Yesterday’s markets were characterised by little more than minor position squaring in front of today’s Non Farm Payrolls Report. US equities closed unchanged whilst the major currencies and Bond Yields were also little changed. Commodity prices were mixed (Industrial Metals mostly higher and Soft Metals lower) whilst Oil was down as refinery shutdowns and a jump in gas production from some North American fields forced an increase in crude stockpiling.
Yesterday’s sole piece of US economic data for September, Existing Home Sales, came in close to expectations at 5.29 million against 5.30 million expected with the monthly decline of 1.9% about half of what was forecast thanks to a downward revision to August. The standout feature of the release is the decline in affordability to a five year low due to a combination of higher prices and the recent rise in mortgage rates. Concerns that the housing market recovery may be faltering alongside evidence of a slowing in the pace of labour market improvement was an important factor behind the Fed’s decision not to commence QE Tapering last month.
Later today at 1.30 pm all eyes will be on the Non Farm Payroll data where an increase of 180k is expected with the unemployment rate steady at 7.3%. Payrolls aside, we will also get US August Construction Spending, October Richmond Fed Manufacturing Survey and the TICS (Capital Flows) data for August.
December S&P 500
The S&P had one of its quietest sessions of the year to date as the market literally went on hold ahead of today’s Payroll data at 1.30 pm. The market just missed my 1743 sell level with a 1742.75 high before having a small sell off and consequently I am still flat. I am going to stay flat until we get the data out of the way. If the S&P rallies after the report is released I will be a small seller from 1746/1751 with a 1754 stop. I will also be a small buyer on any dip to 1723/1728 with a 1719 stop. As long as the S&P can stay over 1710 the market is fine but a break and close below 1710 will be bearish.
Euro/USD
The Euro also had a very quiet session yesterday and even though the market attempted to sell off we had no follow through and I have cut my short 1.3680 position at 1.3672 and I am now flat. The Euro has had a huge move since the last Payroll report was released in early September when we were trading at 1.3120. The key level for is 1.3770/1.3800 and I will be a seller in this area with a 1.3820 stop. Given how overbought the Euro is trading I do not want to be long the market at this time.
December DAX
After I posted yesterday morning the Dax traded up to my 8870 sell level and I am still short in small size with the same 8895 stop. If I am stopped out I will be a more aggressive seller on any subsequent rally to 8950/8975 with a 9010 stop. I will also be a small buyer on any dip to 8750/8780 with a 8735 stop.
December FTSE
No change as I am still a buyer on any dip to 6520/6550 with a 6495 stop. I will also look to sell the market on any rally to 6690/6715 with a 6735 stop.
Dow Rolling Contract
I am still flat and I will stay this way until the Non Farm Payrolls Report is released later. If the Dow rallies after the report is released I will be a small seller from 15450/15480 with a 15510 stop. I will also be a buyer on any dip to 15280/15310 with the same 15260 stop.
December BUND
No change as I am still flat and I will be a small buyer on any dip to 139.45/139.65 with a 1.3930 stop. I still do not want to be short the Bund at this time.
Gold Rolling Contract
After I posted yesterday morning Gold traded down to my 1613 buy level. I am still long and I will leave my stop the same at 1305. If I am stopped out I will be a more aggressive buyer on any subsequent drop to 1285/1293 with a 1279 stop.
Silver Rolling Contract
Silver traded down to my 22.10 buy level and after a small rally I was able to cover this position at 22.30 and I am now flat. I still like Silver and I will be a small buyer on any dip to 21.70/22.00 with a 21.55 stop.
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