Amid a lot of cross currents buffeting markets in the past 24 hours or so, US Equities closed basically unchanged as did US Treasury Yields and the US Dollar whilst Gold is down 18 Dollars. Geopolitical concerns currently centred on Iraq and Ukraine have certainly not ebbed and remain a dampening impact on sentiment.
US data on Industrial Production, Home Builder Sentiment and the Empire Manufacturing Survey has been unequivocally positive. Industrial Production rose by 0.6% above the 0.5% consensus with April revised up to -0.3% from -0.6%. The Empire Manufacturing Survey, just like the NFIB Survey tends to track smaller business activity/sentiment much better than the ISM and this rose to 19.28 from 19.01 against expectations for a fall to 1.56. The NAHB Home Builders Index rose to 49 from 45 and much better than the 47 expected. So collectively, all news which supports the notion of Q2 GDP running at near 3%.
Despite this, the IMF downgraded its 2014 US GDP view to 2% from 2.8% and suggests that the Fed could hold rates below zero beyond the first half of 2015.This is predictably generating huge media coverage, well beyond the IMF’s historical forecasting prowess. On the negative side the April TICS US Portfolio Flows data shows net long term outflows of $24.2 billion including net $13.6 billion sales of Treasuries. Portfolio flows into the US have failed to cover the US Trade Balance for 13 of the past 14 months which could be Dollar negative going forward.
This morning on the economic front we have UK CPI and PPI followed by the ONS House Price Index. At 10.00 am we have the latest German ZEW Survey. This is followed at 1.30 pm by US CPI and Housing Starts/Permits.
June S&P 500
The S&P had a fluctuating trading session yesterday but basically closed unchanged as traders are reluctant to take the market down ahead of the start of the two day FOMC Meeting. This will see a Fed statement issued at 7 pm tomorrow and will be followed by a press conference with Fed Chair Janet Yellen.
The S&P plan worked well yesterday as shortly after the US Markets opened the market rallied to my 1939 sell level with a 1941 high before having a nice sell-off which enabled me to cover this position at 1934 and I am now flat. The S&P has left two small gaps from last week’s sell-off at 1943 and 1950 with the possibility of both of these being filled ahead of tomorrow’s Fed announcement. Today I will a small buyer on any dip to 1931/1935 with a 1928 stop. My only interest in selling the market today is from 1946/1951 with a 1954 stop.
Euro/USD
The Euro also worked well yesterday as the Dollar started to weaken after the TICS data was released which enabled me to cover my 1.3530 long position from last Friday at 1.3570 and I am now flat. I still like the Euro especially if we can hold over the critical support at 1.3500/1.3520 from where we had the large Key Day Reversal after the ECB rate cut nearly two weeks ago. Today I will be a buyer on any dip to 1.3515/1.3540 with a 1.3495 stop. I still do not want to be short the Euro at this time.
US Dollar Index
No change as I am still a buyer from 80.10/80.30 with a 79.85 stop.
June DAX
The Dax plan also worked well yesterday as shortly after the US Markets opened it traded up to my 9920 sell level and after a brief sell-off I was able to cover this position at 9890 and I am now flat. As I write this update the Dax is trying to break the key resistance at 9950. This is very important as a break and close over this level today could see the market finally test the key 10215/10300 resistance level that I have mentioned over the last few weeks. Today I will be a small buyer from 9930/9955 with a 9910 stop. I do not want to be short the Dax outright at this time as I am still short the DAX/FTSE spread from last week at 3110 in very small size with the same 3200 stop.
June FTSE
For the second consecutive day the FTSE managed to close below the key 6800/6820 support level and this zone should now act as strong resistance. Today I will again be a seller from 6790/6810 with a 6835 stop. I still do not want to be long the FTSE at this time.
Dow Rolling Contract
No change yesterday as the Dow, having briefly sold off rallied as expected ahead of tomorrow’s Fed Statement. Today I will again be a buyer from 16640/16670 with a 16610 stop. I still do not want to be short the Dow at this time.
September BUND
My long 145.30 Bund position from last Friday worked well as the market had a nice rally which enabled me to cover this position at 145.70 and I am now flat. I still like the Bund as long as we can stay over the now key 144.80/145.00 support zone and today I will be a buyer on any dip to 145.10/14530 with a 144.75 stop. I still do not want to be short the Bund at this time.
Gold Rolling Contract
I was finally stopped out of my long 1250 Gold position from last week at 1270 overnight and I am now flat. Despite been taken out of this position I still like Gold as long as we can stay over the 1240 low made 10 days ago. Today I will be a buyer on any dip to 1255/1260 with a 1248 stop.
Silver Rolling Contract
Overnight Silver finally traded down to my 1958 buy level. I will leave my stop the same at 19.10 as Silver continues to trade stronger than Gold.
Recent Comments