a 159.30 stop which is just above yesterday’s high print.
Gold Rolling Contract
Gold continues to trade heavy despite the much weaker Dollar which is a surprise. Late yesterday Gold traded lower to my 1060 buy level and given how disappointed I am with its price action and the fact that I am long Silver I will loom to exit this position at 1063 and go flat.
Silver Rolling Contract
No change as I am still long at 13.85 with the same 13.45 stop.
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