With a quiet start to the week, due in part to London being closed for the August Bank Holiday, price action was relatively contained in the major currencies. Following on from last Friday’s soft New Home Sales Report the market has become much more focused on the economy’s readings into the September 18 FOMC Meeting. The US Durable Goods Report was something of a disappointment as there was certainly an element of payback in the headline, which fell 7.3% versus +4% expected, after several strong rises. But even allowing for this inevitable monthly noise from volatile the Defence and Aircraft Sector, core orders dropped 3.3%taking them back to April levels. These recent data releases, at a minimum, will give the Fed cause for thought as to whether the economy is losing some of its growth momentum in Q3. The stock market rose sharply after the Durable Goods were released but then fell steadily into the close after US Secretary John Kerry said that the President will hold Syria”s Government accountable for using chemical weapons.
On the economic front this morning we have the UK Nationwide House Price Index and then, the very important, German IFO Survey. This is followed later in the US by Consumer Confidence and the Richmond Fed Manufacturing Index.
September S&P 500
The S&P worked well yesterday with the market staying in my buy zone for quite a while before trading higher after the release of the very weak Durable Goods Orders. I bought the S&P at 1660 and I covered this position at 1666 and I am now flat. Today with the market a lot lower on the back of John Kerry’s comments I have bought the S&P at 1645. I will leave a 1639 stop on this position. My only interest in selling the market is on a rally to 1675/1682 with a 1684 stop. If I am stopped out of my long position I will be a more aggressive buyer from 1630/1634 with a 1627 stop.
Euro/USD
The Euro also worked well yesterday as after the market dropped down to my 1.3370 buy level we had a nice rally and I was able to cover this position at 1.3410 and I am now flat. Today I will be a small buyer on any dip to 1.3320/1.3340 with a 1.3290 stop. I still do not want to be short the Euro at this time.
September DAX
The Dax also traded down to my 8390 buy level before initially following the S&P higher and allowing me to cover this long position at 8430 and I am now flat. I still like the Dax and I still believe this market is a buy on dips. Today I am a small buyer from 8290/8310 with a 8270 stop. I still do not want to be short the market at this time.
September FTSE
The market was closed yesterday but we are now back down below the key 6500 level and this is a worry for the bulls. Today I will be a seller on any rally to 6490/6520 with a 6530 stop. I will also be a small buyer on any dip to 6410/6430 with a 6395 stop.
September 10 Year Treasury Note
Very unlucky yesterday as the market just missed my 124.80 buy level with a 124.82 low and I am still flat. Today I will leave my buy level the same at 124.50/124.80 as I do not want to chase this market higher. If I am taken long I will leave a 124.30 stop.
Gold Rolling Contract
Gold also worked well yesterday as the market dropped down to my 1390 buy level and after a small rally I was able to cover this position at 1402 and I am now flat. Today I will leave my buy level the same at 1380/1390 with a 1375 stop.
Silver Rolling Contract
No change as this market is still overbought I will leave my sell level the same at 24.50/24.80 with a 25.10 stop.
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