The run of positive Manufacturing PMIs continued yesterday with the US Manufacturing ISM rising to a three month high of 50.9 from 49.0 in May. However investors seemed to focus on the decline in the Employment Component of the ISM which fell to 48.7 from 50.1 and is now at its lowest level since September 2009. Whilst there is no relationship between the series and the official unemployment rate it was taken as a warning sign of possible softness in next Fridays Non Farm Payroll data causing US Bond Yields and the US Dollar to pare some of their recent gains whereas Equity markets benefited from the prospect of ‘QE for longer’.
US Equity markets ended the day 0.5% higher whilst European markets averaged a 1% gain. The Euro enjoyed some rare gains against the weakening Dollar rising from 1.3010 back up to resistance around the 200 Day Moving Average at 1.3065. European markets were also supported by better Manufacturing PMIs with the Euro-Zone revised higher to 48.8 from 48.7, but more interestingly Spain’s Index rose 1.9 pts to 50 for the first time in two years while Italy rose 1.8 pts to 49.1. Meanwhile the Euro-Zone Unemployment rate came in at 12.1% versus 12.3% expected. In the UK the Manufacturing PMI rose from 51.5 to 52.5 settling a positive tone as Bank Of England Governor Carney started his five year term. Overnight the Australian Central Bank left its rates unchanged while Nikkei continued its recent good run with a gain of 2% helped by a weaker Yen.
This morning on the Economic front we have UK PMI Construction and Euro-Zone PPI followed later in the US by Factory Orders and the New York ISM.
September S&P 500
The S&P plan worked well yesterday as the market traded up to my 1618 sell level with a 1620.25 high before spending the rest of the day leaking lower into the close. I covered my short position at 1610 and I am now flat. With the US markets closed on Thursday and the fact that we still have not quite closed the open Gap at 1622 from two weeks ago plus the positive seasonal factors, it is still quite possible we could trade higher to close this gap before sellers return. Today I will still look to sell on any rally to 1618/1624 with a 1628 stop and I will also be a buyer on any dip to 1598/1603 with a 1595 stop.
Euro/USD
The Euro also worked well as the idea of not to be short at this time is working well. It dropped down to my 1.3010 buy level and I was able to cover this position at 1.3050 and I am now flat. Today I will still look to but the Euro on any dip to 1.3010/1.3030 with a 1.2990 stop. I still do not want to be short the Euro at this time!
September DAX
The Dax plan worked well yesterday as after I posted the market was trading in my buy area. I bought the Dax at 7920 and I was able to cover this position at 7980 and I am now flat. Today I will be a buyer on any dip to 7900/7925 with a 7880 stop.
September FTSE
The FTSE traded higher yesterday on the feel good factor of Mark Carney starting his five year term as Governor of the Bank Of England which led to the market trading up to my 6270 sell level with a 6271 high. It later followed the S&P lower and I was able to cover this position at 6240 and I am now flat. Today I will be a seller on any rally to 6280/6310 with a 6330 stop. I do not want to be long at this time.
Gold Rolling Contract
Very unlucky yesterday as Gold just missed my 1232 buy level with a 1233 low before having a nice rally. Today I will leave my buy level the same at 1220/1232 with a 1208 stop. I will also be a small seller on any rally to 1290/1305 with a 1312 stop.
Silver Rolling Contract
Silver dropped down to my 19.50 buy level. I am disappointed in how weak Silver is trading in comparison to Gold but I will give this position another day to rally. I will raise my stop to a breakeven at 19.50 and I will look to take profit on any rally to 19.90/20.10. I will also be a small seller between 20.35/20.60 with a 20.80 stop.
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