Do It Already is the headline of a Bloomberg article today, but mirrors the sentiment in articles across the press and the discussions on all trading floors. Markets are like rabbits in spotlights, uncertain as to which way to shift, just in case there is a move by the Fed. Even worse, they don’t go and we are having the same discussions a month or more from now. That represents the odd price action in markets over the past 24 hours, with a lot of position unwinding occurring, but retracements, just in case. We are likely to see that continue until we get the FOMC announcement tomorrow evening at 7.00 pm.
For anybody following my new Platinum Service it made 45 points yesterday and is now ahead by 1945 points for September. The previous three months saw gains of 2195, 1810 and 3045 points respectively.
Chinese equities were lower yet again yesterday, but Europe and the US managed gains. Bond Yields were higher, despite mixed data and a general view that the Fed won’t move this week. Commodities were weak, especially Iron ore. The USD was supported, with the NZD outperforming, and GBP underperforming. There was a lot of data released yesterday, but not a lot that really convinced us either way. The US Retail Sales were the most important, and showed that apart from weak gasoline sales (due to falling prices) the underlying state of the US consumer is ok. Not overwhelming, but ok. Unfortunately the industrial production and Empire surveys were not so great, with Industrial Production printing its weakest number in over three years. These were brushed off somewhat.
In Europe, the ZEW survey was relatively good, although expectations were soft. This too was dismissed as it tends to track the equity markets. The UK’s CPI was showing little signs of take-off but the core at least was steady around 1%yoy. Not enough to have the BoE trigger happy, but unlikely to get them to back down on the promise to move at some point. The RBA released its meeting minutes from their September meeting. There was little new information in the release and it had negligible impact on the currency. Overnight, the NZ dairy price auction showed a strong rebound +16.5%, which seems to have supported the NZD a little.
Overnight the PBoC’s Ma Juan said the Chinese economy is performing better than market expectations as the Central Bank tries to calm markets after the recent sell-off. The Nikkei closed 0.8% higher at just under 18,200.
The ECB’s Constancio has just been quoted as saying there is scope for the ECB to increase QE if necessary. There is no doubt the ECB are frustrated that following Drag’s comments 10 days ago that the market has ignored them and bought the Euro. In my opinion no Central Bank wants a strong currency at this time. This comment is giving markets a boost this morning.
This morning on the economic front we have UK Unemployment and Average Earnings at 9.30 am. This is followed at 10.00 am by Euro-Zone CPI. At 1.30 pm we have US CPI and at 3.00 pm we have the NAHB Housing Market Index. Finally just before the US close at 9.00 pm we have the Net Long Term TIC Flows.
September S&P 500
This is my last day trading the September Contract as tomorrow I will roll to the December Contract. Yesterday the S&P plan worked well as the idea of not to be short in the week of an FOMC Meeting and especially one which includes the Quarterly Expiration continues to pay dividend. Shortly after I posted the S&P traded lower to my 1947 buy level before having a huge 35 Handle rally which enabled me to cover this position way too early at my 1953 T/P level as outlined earlier to my Platinum Members and I am now flat. Yet again whatever low is put in on the Thursday/Friday in the week before a Quarterly Expiration continues to work every Quarter. Remember last Thursday’s low print at 1934 still holds. The next main resistance for the S&P is at the 1993 level and a break and close over this strong resistance level could well see an attack on the 2030/2040 which is the major resistance level from where the S&P broke down on August 20th. Today I will be a small seller on any rally higher to 1992/1998 with a 2001 stop. I will also be a small buyer on any dip lower to 1968/1973 with a 1963 stop.
EUR/USD
The Euro plan also worked well yesterday as shortly after lunch the Euro traded lower to my 1.1260 buy level before having a nice rally overnight which enabled me to cover this position at my 1.1295 T/P level as outlined yesterday morning to my Platinum Members and I am now flat. Today with the Euro opening lower on the back of Constancio’s comments, I will again look to buy the Euro on any further dip to 1.1200/1.1235 with a 1.1175 stop. I will leave my sell level unchanged from yesterday at 1.1370/1.1410 with the same 1.1440 stop.
December Dollar Index
No change as the Dollar continues to trade in a narrow range ahead of the FOMC tomorrow. I will leave my buy level the same at 94.70/95.00 with a 94.40 stop. I will also look to go short on any further rally to 96.30/96.60 with a 96.90 stop.
September DAX
Yet again the DAX just missed my 10060 buy level by 5 points before going on to have a 240 point rally and I am still flat. This is very frustrating as I have called these markets to rally this week and now the DAX has missed my buy level on consecutive days which is very frustrating. Given the huge move higher the risk/reward has now turned to trying to sell rallies from here as opposed to buying dips. Today I will be a small seller from 10370/10430 with a 10460 stop.
September FTSE
There is nothing worse than lowering your stop for the market to trigger this price before going on to have a near 200 point rally but this is exactly what happened yesterday morning shortly after I posted. For the record I was stopped out of my long 6095 position at 6045 and now we are trading at 6190. If there is one lesson out of this week is never to be short on the week of a Quarterly Expiration no matter what Indices we are trading. Just like the DAX above the move higher has seen the risk/reward change to looking to sell rallies from here and today I will be a small seller on any further rally to 6240/6270 with a 6305 stop.
Dow Rolling Contract
Very frustrating as the Dow just missed my 16280 buy level with a 16310 low and is now trading 300 points higher. This is the type of move that I have been looking for this month as once Friday is out of the way I will then be looking to put on a more macro short position as I really believe that we will at least re-test last month’s low at 15250 over the coming weeks. There is no doubt tomorrow’s FOMC Rate decision and Yellen press conference which follows the announcement is going to be huge. Today I will look to sell the Dow in small size on any further rally to 16730/16780 with a 16830 stop. Despite yesterday’s huge move higher I do not want to be long the Dow at this time.
December BUND
Unfortunately the BUND just missed my 155.25 sell level by 15 points after I posted before going on to have a 150 point sell-off and I am still flat. The move in the BUND is similar to what I believe will happen in the US Stock markets as so many people are trapped long above the market and are using any and all rallies to lighten their positions or go short. Today I will lower my sell level in the BUND to 154.40/154.75 with a 155.05 stop.
Gold Rolling Contract
Gold has traded in such a narrow range over the past few weeks. I am still flat and today I will leave my buy level unchanged at 1091/1099 with the same 1085 stop.
Silver Rolling Contract
No change as I am still long at 14.40 with the same 14.10 stop. Again if I am stopped out of this long position I will be a more aggressive buyer in front of 13.90 with a 13.50 stop.
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