There is still a major focus on the Japanese Yen which has continued to weaken and hit a high of 99.60 overnight versus the US Dollar. Since the BOJ meeting last Wednesday the Yen has weakened from 92.50, an incredible 8% in three days. Yesterday, equities recaptured some lost territory with modest gains in Europe followed by more momentum in the US with the Dow closing up 0.3%, with the S&P and Nasdaq both rising 0.7%. Weakness in the Yen against the Euro has helped lift the Euro back above 1.30 aided somewhat by the slightly stronger German Industrial Production which rose 0.5% in February versus 0.3% expected. However a significant downward revision to back data that saw January revised down from flat to -0.6% means Industrial Output is still slightly negative for the First Quarter. The German Economy could still avoid a technical
recession this last Quarter, especially if Q4 is revised lower which could provide more
room for a technical bounce.
Today again is very light on the economic front with German and UK trade figures released this morning. The UK also releases Industrial Production at 9.30 am whilst later in the US we have the NFIB Small Business Optimism. Fed Presidents Lacker and Lockhart are speaking later this afternoon. Lacker said as recently as last week that he favours a tapering off of QE later this year and was a FOMC dissenter last year voting against QE3 but he does not have a FOMC vote this year and I don’t think markets will get too excited.
June S&P 500
As I mentioned yesterday a market that will not go down on bad news has got to be respected and this is exactly what happened as the market is now nearly back to contract highs. The S&P traded down to my 1543 early yesterday afternoon before having a nice rally back to 1561 before the close. I bought it at 1544 and I took a gain at 1554. The market then traded up to my 1562 sell level overnight and I have cut this position this morning at 1560 as I do not want to be short at this time. It is amazing that we still have not had two decent down days in a row this year as buyers keep returning to the market frustrating the bears at the same time. April is generally one of the strongest months of the year for US Equities making it difficult to short the market and this morning I will look to buy the S&P on any dip to 1554/1558 with a 1549 stop.
Euro/USD
The Euro also worked well as I was able to take a gain at 1.3030 on my 1.2990 long position and I am still flat. As I said yesterday I do not want to be short the Euro as I feel we will have one more decent rally especially after last Thursdays upside reversal. Today I am a buyer on any dip to 1.2980/1.3010 with a 1.2960 stop which was just below the low made early Monday morning.
June BUND
The Bund also worked well as it continues to trade heavy up at these lofty levels. I took profit yesterday at 146.00 on my 146.40 short position and I am still flat. Today I will look to sell any rally to 146.20/146.40 with a 146.60 stop which is just above Fridays high. I do not want to be long the Bund at this time.
June DAX
The Dax just missed my 7650 buy level with a 7657 low and I am still flat. The Dax is still oversold and at the bottom of the Bollinger Band but the Williams Index is starting to turn higher. For this reason I have bought the Dax this morning here at 7702 in small and I will have my stop at 7652 which is just below yesterdays low. If I am stopped out I will be a more aggressive buyer on any further dip to 7610/7630 with a 7590 stop.
June FTSE
Very late last night the FTSE broke my 6240 buy level and I bought it in small at 6242. I will leave my stop the same at 6210 on this position as I look for it to trade back to the 6290/6310 resistance area.
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