The US Dollar made some limited gains yesterday with the Dollar Index rising to 80.65 from 80.50 last Friday. The rally, if you can call it that, was interrupted for a time when the initial release of the US Manufacturing ISM printed lower at 53.2 but an ‘Oops’ moment ensued when a US based economist picked up an error. In the event it was revised not once but twice, first to 56.0 then finally to 55.4, still a rise of 0.5 points and reflecting a US Manufacturing sector and economy back on a more secure growth path. The ISM Report noted ‘areas of concern regarding raw material pricing and supply tightness and shortages’ backing the reported rise in the Prices Component to 60.0 from 56.5.
US Bond Yields rose 5 basis points for the 10-Year to 2.53%, a rise which was also interrupted by the ISM release ‘error’. For Commodities, spot Chinese Iron Ore was steady after last week’s hammering.
In the Euro-Zone, Germany’s CPI for May was lower than expected, missing by 0.2%. The Euro eased after weaker regional German CPI’s, released earlier, printed on the low side thus giving more ammunition for Dragi to ease rates at Thursday’s ECB Meeting.
This morning on the economic front we have UK Construction and Nationwide House Prices at 9.30 am This is followed at 10.00 am by Euro-Zone Unemployment Rate and the now very important CPI. At 3 pm we have US Factory Orders.
June S&P 500
The S&P made yet another new high at 1925.88. Yesterday marked the 9th ‘up-close’ out of the past 11 trading days but interestingly, momentum has been waning since last Wednesday. However we will have to get the ECB and Non Farm Payrolls (due later in the week) out of the way before the S&P decides to sell-off. I was lucky today as the misprint form the ISM data saw the S&P trade down to my 1914 buy level with a 1913.50 low which allowed me to cover my short 1918 position from last Wednesday and I am now flat. The S&P continues to trade at the top of the Bollinger Band and Williams Index but as I have mentioned before, this signal works so much better on the downside. Today I will be a seller from 1923/1927 with a 1931 stop. My only interest in buying the S&P is on a dip to 1905/1910 with the same 1901 stop as I do not want to chase the market higher at these lofty levels.
Euro/USD
Shortly after I posted yesterday morning the Euro was trading at my 1.3595 buy level. I am still long but only in small size and I will leave my stop the same at 1.3545. I will still look to go short the Euro on any rally to 1.3690/1.3720 with a 1.3740 stop.
US Dollar Index
No change as I am still long from last week at 80.20 with the same break-even stop. If I am stopped out of this position I will still look to reset my long position on any dip to 79.80/80.00 with a 79.45 stop.
June DAX
The Dax plan worked well yesterday as shortly after I posted it was trading at my 9980 sell level and after a nice sell-off I was able to cover this position at 9940 and I am now flat. I still believe that the Dax is struggling at these levels but the market may well stay here until we get the ECB rate announcement and Dragi press conference out of the way on Thursday. Today I will again be a seller on any rally to 9980/10020 with the same 10050 stop. As I have mentioned over the last few weeks the real area that I want to go short is from 10245/10300 with a 10450 stop.
I am still short the DAX/FTSE spread at 3120 with the same 3190 stop.
June FTSE
No change as I am still long the FTSE from last Friday at 6830 with the same 6795 stop as it traded in an extremely narrow range yesterday.
Dow Rolling Contract
No change as I do not want to chase the Dow higher at these levels. I am still a buyer on any dip to 16570/16610 with a 16540 stop. I will also be a small seller on any rally to 16780/16820 with a 16860 stop.
June BUND
After I posted yesterday the Bund finally traded down to my 146.55 buy level. I am still long and today I will raise my stop on this position to 146.25 as I do not want to risk to much on this trade.
Gold Rolling Contract
The Daily Sentiment Index last night finally printed at just 9% bulls which is a level in the past which has led to at least a short term low in Gold. After I posted yesterday, Gold was trading at my 1243 buy level. I am still long and given how oversold Gold is trading coupled with the very low DSI reading I am going to lower my stop to 1229 on this position. If I get stopped out of this position I will be a more aggressive buyer on any further dip to 1215/1225 with a 1199 stop.
Silver Rolling Contract
No change as I am still long from last week at 18.80 with the same 18.45 stop. The Daily Sentiment Index Reading for Silver printed at just 9% bulls on Friday night which is the first time this year we have had a single digit print.
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