Very negative sentiment in global financial markets yesterday as the wires were hit with a litany of bad news out of Europe. The focus remains on Spain where 10 Year Bond Yields rose to 7.57%, triggering a rise in Italian yields to 6.42%. In summary, reports from Spain suggest that six regions will need a central Government bailout after Valencia on Friday, GDP fell 0.4% in Q1, and the stock market regulator banned short selling for three months for all stocks, as the market threatened another big fall on Monday. Italy also banned short selling of banks and insurance stocks for one week. The Troika assesment team will arrive in Greece today with the country well behind on its agreed obligations to get its next €200 billion bailout. Reports say that the IMF will refuse to provide any more financial aid. Stocks fell heavily as did commodities, including Gold.
US Chicago Fed Nat Activity Index was a touch better at -0.15% versus -0.48% last month and EC Consumer Confidence fell to -21.6 for July which was worse than expected. Later today, we have the Richmond Fed Index and the House Price Index from the US.
Sept S&P 500
My 1349 long was quickly stopped out at 1345 and I am now flat. The market then traded down to 1332, which was the bottom of the Bollinger Band, which helped the rally trade back to 1348 before a late sell off took the market back to the 1338 level. Again I keep saying how important stops are and that you can make more money when you are flat as you are in a better position to then make a more rational decision. Today I will look to go long from 1333/1337 with a stop at 1330 which is just below yesterdays 1332 low. If the market can manage to rally I will look to go short from 1348/1352 with a 1354 stop. Again, given the volatility, if I see 5-8 point profit on any position I will take it and start again.
EURO
The Euro worked out well as we traded down to my buy level and I went long at 1.2075. We then rallied with the stock market and I was able to take profit at 1.2130. I am now flat. Today I will try one more attemt to go long in the 1.2050/1.2075 area with a 1.2030 stop. If I am taken long I will look to take profit from 1.2120/1.2140 which is just below the now very important resistance area of 1.2160/1.2190.
EURO/GBP
This market also rallied with the stock market and I was able to take profit on my long position from Friday at .7820 and I am now flat. I will continue to use the .7780/7795 area to go long with a .7750 stop.
Sept BUND
The Bund also entered my sell area and I went short at 146.15. I took profit at 145.70 and I am now flat. The Bund then traded down to 145.50. Today I will look to go short on any move back to the 146.15/146.30 with a 146.45 stop.
Sept FTSE
I was also quickly stopped out of my long FTSE position at 5545 when we broke 5525. Today I will look to go long on any dip to the 5450/5470 area with a 5535 stop. If I am taken long I will look to take profit from 5510/5530.
Sept DAX
This is one market I am glad I left alone yesterday! The next big support for the Dax is the 6330/6350 area I and I will look to go long here, in small size, with a 6310 stop.
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