Financial markets are fairly steady this morning with European and US Equities little changed after some weakness in China and Japan stock markets yesterday, with the former still reeling from the disappointing data over the weekend. Commodities were generally stronger with Oil, Gold and Base Metals all up by 0.5% or more. A couple of key data points were a rise in the American NFIB Small Business Survey to 90.8 from 88.9 but a fall in UK Industrial Production which fell by 1.2%, considerably worse than consensus of 0.1% leaving Output 2.9% down over the past year. On currency markets, Sterling initially gapped lower after the weak Industrial Production Data but has subsequently clawed its way higher as negative UK sentiment was already well priced into a weak Sterling. Today the EU leaders are meeting to sort out the bail out for Cyprus.
This morning on the economic front we have Industrial Production due from the Euro-Zone at 10.00 am while it will be interesting to see how Italy gets on today with it’s latest Bond Auction. At 12.30 pm the US Has its monthly Retail Sales Report and the market is looking for a rise of 0.3% after a rise of 0.1% last month. Business Inventories are also due from the US this afternoon.
June S&P 500
Another extremely quiet day as the market waits for the March Contract to expire on Friday along with all the Options Contracts. This expiry of contracts is known as Triple Witching Friday and the markets tend to rally ahead of this expiration. I did not trade yesterday as the market never hit my sell levels and I am still flat. I still believe we will have one test of this 1565 cash high from 2007 before reversing lower and I will leave my sell level the same at 1558/1562 with a 1566 stop. If I am taken short and subsequently stopped out I will use any five handle sell off in the market to go short with a stop at whatever high is put in. On the downside the critical level to watch is 1525/1530 and as long as we stay over this level the market will probably grind higher. However a break and close below 1525 will be very bearish.
Euro/USD
Very unlucky with the Euro as it just keeps missing my buy level and I am still flat. This morning I will raise my buy level to 1.2970/1.2990 with a 1.2945 stop. I do not want to be short the Euro at this time.
GBP/USD (Cable)
Cable has reacted very well to the very weak Industrial Production No’s yesterday and any market which goes up on weak news has to be respected. Today I am a small buyer on any dip to 1.4890/1.4920 with a 1.4840 stop. I have to leave a wider stop given the volatility as I look for Cable to retest the 1.5000 level initially. A break and close over 1.50 will be short term bullish as I will then look for Cable to test the important 1.5120/1.5170 resistance level.
June BUND
The Bund worked very well as I was able to take profit at 143.10 on my 142.60 long position and I am now flat. I still like the Bund and I will look to reset my long position on any dip to 142.50/142.75 with a 142.38 stop. I will also look to buy the Bund on a break of 143.30 with a tight 143.05 stop.
June Dow
The Dow also worked very well yesterday as shortly after the US opened the Dow rallied to my 14400 sell level with a 14410 high. I took a nice gain at 14350 on my 14400 short position and I am now flat. This morning I am a buyer on any rally to 14420/14450 with a 14470 stop. If the market sells off for whatever reason I will be a very aggressive buyer from 14180/14220 with a 14150 stop.
March DAX
Unfortunately the Dax just missed my sell level before trading lower and I am still flat. This morning I will lower my sell level slightly to 7995/8025 with a 8040 stop.
Silver Rolling Contract
No change from yesterday.
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