Whilst not all the market activity has been one way, it has likely benefited to some extent by better than feared business confidence and in a global market environment of low volatility at near post Global Financial Crisis (GFC) lows. The Euro/USD underperformed yesterday in the aftermath of last week’s ECB moves and with French and Italian Industrial Production data growing in line with expectations. UK Industrial Production also rose but Sterling is somewhat softer as we head into the Labour data this morning.
Two good economic reports from the US showed that the core of the US economy is continuing to improve. Whilst neither the NFIB Small Business Optimism Index nor the Job Openings and Labour Turnover (JOLTS) had much measurable market impact after release, both tell a useful story about the internal US economy that is back on its feet. Both are back to GFC levels and the highest since March 2007. The Fed Chair is a big fan of the JOLTS for what it says about the state of the Labour market. She will be taking some comfort from such developments.
This morning on the economic front we have UK Unemployment and Average Earnings at 9.30 am. Again we have no data of note due from the Euro-Zone whilst at 1.30 pm we have US MBA Mortgage Applications and the Monthly Budget.
June S&P 500
On yet another day of very low volatility the S&P closed flat, having been down 0.3 earlier in the session. The plan worked well yesterday as the market had a nice drop after the US markets opened which enabled me to cover my short 1950 position from Monday at 1945 and I am now flat. As I mentioned yesterday the S&P is extremely over bought and in my opinion over loved and is at least due for a minimal correction. The next real resistance for the S&P runs all the way to 1970 and today I will again be a seller from 1952/1957 with a 1960 stop. Again If I am taken short and subsequently stopped out I will be a seller on any 5 handle drop from what ever new high is put in with a stop just above this high. My only interest in buying the market is on a drop to 1932/1936 with a 1929 stop.
Euro/USD
By the time I had posted yesterday morning the Euro was already trading through my stop at 1.3570 from my long 1.3610 position taken last Monday. It subsequently traded down to my 1.3535 buy level and I am still long here with the same 1.3495 stop which is just below last Thursday’s low after the ECB cut rates and from where we had the Key Day Reversal back to 1.3670. I am surprised at how quickly the Euro has traded back to these levels and if I am taken out of this latest long position I will start to look to sell rallies. It is back trading at the bottom of its Bollinger Band but not the Williams Index which will be something to keep a close eye on today.
US Dollar Index
The Dollar continues to rally but the market really needs to take out the key 81.30/81.50 resistance level for me to turn really bullish. Today I will raise my buy level to 80.30/8050 with a 79.90 stop.
June DAX
The Dax traded better yesterday than it has for the last few trading sessions but still the market is lacking volatility making it difficult to day trade. Today I will still look to go short but this time I will raise my sell level to 10060/10100 with a 10120 stop. The real level that I want to go short is from 10215/10300 with a 10450 stop.
Unfortunately I was stopped out of my short 3120 Dax/FTSE spread near the highs of the day at 3190 and I am now flat.
June FTSE
The FTSE plan worked well yesterday as shortly after I posted it was trading in the middle of my buy range at 6840 and after a nice rally into the New York close I was able to cover this position at 6870 and I am now flat. It again managed to close over the key 6850 resistance level and this 6830/6850 should still act as good support. Today I will again be a small buyer from 6835/6855 with a 6810 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
No change as I am still short from near last Friday’s close in very small size at 16920 with the same 17080 stop.
September BUND
By the time I posted yesterday morning the Bund was selling off. The Bund finally traded down to my 145.00 buy level and I am still long with the same 144.70 stop as I do not want to risk to much on this position.
Gold Rolling Contract
Gold traded down to my 1250 buy level and I am still long. Today I will raise my stop to 1245 on this position as Gold looks to consolidate at its recent 1240 lows. If I am stopped out of this position I will look to reset my long position on any dip to 1238/1243 with a 1234 stop.
Silver Rolling Contract
Silver just missed my 19.00 buy level and I am still flat. Today I will raise my buy level slightly to 18.80/19.10 with a 18.55 stop.
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