Markets are on edge watching the headlines and waiting to see how the escalating tensions between Ukraine and Russia play out. Amidst this situation, equity markets ended the day lower across the board led by the DAX which fell by over 3%. The Dow and S&P ended the day down less than 1% with the S&P again rebounding off the key 1836 support level. The US Dollar and Oil were stronger whilst, not surprisingly, Eastern European Currencies were the hardest hit.
An ultimatum was purported to have been issued with Russia asking Ukraine to surrender its warships in the Crimea Peninsula at 3 am which was subsequently denied. The IMF is sending in a mission to assess funding needs in Ukraine whilst Russia is feeling the heat as the Ruble fell 2% despite its Central bank raised rates by 1.5% to 7% in an attempt to stem the flow.
European markets are opening stronger this morning after reports that Russian President Putin had ordered his troops back to their bases after they concluded their military exercises. This led to the Russian stock market rising 2.5% after $55bn had been wiped from the Russian equities yesterday.
On a far more positive note the US ISM Manufacturing series was better than expected despite the poor February weather. The headline came in at 53.2 versus 51.3 last month with much of the detail being fine thus alleviating some of the recent concerns regarding a slowing of US economic growth. The final European PMI was okay as it came in a little better than expected but a little lower than the previous month whilst the UK data was unexpectedly solid.
We have no economic news on either side of the Atlantic today but the markets will react to any news out of the Ukraine as the day develops.
March S&P 500
The S&P again tested the key 1836 support level yesterday and for the third time over the last week has had a substantial rally from this now very key support level. After I posted yesterday morning the S&P was trading at my 1838 buy level and after a nice rally, after the ISM was released, I was able to cover this position at 1845. The S&P left a large Gap from 1849/1857 from last Friday’s close which is has now been filled overnight on the news that Putin had recalled his troops. Overnight the S&P traded up to my 1859 sell level and after a small sell-off this morning I was able to cover this position at 1854 and I am now flat. This morning the S&P is trading at the top of its Bollinger Band but not the Williams Index and today my only interest in selling the market is on a further rally to 1863/1868 with a 1871 stop. I will also be a small buyer from 1844/1848 with a 1841 stop. Note: A break and close below 1836 will be very bearish.
Euro/USD
The Euro continues to defy logic as no matter what bearish news is thrown in it will not fall. One very good lesson that I have learned over the years is to respect a market that will not fall on bad news and this is certainly the case with the Euro at the moment. I am still flat the Euro and today I will be a small buyer on any dip to 1.3690/1.3720 with a tight 1.3670 stop. My only interest in selling the Euro is on a rally to 1.3820/1.3850 with a 1.3870 stop. A break and close over 1.3850 will be very bullish and will probably open up a test of 1.4000.
US Dollar Index
No change as I am still a buyer on any dip to 79.50/79.80 with a 79.20 stop.
March DAX
The Dax had a very bad day yesterday as the market fell over 370 points from its high last Friday. The DAX has the biggest exposure to Russia but I must confess I was very surprised by the extent of the sell-off. After I posted, it traded down to my 9400 buy level and after a small rally I was able to cover this position at 9430 and I am now flat. The Dax was heavy all day and despite the big rally earlier in the S&P it struggled to trade higher. The market is higher this morning on Russia pulling back its troops but it is hard to see this crisis ending soon and today I will be a small seller from 9495/9525 with a 9545 stop. The Dax needs to break 9585 for me to turn bullish. I do not want to be long this market at this time.
March FTSE
Unfortunately I was stopped out of my long 6700 position taken yesterday morning at 6665 and I am now flat. The FTSE is trading a lot higher this morning and today I will be a buyer from 6700/6720 with a 6685 stop. The price action is telling you not to be short the market at this time.
Dow Rolling Contract
The Dow worked well yesterday as after I posted the Dow traded down to my 16170 buy level before having a nice rally on the ISM news enabling me to cover this position at 16220 and I am now flat. The Dow is trading a lot higher this morning but I am not going to chase the market here and I will be a buyer on any dip to 16150/16190 with a 16120 stop. I still do not want to be short the Dow at this time.
I made a mistake yesterday in that I thought that the US had moved its clocks forward by 1 hour over the weekend. This clock change is happening next week so apologies for the confusion.
March BUND
No change as I am still a buyer on any dip to 144.40/144.60 with the same 144.25 stop. I still do not want to be short the Bund at this time.
Gold Rolling Contract
Gold is lower this morning on the back of tensions easing in Ukraine. I believe that this only a short term measure and for this reason I have decide to cover my short 1348 position from yesterday morning at 1340 and I am now flat. Today I will be a small seller on any rally to 1359/1364 with a 1368 stop.
Silver Rolling Contract
Silver traded down to my 21.20 buy level overnight and I am now long with a 20.75 stop.
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