Yesterday you would be forgiven for thinking that perhaps there was a long weekend in many parts of the world. Well it is just August, with many traders taking the last of their summer holidays. There is also very limited newsflow and markets are behaving as such, but this should end soon.
There was a general easing of geopolitical tensions with no new developments in Ukraine and Gaza yesterday – this was good news. This allowed a fairly solid rally in equities across the US and Europe whilst Bond Yields were higher and the US Dollar was stronger. In Germany, the Bundesbank released its Monthly Report where basically they highlighted what the poor GDP had already told us, namely that growth is slowing and for this they blame international factors.
In the US, the NAHB Survey of Housing Sentiment belied the poor housing data of late to actually rise, giving hope for a pick-up in today’s Real Estate. With regard to housing, there was some soft data out of China yesterday with house prices falling in 64 of the 70 cities recorded, up from 55 the prior month. Concerns regarding China’s property market abound as they have done for some time now.
This morning on the economic front we have Euro-Zone Current Account at 9.00 am. This is followed at 9.30 am by UK CPI and PPI as well as the ONS House Price Index. At 1.30 pm we have US CPI, Housing Starts and Building Permits and it will be interesting to see if the latter confirms yesterday’s strong NAHB Housing Survey.
September S&P 500
Shortly after I posted yesterday the S&P cash market closed the ‘Open Gap’ from July 30 at 1970. The technical picture for yesterday’s advance was strong with the internals been particularly strong as the S&P has now retraced over 78.2% of the previous decline. As I mentioned yesterday, every sell-off is been met by serious buying no matter how bad the economic data or geopolitical news is.
The S&P finally traded up to my 1967 sell level and I entered short I will leave my stop the same at 1973 on this position and if I am stopped out I will be a more aggressive seller in front of 1979 with a 1985 stop. I am reluctant to move my buy level to much higher but today I will raise this level to 1954/1959 with a 1949 stop.
Euro/USD
After I posted, the Euro traded down to my 1.3360 buy level. I am still long and I will leave my stop the same at 1.3325 which is just below last week’s low. The real support for the Euro comes in at 1.3280/1.3300 and if I am stopped out of my long position I will look to reset my long position on any drop to this latter level with a 1.3255 stop.
US Dollar Index
No change as I am still long from last week at 81.45. Today I will raise my stop on this position to 81.10.
September DAX
I am glad that I stood aside from the Dax yesterday as this market is literally just being driven by whatever newsflow comes out of Ukraine. Today I will be a small seller on any rally into last Friday’s resistance at 9310/93500 with a 9385 stop. I will also be a small buyer on any dip to 9120/9160 with a 9085 stop.
September FTSE
The FTSE traded in a very narrow range yesterday as the market continues to retrace its early August sell-off. Today I will raise my buy level to 6675/6700 with a 6645 stop. As I have mentioned over the last several weeks the FTSE is still my preferred stock Index and for this reason I do not want to be short the market at this time.
Dow Rolling Contract
By the time I posted yesterday morning the Dow was trading near the top of my sell level at 16780. When the US markets opened I was quickly stopped out of this position at 16820 and I am now flat. It still has an Open Gap’ from July 30 at 16880 and today I will be a small seller on any further rally to 16870/16920 with a 16950 stop. Given how much the Dow has retraced from its early August sell-off down to the 16200 area I do not want to be long the market at this time.
September BUND
Unfortunately the Bund just fell shy of my 150.45 sell level before having a nice sell-off in yesterday’s trading session and I am still flat. I still believe that the Bund is an accident waiting to happen and today I will lower my sell level to 150.10/150.50 with a 150.75 stop.
Gold Rolling Contract
No change as I am still a buyer on any further dip to 1288/1295 with the same 1283 stop.
Silver Rolling Contract
Finally Silver decided to rally yesterday with the market having a nice run up into the New York close. I am still long at 19.90 and I will leave my stop the same at 19.45.
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