Markets have had a positive start to the week with equities higher on both sides of the Atlantic. Europe got a lift from the improved lower Chinese CPI which came in at 1.9% giving the PBOC plenty of room to ease monetary policy. News from the EC that the next tranche of bail out money for Greece could be finalised by mid-November also helped. However the big news was a strong Retail Sales Report from the US, coming after the strong Michigan Consumer Confidence Survey last Friday. iPhone 5 sales boosted the outcome with the electronics component up by 4.5% in the month but the report was broadly positive across the various types of retail expenditure. The S&P was helped further by the better than expected earnings report from Citibank.
This morning we have the ZEW from Germany which historically is a market mover. The Euro-Zone CPI and Trade Balance figures will also be released. This will followed by CPI from the UK whilst in the US we have CPI, Industrial Production, NAHB Housing and the TIC flow data which is a measure of the buying and selling of US Treasury Bonds by country.
Dec S&P 500
The S&P traded up to my 1430 sell level after the Retail Sales Nos were released which enabled me to go short at 1430. The market subsequently sold off to the 1422 area after the New York open and I was able to take profit at 1424 and I am still flat. The market had a very strong close in contrast to what was happening last week and I always respect the what happens in the last hour of trading. As long as the S&P stays over 1420/1425 I am still bullish and as I said yesterday I will only short the market if we break 1417 with a 1423 stop. Today I will look to buy a pullback in the S&P and I will look to go long from 1430/1434 with a 1427 stop. If I am taken long I will look to take profit from 1439/1443.
Euro/USD
The Euro worked really well as the US Dollar did not strengthen on the sell off in Gold and Silver so we may see some decoupling in this relationship. I was able to take profit at 1.2970 on my 1.2910 long position and I am still flat. I still think the Euro will have a test of the 1.3250/13400 area before we sell off. Today I will look to buy a pullback to the 1.2950/1.2980 area with a 1.2930 stop. I do not want to be short at this time as I see the Euro Crosses as been well bid.
Dec DAX
The Dax traded up to my 7300 level and I was able to take a nice profit on my 7230 long from yesterday morning. I will still look to go short from 7330/7350 with a 7370 stop. I will also look to buy a dip to the 7240/7270 area with a 7225 stop.
Dec FTSE
The FTSE traded down to my buy zone and I went long at 5780. I still like the FTSE and I am going to raise my stop to a break even on this trade. If it continues to rally I will look to take profit from 5830/5850.
Dec BUND
I still like the Bund but as the equity markets are stronger this morning I am going to lower my buy zone to the 140.80/141.05 with a 140.65 stop on any long position.
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