Having been brittle this month on US Fiscal Cliff worries, the markets continued to build on their gains from late Friday with European Equities gaining 2-3% and the US 1.5-2.5% led by a 7% gain in Apple Shares. After signs for a little while now that the US Housing Market has emerged again from its lows, it was further enhanced by the NAHB Home Builders Index reading of 46, up from 20 a year ago. Existing Home Sales rose again in October, up 10.9% year on year, with a lower level of stressed sales at 24% of the total compared to 28% a year earlier. European markets are lower this morning after late last night Moodys Rating Agency pulled the plug on France’s ‘Triple A’ rating, by downgrading it from Aa1 to Aaa. This could have a trickle-down effect throughout the French banking system, with potential downgrades for French banks feeding through to higher borrowing costs.
European Finance Ministers are meeting in Brussels at 5pm today to discuss ways to fill a €15 billion gap in Greek Public Accounts. Later today we have Housing Starts in the US and Fed Chairman, Bernanke is speaking in New York to the Economic Club.
Dec S&P 500
The S&P continued to build on the strong gains posted late Friday. The market opened at 1373 and never looked back leaving another large Gap from 1360/1373. There were two 90% down days on Nov 7th and 14th followed by today’s 90% up day suggesting that selling pressure has been temporarily exhausted and a relief rally underway. The S&P managed to close back above its 200 Day Moving Average at 1382.5. Today I will be a small seller from 1388/1392 with a 1396 stop and I will also look to buy if the market decides to close the Gap below and I will look to go long from 1363/1367 with a 1359 stop. This is traditionally a strong week with the markets closed for Thanksgiving on Thursday and only open for a half day on Friday.
Dec BUND
I have had the same 143.30 short position for a week now and the market has not moved. I covered my position last night at 142.95 as, given the strong Equity markets, the Bund should be trading lower and is not. If the Bund can rally out of this tight trading range I will be a seller from 143.50/143.80 with a 144.02 stop.
GBP/USD
The market traded lower but just missed my 1.5870 buy level. I will leave my buy level the same at 1.5850/1.5880 with a 1.5835 stop.
Euro/USD
The Euro is trading very well this morning considering the Moodys downgrade. I will raise my buy level to 1.2750/1.2775 with a 1.2745 stop which is just below yesterdays low.
Nasdaq 100 Rolling Contract
The Nasdaq had a huge rally yesterday led by Apple and I took profit at 2590 on my 2520 long position and I am now flat. The 2600/2640 is huge trendline resistance and I will be a small seller from 2615/2635 with a 2652 stop.
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