Equity markets ended the day in positive territory but well off session highs led by strong US Economic data. The US Empire Manufacturing data jumped back to a positive reading of 7.84 from -1.43 in May, followed by the NAHB Home Builders Index of Buyer Sentiment which rose to 52, from 44 last month, the highest level since 2007.This despite the 50 basis points rise in mortgage rates over the last month and will have given some comfort to the Fed that the recovery, at least for housing, has not been scotched by the back up in Bond Yields.
There was a late session article written by the Financial Times, Washington based Fed watcher, Robin Harding saying that the economic preconditions to begin tapering were close to being met but the Fed qualified this by saying that it was subject to the economy’s performance. The question now is whether the Fed will signal the beginning of this tapering at the tomorrow’s FOMC announcement or wait until the next meeting. The Equity markets got slammed on this news but then rallied into the close.
Overnight the Nikkei closed down 0.6% as most markets went on hold ahead of tomorrow’s FOMC meeting.
Today is a much busier one for economic data. This morning we have UK PPI, CPI and the ONS House Price Index. We have new car registrations for the Euro-Zone and the German ZEW Survey which will certainly move markets. Later from the US we have CPI followed by Housing Starts and Permits
September S&P 500
I have now rolled from the June to the September contract which carries a discount of 6 handles to both the June contract and the Cash Market. Some spread betting firms did this roll-over at the weekend and may have led to confusion with the different price structures, as some had June for the front month whilst other companies had September for their front month. As the June Contract expires on Friday Lunch time I have decided to use the September contract from today.
Yesterday the June contract just missed my 1629 buy level with a 1629.5 low after the FT article hit the markets and I am still flat as I did not trade after this.
Today for the September S&P I am a small buyer on any dip to 1624/1628 with a 1619 stop and I will also be a small seller on any rally to 1642/1646 with a 1651 stop. I am only trading in small as I want to be flat ahead of tomorrows very important FOMC announcement and Bernanke’s Press Conference that follows.
Euro/USD
The Euro rallied up to 1.3380 before sellers returned and given the fact that anything can happen tomorrow I have decided to cut my 1.3350 short position this morning at 1.3330 and I am now flat. If the Euro breaks and closes over 1.3380 it will very bullish and I would expect it to trade up to the 1.3570/1.3600 resistance area ahead of the 1.3700 highs made in February. For me to turn bearish again we need to see a sell extreme from 1.3330 level with at least a close below 1.3250.
June DAX
Unfortunately after I posted yesterday morning the Dax had already traded through my sell level and I am still flat. Having looked strong all day had a nasty sell off into the close and today I will be a small seller on any rally to 8225/8250 with a 8270 stop which is just above yesterday’s high. I will also be a small buyer on any dip to 8110/8135 with a 8090 stop which is just below last Friday’s low.
June FTSE
Just like the Dax, the FTSE had a nasty sell off in the last hour of trading. It traded down to my 6310 buy level and despite the fact the S&P is back to near its best levels the FTSE is not following suit and for this reason I have decided to cover my long position this morning at 6320 and I am now flat. Today I will be a small seller on any rally to 6330/6350 with a 6375 stop which is just above yesterday’s high. I do not want to be long at this time.
September BUND
No change from yesterday as I am small buyer on any dip to 143.10/143.30 with a 142.95 stop. I will also be a small seller on any rally to 144.30/144.50 with a 144.75 stop.
September Nasdaq 100
I have also rolled the Nikkei to the September contract which carries a 5 point discount to both the June contract and the Cash Market. My parameters are still the same as I will be a buyer on any dip to 2920/2940 with a 2195 stop. I will also look to sell the market on any rally to 2990/3110 with a 3125 stop.
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