After I posted yesterday morning European Equity markets sold off hard as some lower tier periphery economy bank shares came in for some heavier selling in the wake of the ECB stress test results, with some of the Italian and Greek banks seeing the sharpest declines. European Bank shares overall ended the day down 1.75% against the Euro Stoxx Composite Index which fell 0.6%.
Investor sentiment was further bruised by another disappointing German IFO Survey that is regarded as the most reliable monthly barometer of the German economy. It has now been on the slide for six months with yesterday’s report for October pointing to even weaker growth into the final quarter of the year. This comes in contrast to last week’s above 50 German Manufacturing PMI in October. Germany’s IFO Business Climate Index declined from 104.7 to 103.2 missing expectations for a virtually unchanged outcome and the weakest since December 2012. Confidence was down as was the Current Assessment Index to its lowest level since April 2013 when the German economy was growing at an even narrower rate of 0.5%. The Euro pulled back on the news, testing 1.2670 but subsequently steadied. It was also aided by less enthusiasm for the US Dollar with currency traders taking their excuse to trim long Dollar positions from somewhat disappointing US Pending Home Sales report for September that only rose 0.3% versus the 1% expected.
Today we have no data of note due from the Euro-Zone or UK while at 12.30 pm we have US Durable Goods Orders. This is followed at 2 pm by the Consumer Confidence Index and the Richmond Fed Manufacturing Index.
December S&P 500
The S&P plan worked out well yesterday as after I posted the market started to follow the Dax lower before eventually hitting my 1948 buy level. It steadied as expected in front of last Wednesday’s 1944 support level which enabled me to cover this position at 1956 and I am now flat. The S&P is still trying to break the now key 1960 resistance level and I would expect the market to trade quietly today ahead of tomorrow’s key FOMC Meeting when the Fed are expected to announce the end of QE. Today I will again be a small buyer on any dip to 1945/1950 with a 1943 stop. I will leave my sell level the same at 1966/1971 with a 1976 stop.
Euro/USD
No change as I am still a small seller on any rally back to 12750/1.2780 with a 1.2805 stop. I still do not want to be long the Euro at this time especially with the European economic situation getting worse by the day.
US Dollar Index
No change as I am still a buyer on any dip to 85.10/85.40 with the same 84.85 stop.
December DAX
Yesterday I was very unlucky with my Dax plan as the market started to sell-off just as I posted and in the process just missed my 9095 sell level. Following the release of the extremely weak IFO Survey the Dax got crushed falling nearly 250 points from yesterday’s opening high. The market eventually traded lower to my 8920 buy level before stopping me out of this position near the lows of the day at 8860 and I am now flat. As I mentioned on Friday I am disappointed by the weak rally in the Dax over the last week in comparison to the US markets and normally when we see this type of price action especially in relation to the Dax it does not end well. Despite this I do not want to be short today especially with the FOMC Meeting tomorrow. For this reason I will again be a small buyer on any dip to 8800/8850 with a 8765 stop.
December FTSE
The FTSE also just missed my sell level before also following the other major Indices lower and I am still flat. Today I will be a small buyer from 6270/6310 with a 6245 stop. Given that tomorrow is FOMC day I do not want to be short the FTSE at this time.
Dow Rolling Contract
My short 16800 position from last Friday finally worked out yesterday as the Dow followed the S&P lower which enabled me to cover this position at 16750 and I am now flat. Today I will again be a seller on any rally to 16840/16870 with a 16910 stop. Despite tomorrow’s FOMC Meeting I do not want to be long the Dow at this time especially after the 1000 point rally we have had over the last two weeks.
December BUND
No change as I am still a buyer on any dip to 149.95/150.25 with a 149.65 stop. Remember a close below 149.80 will be short term bearish for the Bund.
Gold Rolling Contract
It is very hard to make money when Gold and Silver are trading in such tight ranges that we have seen over the past month. I am still flat and today I will still be a buyer on any dip to 1212/1220 with the same 1205 stop.
Silver Rolling Contract
No change as I am still a buyer on any dip to 16.50/16.85 with the same 16.25 stop.
Recent Comments