There is a nervous tinge to the commentary yesterday, but market moves have been relatively light, and the same is expected for today. Equities are modestly higher in the US and Europe, Bond Yields are lower generally, while the US Dollar outperformed. Commodity prices are mixed, but iron ore in particular was 2% lower. The AUD is marginally softer. The ongoing events in Greece were the major source of news over the past 24 hours.
For anybody following my New Platinum Service it made 195 points yesterday, 285 on Monday and a total of 600 and 955 points over the previous two weeks respectively.
There has not been anything particularly new, and that remains the problem. Ongoing declarations from both sides that they need concessions from the other, further suggests that no resolution is forthcoming this week. As we go into the end of the month (when the debt is due) there is likely to be a rise in tension. Although, the degree of complacency in either a) a deal will come at the last minute or b) the EU is better off without Greece, is suggestive of little market movement ahead of these events.
Sterling outperformed yesterday, with the release of the Inflation numbers, which showed that the move into deflation was very short lived. EUR underperformed, maybe on Greece but that worry is also affecting the numbers. The German ZEW business survey dropped more than expected. In the US, the Housing numbers remain volatile, but the higher than expected forward indicator, Housing Permits, were up strongly, while Housing Starts disappointed. Overall, the outlook for housing is expected to be positive.
This morning on the economic front we have UK Average Earnings and Unemployment at 9.30 am. At the same time the Bank of England will release its Minutes from the last BoE Meeting. At 10.00 am we have Euro-Zone Construction Output and CPI. This is followed at 12.00 pm by US MBA Mortgage Applications. Finally at 7.00 pm we have the long awaited FOMC Rate decision and Yellen press conference.
The FOMC are not expected to change policy at this meeting, but with the US data having improved substantially of late, speculation is increasing that the move to raise rates might be September, rather than December. Markets are not fully priced for September, but pricing around a 50% chance of a 25bp move in September and are fully priced for December. Indications for September would be US Dollar positive, a delay, negative. But it isn’t likely to be as simple as that. Every nuance is likely to be parsed in minute detail. This meeting also sees the press conference from Yellen, new dot points of Fed member forecasts for the Fed Funds Rate, and updated forecasts. The ‘Dot Points’ should get a lot of attention, as the 2015 ones at the last release (March) showed two hikes this year; that might be lower, it would be a surprise if it were not. There will be a lot to chew over, but it is possible that we will still be left to watch the data.
June S&P 500
The S&P plan worked really well yesterday as by the time the European Markets opened the S&P was trading at the bottom of my buy range at 2075 before having a very nice rally after the US markets opened which enabled me to cover this position at 2087 as outlined earlier in my New Platinum Service and I am now flat. As I have mentioned countless times over the past four years you do not short the market in the week of an FOMC Meeting and especially one which contains a Contract Expiration such as we have on Friday. This will be my last day trading the June Contract as will roll to the September Contract tomorrow.
Today I am going to stay flat until we get the FOMC decision out of the way and if the market trades lower to 2086/2093 I will be a small buyer with a 2082 stop. No matter how negative the Fed are this evening I still do not want to short the market until we get Friday out of the way.
EUR/USD
I am glad that I moved my buy level lower in the Euro yesterday as having opened strongly the Euro spent the rest of the day on the defensive before having a late small rally into the New York close. The market finally traded lower to my 1.1225 buy level and I am still long. It is my intention to close this position before the FOMC this evening. If the Euro sells off after the FOMC I will be a small buyer on any dip to 1.1110/1.1160 with a 1.1070 stop. I still do not want to be short the Euro at this time.
September Dollar Index
Shortly before lunch the Dollar rallied to my 95.50 sell level. I am still short and it is also my intention to close this position ahead of the FOMC this evening. Following the rate announcement I will again look to go short on any rally to 96.10/96.50 with a 96.80 stop.
June DAX
As expected the DAX just opened lower and got slammed to a low of 10800 before having the huge rally that I have been looking for all week. In the process the DAX had an Upside Key Day Reversal. Shortly after the market opened I was stopped out of my small long 11020 position for a small loss at 10950, Thankfully I had a re-buy which was filled at 10880 as this stage the market was in free-fall and after a nice rally I covered this position at 10990 as outlined earlier in my Platinum Service Members and I am now flat. Despite all the negative press I still believe that Greece will be given some sort of settlement. Today I will again be a very small buyer on any dip lower to 10950/11010 with a 10890 stop.
June FTSE
There was no gain or loss in the FTSE today as shortly after the open I was stopped out of my 6740 long position from early Monday morning at 6695 before thankfully having a re-buy in the market at 6675 which was covered at 6720 as outlined in my PS email and I am now flat. Today I will again be a small buyer on any dip lower to 6670/6700 with a 6645 stop.
Dow Rolling Contract
The Dow plan also worked well as shortly after the US Markets opened the Dow was trading at my 10710 by level before having a nice rally shortly after the US Markets opened which enabled me to cover this position at 10790 as again outlined by email to my Platinum Members and I am now flat. I will stay flat until we get the FOMC decision later and I will then look to buy the market on any dip lower to 10780/10830 with a 10740 stop. Given the contract expiration on Friday I still do not want to be short the Dow at this time.
September BUND
Thankfully the BUND opened near the top of my sell range at 151.60 before unfortunately stopping me out of this position near the high of the day at 152.10 and I am now flat. I am going to stay flat as I want to see how the market reacts to the FOMC and I will take another look tomorrow.
Gold Rolling Contract
Gold traded lower to my 1178 buy level. I am still long and I will leave my stop the same at 1165 on this position
Silver Rolling Contract
Silver also traded lower after the markets opened yesterday with Silver eventually trading to my 15.95 buy level. I am still long and today I will raise my stop on this position to 15.60.
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