We wait, there is a vast amount of commentary and expectation, and even a fair degree of optimism. And nothing might happen for a few days at least. But in this case, there will be an endpoint. Markets were mostly pleased, with equity markets in Europe up strongly (Germany almost 4%). Yields also rose in the US and Germany, with periphery yields lower. Currency markets were far more muted, with the USD rallying, the NZD and AUD underperforming. The EUR was slightly lower, after rising to 1.14 earlier in the day.
For anybody following my new Platinum Service it made 170 points yesterday. For the last three weeks the gains have been 1010, 600 and 955 points respectively. If anybody is interested in my new service please email me at bryan@tradernoble.com
Commodities were also restrained and iron ore continues its run lower. There is a huge amount of attention on the negotiations between Greece and its creditors and I am afraid that it is going to continue. The next focal point will be Thursday, but that won’t stop the stream of headlines, and the subsequent market twists and turns as it tries to make sense of it all. The news from yesterday was mostly positive, if somewhat cloudy. It appears that Greece has put forward a proposal (after first sending the wrong draft – you couldn’t make this up) that is promising for the Troika (the creditors – IMF, ECB, Euro-Group). They are proposing an increase in tax (VAT) and some cuts to low income pensions, with increases in pension contributions. There is only a broad outline, as that is all released, but it seems that negotiations at least have started in earnest.
It is a significant fiscal tightening for Greece, suggested to be around E7.9bn, and as such, creditors wish for the proposal to first be passed by the Greek government before it goes to the other European states to be voted on. No point agreeing, if the Greek government then renege. And it is likely that Greece will want some debt relief in return. That means, that while the news was greeted positively by equity and debt markets yesterday, we aren’t quite there yet. Closer, definitely, but not there. The next big meeting of the EU Leaders Summit is on Thursday. And many more headlines between now and then. Remember, the deadline to pay the IMF is on June 30th. Market reaction has been interesting, suggesting that equity and Bond markets were positioned for higher Greek event risk, but the currency markets are not as fussed. The USD rally may be due to the stronger Housing data (Existing Home Sales) but that shouldn’t overwhelm the more global events.
This morning we have no data of note due to be released from the UK. However at 8.30 am and 9.00 am we will get German and Euro-Zone Manufacturing/Services PMI respectively. This is followed at 1.30 pm by the always volatile US Durable Goods Orders. At 2.00 pm the FHFA House Price Index will be released. This is followed at 2.45 pm by US Manufacturing PMI. Finally at 3.00 pm we have New Home Sales and the Richmond Fed Manufacturing Index.
September S&P 500
My long 2106 S&P position from last Friday finally worked out yesterday morning as shortly after the European Markets opened higher the S&P traded to a 2122 high which enabled me to cover my long position at 2112 as outlined earlier to my Platinum Members and I am now flat. The S&P has left a large ‘Open Gap’ from last Friday’s close at 2099 to this afternoon’s low at 2111.50 and to me while there might be some down and up moves I still believe that this market wants to trade higher first before running into trouble later in the year. Today I will look to buy the market on any dip to 2107/2113 with a wider 2101 stop. Remember a break and close over 2118 is very positive and opens up a move higher to 2140 and then possibly 2180/2210 over the coming weeks. It is interesting that nearly every trader that I talk to is bearish.
EUR/USD
The Euro plan also worked well yesterday as shortly after the Euro spiked higher on the European open, the Euro reversed course to trade lower to my 1.1325 buy level before having a nice rally over 1.1400 which enabled me to cover this position at 1.1370 and I am now flat. As long as the Euro can hold the 1.1170/1.1200 support level I believe that it is only a matter of time before we trade higher to at least 1.1600 and then possibly 1.1800. Today I will again be a small buyer on any dip to 1.1270/1.1310 with a 1.1240 stop. Again if I am taken long and subsequently stopped out of this position I will be a more aggressive buyer in front of 1.1210 with a 1.1150 stop.
September Dollar Index
My short 94.60 Dollar position from last Friday worked very nicely yesterday as shortly after the European Markets opened the Dollar traded to a 93.90 low which enabled me to cover this position at 94.20 as outlined earlier to my Platinum Members and I am now flat. Today I will again look to go short on any rally higher to 94.80/95.10 with a 95.40 stop.
September DAX
The DAX had a lovely Gap higher at the European Open with the first print at over 11200 which meant that anybody still long from last Friday made nice gain. Unfortunately I covered my position too early at 11100 and I am now flat. As I mentioned over the past few weeks that Greece would get some sort of deal and as this is looking more and more likely there is no point in been short the DAX. However it is tricky to pick a buy level today after the 400 point up-move that we have seen since last Friday. Today I will be a small buyer on any dip to 11280/11350 with a wider 11240 stop. Be careful with the DAX over the next couple of days as this market will be very sensitive to any news out of Greece.
September FTSE
The FTSE also gapped higher on the London Open yesterday morning. Thankfully we have had no sell orders in any of the main markets over the past two weeks. Today I will raise my buy level to 6680/6720 with a 6650 stop.
Dow Rolling Contract
My long 18020 Dow position from last Friday worked very well yesterday as the market eventually traded higher to my 18080 take profit level as outlined to my Platinum Members and I am now flat. Today I will again be a small buyer on any dip to 18020/18080 with a 17970 stop. Despite the confirmed Hindenburg Omen from last week I do not want to be short the Dow at this time as just like the S&P above I believe this market is going to new highs before trading lower.
September BUND
My fears that this BUND is still an accident waiting to happen especially with all the Pension/Hedge Funds caught long at prices way above the market certainly proved to be the case yesterday. Thankfully the BUND opened near the bottom of my buy range at 151.50 before literally stopping me out of this position for a small loss at 151.15 and I am now flat. Yesterday was a good stop especially when the BUND fell another 80 points after I was stopped out. Today I will be a small seller on any rally higher to 151.00/151.40 with a 151.70 stop. Given the extent of yesterday’s sell-off I do not want to be long the BUND at this time.
Gold Rolling Contract
Gold opened down yesterday morning and continued to trade lower all day before eventually hitting my 1188 buy level. I am still long and today I will leave my stop the same at 1179 which is just below the 1182 low made yesterday.
Silver Rolling Contract
No change as I am still long at 15.90 with the same 15.50 stop on a day when Silver traded higher than Gold.
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