With the US Government shutdown and debt ceiling talks rolling on for yet another day with no clear impasse as yet the US Dollar lost some ground yesterday though not dramatically so. Most of the major currencies made up some ‘albeit limited’ net ground against the US Dollar with the exception of the Yen which has weakened over the last 24 hours.
In a topsy-turvy trading day yesterday European Equities opened on the defensive but regained some composure after the US stock markets opened with the markets whipping around in reaction to Washington headlines. Signs that the Democrat and Republican parties were moving closer to reaching an agreement on the debt ceiling helping to push US stocks higher in the afternoon session with the Dow closing up 64 points having been down nearly 150 points in early trading. This followed news that President Obama would meet with Congressional leaders in both parties late on Monday. The markets extended those gains after Senate leaders in both parties said progress was being made.
This morning on the economic front we have UK PPI and CPI followed by the German ZEW Investor Survey at 10.00 am. Later from the US we have Empire Manufacturing plus more Washington Headlines.
December S&P 500
The S&P did indeed mange to close its large down-Gap from yesterday morning but unfortunately did not trade down to my 1681 buy level before this rally started. This market is very difficult to trade at the moment as we are not getting any of the major US Economic data due to the shutdown and all the moves in the market are caused by headlines on the debt ceiling and budget impasse from Washington. The S&P did trade up to my 1700 sell level before stopping me of this position at 1705 and I am now flat. I feel we have an awful lot of good news priced into this market and when we get a debt ceiling extension and Budget deal I will be looking to short the inevitable spike in the S&P that this news will bring.
Today I will be a small seller on any rally to 1716/1721 with a 1726 stop which is just above the highs made on September 18. I will also be a small buyer on any dip to 1690/1695 with a 1684 stop which is just below the lows made after the US session opened yesterday.
Euro/USD
The Euro just missed my 1.3600 sell level yesterday before having a late sell off and I am still flat. Today I will still be a small seller on any rally to 1.3610/1.3640 with a 1.3660 stop. I am still a buyer on any dip to 1.3480/1.3500 with the same 1.3465 stop. As long as the Euro holds over 1.3480 I will look for higher prices but a break and close below 1.3480 will be bearish and I will then look to set up a short position.
December DAX
The Dax also just missed my 8650 buy level yesterday before trading higher and is now up nearly 300 points off the 8488 low made last Wednesday. The Dax is now at the top of both the Bollinger Band and Williams Index and I will also short any spike in the Dax after an agreement is reached in Washington. Today I will raise my sell level to 8810/8840 with a 8860 stop. I will also be a small buyer on any dip to 8670/8700 with a 8649 stop.
December FTSE
The FTSE continues to trade higher without me being able to get a long position on. Today I will raise my buy level to 6440/6470 with a 6420 stop. I will also be a small seller on any rally to 6560/6580 with a 6605 stop.
Dow Rolling Contract
The Dow also just missed my 15100 buy level with a 15140 low before having a nice rally to my 15270 sell level. After the market consolidated here for a while the Dow pushed higher late in the session and stopped me out of this position at 15305 and I am now flat. Today if we get a spike in the Dow on the back of an agreement out of Washington I will be a small seller on any rally to 15450/15480 with a 15520 stop. I will also be a buyer on any dip to 15140/15170 with a 15120 which is just below the low made in the US session yesterday.
December BUND
After stock markets rallied yesterday afternoon the Bund was sold off and the market traded down to my 139.40 buy level. So far I have not been stopped out of this position and considering how strong the 139.00/139.25 support is I am going to lower my stop on this small position to 138.95.
Gold Rolling Contract
I am glad I stayed flat in Gold yesterday to observe the price action, Today I will be a small seller on any rally to 1285/1292 with a 1302 stop. I do not want to be long Gold at this time unless we trade down to 1185/1200 where I will be an aggressive buyer with a 1175 stop.
Silver Rolling Contract
Silver worked well yesterday as after I posted it had a nice rally and I was able to cover my 21.15 long position at 21.55 and I am now flat. Today I will be a small buyer on any dip to 20.20/20.50 with a 19.90 stop. I still do not want to be short Silver at this time as I am looking for it to put in a major bottom between 17.00/20.00 over the coming weeks.
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