The ISM in the US came in very strong, with a reading of 51.5, providing a strong hint that the US Economy is showing some signs of resilience. This level is comparable with a GDP reading of over 3% which is over twice the 1.3% reported for Q2 last week. The detail was even a little better with the New Orders Component at 52.3 from 47.1 and the Employment Component also stronger. Fed Chairman, Bernanke has also been speaking and renewing the Fed’s pledge to keep stimulus at record levels even after the recovery gathers strength and for a considerable period thereafter.
In Europe, the Euro-Zone Manufacturing PMI was revised upwards whilst the UK PMI came in lower than expected at 48.5. The shine was taken off Equity markets after Moodys reported that Spanish Banks face a shortfall of €105 billion, almost double the estimates reported last week. Today, data-wise it is very quiet with US Auto sales the only one of note.
Dec S&P 500
The S&P worked really well as we traded up to 1450. I took profit at 1445 on my 1432 long from Friday after the Moodys report on Spanish Banks came out and I am now flat. The S&P had another bad close and today I want to go short from 1441/1445 in small with a wider stop at 1450 which is just above yesterday’s high. Again, if the market sells off I will be a buyer in the 1423/1428 area with a stop at 1418 which is just below the very important 1420 level. If we break and close below 1420 it will be a short term bearish signal.
Euro/USD
The Euro worked really well and I was able to take profit at 1.2930 on my 1.2860 long. Today I will still be a seller from 1.2920/1.2950 with a 1.2965 stop. I will also look to set up a long position on any dip to the important 1.2820/1.2840 support with a tight 1.2800 stop.
Dec DAX
The Dax had a nice rally off the important 7220/7250 support from last week and I was able to take profit at 7330 on my 7230 long from last Friday. Today I will be a seller on any rally to the 7330/7350 area with a 7370 stop. If the market sells off I will be a buyer again from 7210/7230 with a 7195 stop.
Dec BUND
The Bund also sold off and I was able to take profit on my small short at 141.20 and I am now flat. I have no strong view on the Bund unless we trade down to the 141.00/141.20 area where I will be a buyer against a stop of 140.90.
Dec FTSE
No Change from yesterday as the FTSE just missed my 5725/5745 buy level with a 5753 low. I will leave the same parameters in place, as posted yesterday.
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