Another quiet day is expected today after yesterday’s relative inactivity in the markets. The only moves will be driven by balance sheet re-balancing which always contributes to sudden odd moves especially in the currency markets. Yesterday, Equity markets were flat.with Oil and Gold markets lower as were US 10 Year Bond Yields which closed down 3 basis points to 2.97%. The US Dollar ended the day lower across the board. Most European markets closed early yesterday and do not re-open again until Thursday. The US Dollar was not helped by weaker than expected Pending Home Sales. Most markets will be closed tomorrow, with the exception of China, and Thursday promises to be a volatile start to the new year as Europe will release its latest PMIs.
Today on the economic front we have no data releases from Europe whilst the US will release it’s latest Case-Shiller Home Price Index and with the housing cycle a key determinant of the on-going US recovery it may move the US Dollar. Later at 3 pm we have the Chicago PMI.
As this is the last post of the year, I would like to wish everyone a very happy and prosperous 2014. As all the major markets are closed tomorrow for New Year’s Day the next update will be on Thursday.
March S&P 500
Today is the last trading day of the year and coupled with Thursday is traditionally a seasonally very positive time for the stock market as it looks ahead to a positive start to 2014. In the last two years the S&P gapped up 20 handles on the open of the first trading day of the new year. However it is difficult to see this trend continuing this year with the stock market trading at record highs, having rallied over 27% in 2013. I firmly believe that if we gap higher on Thursday that it is a great opportunity to go short the market especially given how overbought the market is coupled with the sentiment readings which are so one-sided.
Yesterday was one of the narrowest trading days of the year so far with very little volume as most traders are still on holidays and not back until Thursday or even next Monday. The S&P just missed my 1839 sell level before having a small sell-off and I am still flat. Today I will be a small buyer on any dip to 1829/1833 with a 1825 stop. Given that today is year end and even though the market is extremely overbought I do not want to be short today especially after what happened the last two years.
Euro/USD
After I posted yesterday morning the Euro started to trade higher before finally trading up to my 1.3805 sell level. The fact that Europe is closed today I have decided to cover this position at 1.3790 as I do not want to have a position over year-end and I am now flat. As I mentioned above we can get very sudden moves at this time of the year which have no fundamental basis and for this reason I am going to stay flat and take another look on Thursday morning.
I was stopped out of my 79.95 long US Dollar Index position for a small gain at 80.20 and I am now flat. If The US Dollar Index trades lower to 79.60/79.80 I will be small buyer with a 79.30 stop.
March DAX
As the Dax is closed until Thursday morning I will not comment on this market until we re-open. I am still flat the Dax.
March FTSE
Shortly after I posted I was stopped out of my long 6995 position for a small loss at 6980 and I am still flat. The FTSE closes early today for New Year and I am going to stay flat and take another look when we re-open on Thursday morning.
Dow Rolling Contract
The cash Dow had its narrowest trading session of the year to date with the market trading in just a 28 point range. The market just missed my 16520 sell level before trading lower and I am still flat. I am going to stay flat today as I do not want to have a position over year-end.
March BUND
Again, just like the Dax, the Bund closed early yesterday and does not re-open until Thursday. I am still flat this market and I will look to put on a new position when we re-open.
Gold Rolling Contract
Gold is down 29% for the year to date which is its first losing year since 2000 and the largest sell-off that it has had since 1981. Sentiment readings continue to signal that we should get a turn around in Gold in early 2014. Overnight it has traded down to my 1195 buy level. I only have a very small position and I am going to leave my stop the same at 1178 as I still believe we will get a rally off this important support at 1180.
Silver Rolling Contract
No change as I am still long from 19.70. Given that I only have a small position I am going to lower my stop to 19.25 and If I am stopped out of this position I will be a more aggressive buyer on any dip to 18.70/18.90 with a 18.45 stop.
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