Signs of progress in Fiscal Cliff negotiations has seen Equity markets a lot higher yesterday, coupled with a very weak US Dollar. After President Obama’s counter offer yesterday to raise taxes on incomes of $400k, House Speaker Boehner proposed a Budget Plan B until a broader deal is agreed to, that would include tax increases on incomes greater than $1m. The White House rejected Boehners plan but there is finally some movement at the station. Some significant differences between the parties remain but with 12 days to there is a reason to be hopeful a deal will be done. Republicans are finally softening their position on higher taxes and Democrats are finally more receptive to spending cuts. Also supporting the markets were more solid numbers for the NAHB Housing Market Index in the US. The measure of homebuilder confidence rose to 47 in December from 45 in November and is now at the highest level since 2006.
This morning we have the German IFO for December followed by the BOE Minutes from the December meeting. Later at 1.30pm we have US Housing Starts for November.
Mar S&P 500
The scenario that I mentioned last Friday that whatever low is put in on the Friday before a triple witching expiration would be significant and the S&P has now rallied 37 handles from the 1406 low made in the March contract. Yesterday worked great as shortly after the cash market opened the S&P dropped down to my 1427 buy level with a 1425.25 low and I was able to take a nice gain at 1438 on this position. The market continued to rally and I went short at 1441 and covered this position at 1437 before the close and I am now flat. The market is back to overbought levels again but given the seasonal effects it is very hard to be short. This morning I am a small seller from 1445/1449 with a 1451 stop and I will also look to go long on any dip to 1430/1434 with a 1427 stop.
Dec Dax
The Dax continues to trade quietly higher and it reached my sell level this morning at 7670. The Williams Index has started to turn down and I will leave a 7695 stop on this position. I will also look to take profit on any dip to 7620/7635. As the week goes on the liquidity is going to go out of the market as most traders are finished for the year.
Eur/USD
Much to my frustration the Euro continues to trade higher and I was stopped out of my latest 1.3200 small short position at 1.3240 over night and I am now flat. The Euro continues to trade at the top of the Bollinger Band and Williams Index and is now in the 1.3250/1.3400 resistance area that I have mentioned over the last few months. This morning I will look to go short in small size on any spike to 1.3280/1.3310 with a 1.3320 stop. Given we are at my long term target levels I do not want to be long at this time.
Gold Rolling Contract
Very unlucky as just after I get stopped out on my 1702 short position at 1695 Gold falls $30. This morning I will look to buy Gold on any dip to 1640/1650 with a 1632 stop.
GBP/USD (Cable)
The Cable continues to trade higher and I was stopped out of my 1.6215 short position at 1.6250 and I am now flat. I don’t mind ever getting stopped of a position as long as the market continues to trade away from my stop. The Cable is still at the top of the Bollinger Band and Williams Index and the next main resistance is at the 1.6320 area. This morning I am a small seller from 1.6310/1.6330 with a 1.6340 stop.
Recent Comments