Yesterday’s Bank Holiday in the UK was a factor in constraining market liquidity but did not stop the S&P making yet another new high however for the fourth time this month the Dow failed to make it past its July high of 17150.
The German IFO Survey for August was again underwhelming. Both the headline and the detail disappointed expectations which were already set for a pull back, with the main Business Climate Index down to 106.3 from 108, its lowest level since last July. It was a similar story for the Current Assessment Index, a good tracker of German GDP, that also notched up its fourth decline. This only adds weight to the market’s expectation that annual growth will ease with current forecasts expecting it to ease to a modest 1.3% from 2.2% in Q2. There was no further response from the Euro which had already been losing ground from the open early yesterday morning on the expectation that the ECB would step up to the plate with more stimulus at next week’s meeting.
The US Dollar was similarly contained yesterday. The Dollar Index did actually test some lower levels mid-session but recovered its composure. It was not helped by a lower than expected reading on US New Home Sales for July but revisions did soften the blow whilst there was also a lower than expected Dallas Fed Manufacturing Reading for August.
This morning on the economic front we have UK BBA Loans for House Purchase at 9.30 am. We have no data of note due from the Euro-Zone while at 1.30 pm we have US Durable Goods Orders. This is followed at 3 pm by Consumer Confidence and the Richmond Fed Manufacturing Index.
September S&P 500
By the time I posted yesterday morning the S&P was trading near the top of my sell range at 1996. I am still short and I will leave my stop the same at 2003. If I am stopped out of this position I will be a more aggressive seller in front of 2008 with a 2013 stop. The S&P cash market has finally broken the 2000 resistance level that I have eluded to over the last three months. The market is now overbought on both a Daily and Weekly basis and given this fact, I am only going to move my buy level up to 1878/1983 with a 1974 stop. This coming weekend is Labour Weekend in the US so the US Markets will be closed next Monday. From Thursday the market could well turn positive as the end of this week beginning of next week is a seasonally strong time of the year for the stock market.
Euro/USD
No change as I am still long from early yesterday morning at 1.3190 with the same 1.3160 stop. The Euro is still trading at the bottom of its Bollinger Band and Williams Index and it was interesting that after the very weak German IFO Survey was released yesterday morning that the Euro did not fall much. Given how oversold the market is trading at this time I do not want to be short. It is worth noting that the Daily Sentiment Index Reading for the Euro last week showed a reading of just 9% bulls, which is another reason why I do not want to be short at this time.
US Dollar Index
No change as I am still a seller on any further rally to 82.80/83.10 with the same 83.30 stop.
September DAX
By the time I posted yesterday morning the Dax was trading at the top of my sell range at 9470. The market briefly sold off from this level before trading higher after the US Markets opened and I was stopped out of this short position near the high of the day at 9510 and I am now flat. The next major resistance for the Dax is from 9545/9590 and I will be an aggressive seller in this region with a 9630 stop. I will also raise my buy level to 9340/9380 with a 9290 stop. I am reluctant to chase this market higher given the fact that it is so underperforming the major US Indices and the fear that we will get more negative news out of Russia and Ukraine.
September FTSE
The FTSE is not reacting as strongly to the other major equity moves making me suspicious as how far these markets can continue to rally without another decent pull-back. Today I will be a small buyer on any dip to 6740/6770 with a tight 6725 stop. I still do not want to be short the FTSE at this time and this view has certainly saved me a lot of money over the last three weeks.
Dow Rolling Contract
The Dow so far continues to lag the S&P and as long as it stays below 17150 we still have negative divergence vis a vis both the S&P and the NASDAQ. After I posted yesterday morning the Dow was trading at my 17105 sell level. I am still short and I will leave my stop the same at 17165 but I am also conscious about the positive seasonal sentiment later in the week and therefore I will use any decent pull-back to cover my short position. Despite the expectation of this positive seasonal sentiment I still do not to be long the Dow at this time.
September BUND
Yesterday was another great example of why it is so important to have stops in the market as just after I posted I was stopped out of my short 150.20 position at 150.75 and I am now flat. The Bund is now trading near 90 basis points for the yield for 10 Year Bonds which is incredible when we are supposedly 7 years into an economic recovery. I sincerely hope that Europe does not become the new Japan. Today I am going to stand aside in the Bund as I want to see what the London traders make of this latest rally when they return to their trading desks after the UK Bank Holiday.
Gold Rolling Contract
No change as I am still long from last week at 1274 with the same 1261 stop as Gold just fell shy of my 1284/1289 resistance with a 1282 high.
Silver Rolling Contract
Silver continues to trade stronger than Gold at this time. I am still a buyer from 19.10/19.30 with the same 18.75 stop.
Recent Comments