The big mover over the past 24 hours has been the strength in the US Dollar. It is renewed slippage in EUR/USD (down 1.2% on Friday night’s New York close) that has done most of the subsequent damage. This in turn looks linked to the apparent lack of substantive progress in talks between Greece and her EU creditors. Comments late last night from Greek officials, including Finance Minister Yanis Varoufakis, that Greece is ‘very close’ to a deal with creditors (by which he mean inside a week) are being treated with probably justified scepticism.
US Dollar strength has come despite yet another incoming US data disappointment, this time courtesy of the NAHB index of homebuilders’ sentiment, which slipped to 54 from 56 against expectations for a small rise to 57.
Something of an antidote to the recent gloom and doom on US data came from the San Francisco Fed last night (headed by FOMC ‘centrist’ but recently more hawkish John Williams). They issued a paper suggesting that Q1 GDP has tended to be consistently underestimated in recent years, and that applying a second round of seasonal adjustments to what are supposed to be already seasonally adjusted data, suggests Q1 GDP growth was more like 1.8% rather than the 0.2% currently reported (and widely expected to be revised into negative territory later this month).
US equities have performed better than they did Friday, culminating in yet another all-time record closing high for the S&P 500 (+0.3% to 2129.2) led by a rally in Apple shares after some constructive comments from veteran stock investor Carl Icahn (that the stock is undervalued and misunderstood, and that they should boost their stock buyback programme). Sound like he’s quite long. We’ve also had US bond yields retracing most of Friday’s rally, with 10year yields up 9bps and 2s, which were down less than a basis point on Friday, up 4bps Monday
This morning on the economic front we have UK CPI and PPI which are both due at 9.30 am. This is followed at 10.00 am by Euro-Zone Trade Balance and CPI. At the same time we have the latest German ZEW Survey for Current Expectations and Current Situation. The only data of note due from the US is Housing Starts and Building Permits at 1.30 pm.
Please note that due to numerous requests from some of my Members I have started a new service for Platinum Members. The main difference in this service and my Premium Service is that I am telling everybody in Platinum where I am exiting all positions. A lot of my Members are more comfortable under this new scenario and the cost for anybody interested in this new service is an extra $140 per month. Please email me if you are interested in this new service and I will then email you a copy of the latest update.
June S&P 500
I was very unlucky with my buy level yesterday as shortly after I posted the market just missed my 2112 buy level with a 2113 low. Subsequently the market traded higher for the rest of the US trading session before hitting my 2029 sell level I am still short and today I will lower my stop on this position to 2135. The market is extremely overbought on both a Daily and Weekly basis and is currently trading at the top of its Bollinger Band and Williams Index. My only interest in buying this market today is still on a dip to 2110/2115 with a tight 2106 stop. If I am stopped out of my short position I will be a more aggressive seller in front of 2138 with a 2144 stop.
EUR/USD
My Euro plan worked well as shortly after I posted yesterday morning the Euro traded lower to my 1.1390 buy level before having a nice spike which enabled me to cover this position at 1.1430 and I am now flat. I must say that I was very surprised by yesterday’s move lower especially with the Euro closing over 1.1420 in New York last Friday. I have to respect this price action and today I will be a small seller on any rally higher to 1.1350/1.1380 with a wider 1.1420 stop. Given the extent of yesterday’s sell-off I do not want to be long the Euro today.
June Dollar Index
Shortly after the US Markets opened yesterday afternoon the Dollar rallied to my 94.10 sell level. I am still short and I will keep my stop tight at 94.50. Today I will again be a small buyer on any dip lower to 83.30/93.60 with a tight 92.95 stop.
June DAX
No change from yesterday as I am still a small seller on any further rally to 11720/11770 with an 11810 stop. Given the weakness of the Euro I will raise my buy level higher to 11400/11450 with an 11360 stop.
June FTSE
My long 6830 FTSE position from last Friday worked out well yesterday as shortly after the FTSE opened the market spiked higher to 7010 which enabled me to cover this position at 6970 and I am now flat. Today I will again be a small buyer on any dip lower to 6895/6925 with a 6865 stop. I still do not want to be short the market at this time.
Dow Rolling Contract
No change as I am still a small seller on any further rally higher to 18360/18420 with an 11450 stop.
June BUND
My short 153.80 position from Friday worked out very well as shortly after the BUND opened the market spiked lower to 153.25 which enabled me to cover my short position at 153.40 and I am now flat. Today I will again be a small seller on any further rally higher to 153.80/154.10 with a tight 154.40 stop. I will still be a small buyer on any dip lower to 151.95/152.40 with a 151.70 stop.
Gold Rolling Contract
No change as I am still a small buyer on any dip lower to 1210/1218 with the same 1203 stop. Remember a break and close over 1230 is very bullish and opens up the possibility of a move higher to at least 1300.
Silver Rolling Contract
No Change as I am still long at 17.10 with the same 16.80 stop. The next major resistance is from 18.00/18.50 and a break and close over here will mean that the whole downtrend since the May 2011 to at 50.00 will have been broken.
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