No dramatic moves in the markets yesterday. US Stocks and Bond prices were modestly firmer following a mixed set of US economic releases which vied with better than expected Q2 revenue and earnings reported by Citigroup. The S&P closed up 0.14% at another new record close and is now up for the eight straight trading day. 5 and 10 Year Treasury yields are both 4 basis points lower at 1.38% and 2.54% respectively, whilst the VIX is marginally lower at 13.79% and the Euro has again bounced nicely off the 1.3000 support zone.
The US Retail Sales data came in at a disappointing +0.4% which was only half of what was expected whilst May was also revised downwards. Some offset came from a stronger than expected Empire (New York State) Manufacturing Survey at 9.48, up from 7.84 last month, and much better than the 5.0 expected although this has historically been a poor guide to the Manufacturing ISM Survey. All eyes will be on Mr Bernanke’s first Congressional Testimony in Washington tomorrow.
At least today is a much busier one for economic data. This morning we have UK CPI and the ONS House Price Index followed by Euro-Zone CPI and Trade Numbers. Later this morning we have the German ZEW Survey. This is followed in the US by CPI, Industrial Production, TICS Data (which is the Capital Flows for the Currency) and the NAHB Housing Market Index.
September S&P 500
The S&P continues to trade higher with very little price movement as the market goes on hold ahead of Bernanke’s Congressional Testimony tomorrow. At least today there are several economic releases so hopefully we should get some two way action. The S&P is now up for 8 straight days and in the process we have now got a confirmed breakaway Gap as the 1648.5/1660 (Wednesday close to Thursday low in the New York Session) remains unfilled. Today I will raise my buy level to 1665/1670 with a 1663 stop. If I am taken long and subsequently stopped out I will be a more aggressive buyer in front of 1650 with a 1646 stop. As I said yesterday my only interest in selling the market is on a rally to 1690/1695 in small with a 1702 stop.
Euro/USD
For the fourth straight day the Euro has rallied into the New York close and this is definitely price action that I respect. After I posted yesterday, the market was trading at my 1.3030 buy level but I was just stopped out of this trade at 1.2995 with a 1.2993 low. I then re-bought the Euro when we broke 1.3020 again expecting it to rally into the New York close and I was able to cover this position at 1.3060 – I am now flat. As I have been saying for the last week I do not want to be short the Euro and my feeling is we are going to test 1.3280 before attempting to go lower. The whole market is short the Euro and we could have an interesting reaction after Bernanke speaks tomorrow. For today I will be a small buyer again from 1.3030/1.3070 with a 1.3015 stop or if we break 1.3110 I will also buy the market in small with a 1.3065 stop.
September DAX
I sold the Dax yesterday at 8270 and I was able to cover this position at 8230 and I am now flat. Today is very important with the German ZEW to be released later this morning and this survey has the potential to really move the DAX. Today I will still be a seller in small size on any rally to 8280/8310 with a 8325 stop. I will also be a small buyer on any dip to 8100/8130 with a 8075 stop.
September FTSE
The FTSE, just like the S&P, continues to trade quietly higher. The market is overbought both on a daily and weekly basis. This morning it hit my sell level at 6560 and I am now short with a 6580 stop. I still do not want to be long at this time as I do not want to chase an extended market.
Gold Rolling Contract
Gold worked well yesterday as we had a nice sell off after lunch and I was able to cover my 1293 short position at 1275 and I am now flat. Today I am a small seller on any rally to 1290/1300 with a 1305 stop.
Silver Rolling Contract
No change as my stop nearly got triggered yesterday at 19.50 with a 19.54 low. I will leave my stop the same and if I am stopped out I will be a more aggressive buyer on any dip to 19.00/19.25 with a 18.80 stop
September BUND
After I posted yesterday the Bund traded down to my 143.35 buy level. I am still long and I will lower my stop to 142.95 in order to give this trade some room.
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