US Equity markets closed higher yesterday supported by gains in IBM, Microsoft, AMEX and a 3% rise in Apple Shares after it announced a $17 billion bond sale. US Equities did suffer some weakness after the Chicago PMI unexpectedly fell in April (49.0 versus 52.5 expected) with markets mostly ignoring the solid increase in House Prices and Consumer Confidence. The Chicago data confirmed expectations for a fall in the National ISM due later this afternoon where markets are looking for a fall to 50.8 in April from 51.3 in March, after the recent peak in of 54.2 in February. Meanwhile US House Prices rose 1.2% in February and 9.3% year on year, which is the best House price growth in almost seven years, whilst Consumer Confidence rose to 68.1 in April versus 61.0 expected. The US Dollar has suffered relative to most of the major currencies, as sliding Bond Yields are adding to the downward pressure on the greenback, whilst recent softness in the economic data has raised speculation that the Fed may increase its $85 billion of monthly asset purchases. In contrast a rate cut by tomorrow by the ECB looks even more likely after the April Euro-Zone CPI registered just a 1.2% gain versus 1.6% expected. The Euro fell to 1.3050 early in the European session but subsequent weakness in the US Dollar saw it rise to around 1.3170 currently. Early this morning China released its PMI and it came in at 50.7 versus 50.9 expected signalling a further slowdown in the Chinese economy.
Today most of the European markets are closed for May Day and all eyes will be on the FOMC meeting announcement this evening followed by the press conference from Bernanke. This morning we have UK PMI Manufacturing due at 9.30 whilst ahead of the FOMC meeting in the US we have the always volatile ADP Employment change (which will be closely watched ahead of Fridays Non Farm Payrolls) and the ISM Manufacturing due at 3.00pm.
June S&P 500
Amazingly the S&P has closed up for the 16th Tuesday in a row as we await today’s very important ISM data and ADP Employment Report ahead of the FOMC meeting and Bernanke’s press conference after. Although most of Europe is closed today (May Day) the market, given the above data due today, promises to be very volatile later this evening and for the rest of the week with the ECB tomorrow and the Non Farm Payrolls on Friday. The S&P just missed my 1581 buy level as the mantra of not been short over month end continued and we had a nice rally into the close. The volume was again light and it is worrying that the volume on ‘up days’ is so light and now that we are in May I believe the stock market will change direction over the next couple of weeks. As I said yesterday the real area that I want to get short is from 1608/1612 and at this time I do not know if we are going to get that high. The market is overbought on both a daily and weekly basis and we are at the top of the Williams Index. Today I will look to sell the market on any rally to 1598/1603 in small and I will be a more aggressive seller from 1608/1612 with a 1615 stop. I will also be a small buyer on any dip to 1580/1584 with a 1578 stop.
Euro/USD
Very unlucky yesterday as the Euro just missed my 1.3040 buy level before having a nice rally. At least I mentioned yesterday not to be short the Euro and that a closing break of 1.3130 will be short term bullish. The Euro is trading at the top of the Bollinger Band but not the Williams Index (new members can click on the Education Tab for an explanation of Bollinger Bands) and today I will be a small seller on any rally to 1.3200/1.3230 with a 1.3240 stop. I will also look to buy the Euro in small on any dip to 1.3120/1.3140 with a 1.3095 stop.
June DAX
The Dax and Bund are both closed today for May DAY. The Dax just missed my 7895 buy level before having a nice rally and I am still flat both of these markets as I did not want to have a position with both markets closed until tomorrow.
June FTSE
I am surprised how weak the FTSE traded yesterday given the fact it was month end. It is now at the top of the Bollinger Band. Today I will be a small seller on any rally to 6425/6445 with a 6470 stop. Even though we are at the start of a new month I do now want to be long the FTSE at this time and I am looking for it to trade lower over the coming month.
Gold Rolling Contract
Gold hit my sell level yesterday and I have gone short in small at 1478. I will leave my stop the same at 1495 as I look for this 1470/1490 resistance level to be formidable. However a break and close over 1500 will be bullish.
Recent Comments