The main news on Tuesday was China and the extent of her slowdown. News that it will raise gasoline prices by 7% together with Saudi Arabia’s commitment to increase oil production by 2.5% knocked 2.5% off oil prices which led European equities down by 1-1.5 %. The US market rebounded on better than expected Home Sales which rose to 717k, it’s highest level since October 2008. Bernanke said that long term economic prospects are good and they must not move too quickly to reverse the policies that are working, thus weakening the USD.

S&P 500

The S&P had a nice bounce off 1395 and I have taken profit this morning at 1404. I will continue to buy at 1395 and sell at 1412 with a 5 point stop.

Euro

The Euro had a nice move off 1.32 and we are currently at 1.3280 which is the base of my initial target. I have taken half my profit here and will leave a stop at 1.3240 for the rest. Upside target is still 1.3350. If the Euro dips back to 1.32 I will go long again.

DAX

I am long from 7070 from yesterday and as we are now trading 7110 I will raise my stop to break-even. If I am stopped out I will look to go long again at 6990/7010 as we should have very good support here.

USD/JPY

The JPY continues to weaken and I will raise my stop to 83.50 to lock in some profit as the market looks tired at these levels.

Bund

I am still long the Bund and I will leave my stop at 1.3525. I am disappointed that we have not had a rally out of this support area and I will give the trade 1 more day to develop.