There are still differences between what Greece is apparently prepared to offer in the way of further reform and what the Brussels Group (formerly the Troika) is seeking before the further funds are made available to Greece. This is sounding like a well and truly broken record, but it is what it is. More meetings are planned later this morning to work through their differences. Speaking to the Greek Parliament yesterday, Prime Minister Tsipras said that Greece is seeking ‘an honourable compromise’. Greece has a payment due to the IMF on April 9th even though records suggest this could be pushed out if need be. Even if and when some agreement over these reforms is reached there is still the larger issue of Greece’s unsustainable debt level to deal with.
Elsewhere in Europe on the data front, German and Spanish inflation were a little higher than expected, while the Euro-Zone Business Climate Indicator for March also printed a little higher. On the inflation front, across the Atlantic, the US Feb Core PCE price deflator in February rose exactly in line with expectations up 0.1%, though there was enough in the rounding to push the annual rate up to 1.4%, above the 1.3% consensus. As something of a dampener, the same report revealed that real consumer spending fell 0.1% in February shy of the 0.2% forecast and with January revised down to 0.2% from 0.3%. US consumers are holding back on those lower energy price driven real income gains, to date anyway, that some are ascribing to cold weather effects even those these are seasonally adjusted data.
In Currency markets the last 24 hours has been one of big US Dollar strength, with the Australian Dollar coming in for some larger selling than other majors with the AUD/USD trading near 0.76 this morning on increased expectation that the RBA will cut rates again next month. The EUR/USD is also getting hit hard with the currency pair currently trading at 1.0760 well off the 1.1050 highs from last week.
We also note that China yesterday announced measures to cheapen buying of second properties, reducing down-payments from 60% to 40% and lessening the sales tax free-hold time from five to two years.
This morning on the economic front we have German Unemployment at 8.55 am. This is followed at 9.30 am by UK GDP. At 10.00 am the Euro-Zone will release its latest CPI while after lunch the US will release its Chicago Purchasing Manager’s Survey and Consumer Confidence at 2.45 pm and 3.00 pm respectively. Today is also a notable day for Fed speakers with Mester, Lockhart and George all due to speak.
June S&P 500
The S&P had a big up-day yesterday with the market closing 1.5% higher. In the process the market has left a large ‘Open Gap’ from last Friday’s close at 2052 to yesterday’s Chicago opening at 2070. The move higher has seen me go short at 2073 and I was very lucky as the market just missed my 2082 stop with a 2081.75 high. This morning the S&P is trading a lot lower and the fact that today is month and Quarter end I have decided to cover this position at 2070 and I am now flat. I expect that this large ‘Open Gap’ will get at least partly if not fully filled over the next week and today I will again look to go short on any move higher to 2076/2081 with a 2085 stop. If I am taken short and subsequently stopped out of any short position I will use my ‘5 Handle Rule to reset my short position with a stop above whatever new high is printed. Despite today been Month and Quarter end I do not want to be long the S&P at this time especially with all the negative divergences that are in place.However if for some reason the S&P tanks later on I will be a small buyer from 2052/2057 with a 2049 stop.
EUR/USD
The Euro plan worked well yesterday as shortly after lunch the Euro traded lower to my 1.0820 buy level before having a nice rally which enabled me to cover this position at 1.0860 and I am now flat. I am very surprised to see how weak the Euro is trading this morning especially given how weak the recent economic data has been coupled with a dovish Fed. Today I will again be a small buyer on any further dip to 1.0705/1.0740 with a 1.0675 stop. I still do not want to be short the Euro at this time.
June US Dollar Index
Overnight the Dollar has traded higher to my 98.50 sell level. I am still short and I will leave my stop the same at a tight 98.80. If I am stopped out of this trade I will be a more aggressive seller in front of 99.20 with a 99.60 stop.
June DAX
The break of the now key support at 11940 led to a huge 200 point move yesterday as suddenly the World wants to be long again of German Equities. The move up has seen me cover my long 11985 position from yesterday morning at 12120 and I am now flat. Today I will again look to buy any dip to 12040/12080 with an 11990 stop. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer in front of 11950 with an 11895 stop.
June FTSE
The FTSE plan also worked well yesterday as shortly before lunch the market traded lower to my 6810 buy level and after a nice rally I was able to cover this position at 6840 and I am now flat. The FTSE continues to underperform the other major Indices which is understandable given that the UK election just a few weeks away. Today I will again be a small buyer on any dip lower to 6780/6810 with a 6755 stop. Despite the poor price action in the FTSE I still do not want to be short the market at this time.
Dow Rolling Contract
The Dow plan did not work out well yesterday as soon after I posted the Dow traded higher to my 17870 sell level before very quickly stopping out of this position at 17930 and I am now flat. Given the fact that despite yesterday’s near 300 point rally in the Dow I still believe that this market is due a serious correction especially as we still have three confirmed Hindenburg Omen’s on the clock. It is interesting that the McClellan Oscillator is only barley in positive territory at +37 which is very unusual after a large move that we witnessed yesterday. Today I will again look to go short on any move higher to 17990/18030 with a 18070 stop.
June BUND
In contrast to the Dow above the Bund plan worked out well as shortly after I posted the Bund traded higher to my 158.85 sell level before having a nice sell-off which enabled me to cover this position at 158.40 and I am now flat. Today I will again look to go short on any move back to 158.80/159.10 with a 159.35 stop.
Gold Rolling Contract
Unfortunately the stronger Dollar has led to Gold getting hit hard again this morning with the market just stopping me out of my long 1191 position for a small loss at 1179 and I am now flat. Today I will again look to buy Gold on any further dip lower to 1159/1166 with a 1151 stop.
Silver Rolling Contract
No change as I am still long at 16.90 with the same 16.40 stop. Again if I am stopped out of this position I will be a more aggressive buyer in front of 16.10 with the same 15.70 stop.
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