Investors are marking time at present awaiting the outcome of today’s US Elections. Most market commentary sees Mitt Romney as more business friendly and therefore preferred by Wall Street. However the challenger has said he will replace Chairman Ben Bernanke at the Fed if he is elected President. This is seen as ushering an era of tighter Monetary Policy, bad for Equities and good for the US Dollar at least initially. In Europe markets are wary ahead of a crucial vote in the Greek Parliament on €13.5 billion of austerity measures which needs to be passed for Greece to gain the next €31.5 billion of bailout money, to be used to recapitalise the Greek Banks. Some members of the Coalition Government are threatening to vote against some of the measures. US Non Manufacturing ISM Survey came in slightly lower than expected at 54.2.
Today, on the data front, we have PMI and PPI for the Euro-Zone followed in the UK by Industrial Production. However the market will be transfixed by the US Elections later today.
Dec S&P 500
The S&P worked really well as we stayed in my buy zone all morning before the market rallied after the US open and, in contrast to Friday, closed on the high of the day. I went long at 1403.5 and I took a nice gain on exit at 1411. As I have been consistently saying over the last couple of months, in such difficult markets the aim is to make good entries and when I see a reasonable profit I take it and then start again. Today even though I think Obama will win I am not prepared to have a trade until after the outcome of the election is known. If the media is able to determine a winner early then expect a large movement in the overnight futures S&P to occur. The market is stuck in a 1394/1430 range and a closing break of one of these prices should lead to a large movement. So I will stay flat for now.
Dec BUND
The Bund entered my sell area yesterday and I went short at 142.20. Just like the S&P I have covered my position at 142.12 this morning and I am going to stay flat until tomorrow morning.
Dec FTSE
The FTSE just missed my buy level yesterday. I still like the FTSE and I will leave my buy zone the same at 5770/5790 with a 5758 stop. I do not want to be short at this time.
Euro/USD
I am still long the Euro from yesterday morning at 1.2795. The Euro is still oversold and at the bottom of both its Bollinger Band and Williams Index. Normally I would cut this position ahead of tonight but I am going to leave my stop at 1.2750. I will probably get stopped out of this position but the 1.2750/1.2800 is good support so I am prepared to keep the position for now. If The Euro trades higher during the day I will take profit and stand aside.
USD/JPY
I am very surprised that given how strong the US Dollar is over the last few days that USD/JPY is not higher and I was stopped out overnight at 8010 on my 7990 long from last week. I am going to stay flat and wait until tomorrow to see how this currency pair is trading before putting on a new position.
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