The ECB reminded markets that they were still there, and still implementing QE. That allowed for a rally in European stocks and led to underperformance by the EUR. In contrast, better US data (finally!) saw US stocks relatively flat, but yields ended the day higher. Iron ore took a tumble yesterday, which is possibly weighing on the AUD. The USD outperformed pretty much across the board.
The EUR woes started with the ECB’s Couere pointing out that while the ECB wanted markets to determine the price of assets and that there was an adjustment needed in yields and the EUR, but perhaps the volatility or speed of adjustment in past weeks was a little fast. Then, in pointing out the seasonality of a slow Northern Hemisphere summer, that the ECB would complete its QE by front loading their Bond Purchases before the summer and back ended after the summer if necessary.
This brought the market’s attention back to the fact that the ECB were implementing QE; remember that’s EUR negative? This kicked off the move, but it was helped along by a weak German Business Sentiment survey (ZEW) showing Expectations falling rapidly. German Chancellor Merkel and French President Hollande were talking about the need for negotiations with Greece to move faster, and they would like an agreement by the end of May. So nothing better or worse there.
The US markets behaved in typical fashion post the release of Housing Starts and Permits, which bounced from their bad weather induced slump earlier in the year. It’s been some time coming, but there is now at least some signs that the weakness was weather. This was encouraging, and as the FOMC is now very data dependent, every bit counts.
The UK markets did not react as much as you would expect after posting the first negative headline CPI print since 1960; the core was soft too at 0.8%yoy (1.0%E, P). Inflation numbers can be interesting: after you strip away the effect of oil, a stronger GBP etc etc everything’s fine, isn’t it?
This morning on the economic front at the earlier time of 8.00 am the Fed’s Evans will speak on Monetary Policy and the Economy in Munich. This is followed at 9.30 am by the latest Bank of England Minutes. The only other data of note on either side of the Atlantic is at 7.00 pm when the Fed releases its Minutes from the April 28/29 FOMC Meeting and these Minutes will certainly grab the Market’s attention.
June S&P 500
My short 2129 S&P position from late Monday worked well yesterday as shortly after the US Markets opened the S&P had a nice sell-off which enabled me to cover this position at 2123 and I am now flat. I would expect a lot of volatility later when the Fed releases its Minutes from the 28/29 FOMC Meeting at 7.00 pm. With the S&P still trading at the top of its Bollinger Band and Williams Index I will still be a small seller on any rally higher to 2134/2140 with a 2144 stop. My only interest in buying this market is still on a dip to 2112/2117 with a tight 2108 stop. If I am taken short and subsequently stopped out of this position I will be a more aggressive seller in front of 2149 with a 2155 stop.
EUR/USD
Shortly after I posted early yesterday morning the Euro sold off 140 points in a few minutes on comments from ECB Member Couere. Thankfully we had no buy levels in the market yesterday as I was especially concerned how easily the Euro sold off on Monday. My own belief is the Euro will have difficulty in breaking back below 1.1050 and especially below 1.0820 as both of these levels should now act as major support. Today I will be a small buyer on any dip lower to 1.1080/1.1125 with a 1.1045 stop. Given the 300 point sell-off in the Euro since Monday afternoon I have no real desire to be short the market at this time.
June US Dollar Index
My short 94.10 Dollar plan did not work out yesterday as shortly after I posted I was stopped out of this position for a small loss at 94.50 and I am now flat. Yesterday was another great example of how important it is to have stops in the market especially with the Dollar subsequently trading to a high of 95.60. The Dollar has good resistance from 95.70/96.20 and today I will again try to go short on any move higher to this key resistance area. If I am taken short I will have a 96.50 stop.
June DAX
As I had posted before the DAX opened at 7.00 am the market spiked on the open which meant that I could only go short near the top of my sell range at 11760 before literally been stopped out of this position a few minutes later for a small loss at 11810 and I am now flat. As I have mentioned over the last few months the DAX is especially difficult to trade, because it is basically a market that mainly reflects what is going on in the EUR/USD market except with much more exaggerated moves. For example on Monday we were trading at 11390 and then yesterday we are 500 points higher. I am trading in very small size in this market as to me the moves are nearly impossible to predict. Today I will try the sell-side again on any move higher to 11870/11940 with a wider 12010 stop. I do not want to be long the DAX at this time.
June FTSE
No change as I am still a small buyer on any dip lower to 6895/6920 with a 6865 stop.
Dow Rolling Contract
The Dow plan worked well yesterday as shortly before lunch the Dow spiked higher to my 18360 sell level before having a nice sell-off which enabled me to cover this position at 11280 as outlined in my Platinum Service and I am now flat. Today I will again try to go short on any spike higher to 18370/18430 with an 18460 stop. If I am taken short and subsequently stopped out of this position I will be a more aggressive seller in front of 18510 with an 18570 stop.
June BUND
The BUND had already spike through my sell level on the open and I am still flat. It was interesting that the BUND could not hold onto these gains and again closed below the now key resistance at 154.10/154.40. Today I will again be a small seller in this region with a 154.70 stop. I do not want to be long the BUND at this time.
Gold Rolling Contract
Shortly after I posted early yesterday morning Gold started to sell-off with the market eventually hitting my 1212 buy level. I am still long and today I will lower my stop slightly on this position to 1199. If I am stopped out of this trade I will be a more aggressive buyer in front of 1190 with an 1179 stop.
Silver Rolling Contract
No change as I am still long at 17.10 with the same 16.80 stop. If I am stopped out of this trade I will be a more aggressive buyer in front of 16.50 with a 15.90 stop.
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