The US Equity markets closed down 0.8% on average after the main US Retailers reported lower profits and weaker forward guidance. The Dow fell 138 points and is now down nearly 250 points in the last two days. On the currency markets the big mover was the Australian Dollar which fell from 0.9330 to 0.9225 this morning after sub-trend growth coupled with low wages growth was reported which means there is no need for the Central Bank to hike rates any time soon, whilst the improvement in the labour market is also some time away.
In the UK, Consumer Prices rose by 0.4% in April which is a little higher than the 0.3% expected. The annual growth rate accelerated to 1.8% and although this rate could accelerate in May it will probably remain around the MPC’s 2% target rate for the rest of the year which means there should be relatively little pressure on the Committee to tighten Monetary Policy pre-emptively.
Overnight the Asian stock markets are weaker after the Bank of Japan refrained from adding to Monetary Stimulus at its monthly meeting. The Yen has strengthened on this news and is now back at the 101.20 level as risk aversion returns.
In contrast to the last few days when we had no real economic data, today is extremely busy. This morning we have UK Retail Sales and the Bank of England Minutes from its last meeting . At 10.00 am we have Euro-Zone Consumer Confidence and the ECB Current Account. At 7 pm the Fed will release its Minutes from the April 29/30 FOMC Meeting. Before the Fed releases these Minutes Fed Chair Janet Yellen will give a Commencement Speech at the New York University whilst the Fed’s George and Kocherlakota will both speak on the economy at different venues this afternoon.
June S&P 500
The S&P is proving very difficult to read at the moment as the market is unable to have any follow through in either direction as for now is stuck in the 1860/1885 range. I was lucky yesterday as after I posted the S&P was trading at my 1879 buy level and after a brief spike after the US markets opened I was able to cover this position at 1883 and I am now flat. I am going to stay flat until after Ms Yellen speaks this afternoon and we get the very important FOMC Minutes. After these two important events I will be a small buyer on any dip to 1854/1859 with a 1851 stop. I will also be a small seller on any rally back to 1879/1884 with a 1887 stop.
Euro/USD
Just as I posted yesterday morning the Euro started to sell-off and I went long at 1.3685. I am still long and today I will raise my stop to 1.3665 as I do not want to risk to much capital on this position. I still do not want to be short the Euro until such time that the ECB take action and we finally see a sell extreme from this crucial 1.3650/1.3700 support zone.
US Dollar Index
Still no change as I am a buyer on any dip from 79.50/79.80 with the same 79.25 stop.
June DAX
The Dax plan finally worked out late in the trading session as it followed the US markets lower. It traded down to my 9600 buy level and as I did not want to hold this position overnight I covered this trade at 9630 and I am now flat. As I mentioned yesterday the key support for the Dax is at 9465 and today I will again be a small buyer on any dip to 9525/9555 with a 9495 stop. If I am taken long and subsequently stopped out I will be a more aggressive buyer in from of 9465 with a 9435 stop.
June FTSE
After I posted yesterday morning the FTSE was trading at my 6795 buy level. This trade looked good for a while but unfortunately I got stopped out of this position after the US markets started to fall at 6775 and I am now flat. The FTSE is having real difficulty trying to break the key 6830/6850 resistance level and today I will be a small seller from 6805/6825 with a 6855 stop. I do not want to be long the FTSE at this time.
Dow Rolling Contract
The Dow plan worked well yesterday as the market traded down to my 16440 buy level before having a nice rally which enabled me to cover this position at 16480 and I am now flat. I was lucky yesterday with both the Dow and S&P as I managed to cover my long position before the market fell. The Dow is now down over 250 points in the last three days which is a worry going forward. It needs to hold the key 16250 support zone and especially 16050 as a closing break of these two levels will be very bearish. Today I will again be a buyer on any dip to 16290/16320 with a 16230 stop.
June BUND
No change as I am still long from last Monday at 146.10 with the same 145.80 stop.
Gold Rolling Contract
Gold continues to trade in a very narrow range as the market is still trying to see which way it will break. Today I will still be a small buyer on any dip to 1275/1283 with the same 1269 stop.
Silver Rolling Contract
Silver just missed my 19.20 buy level before trading higher and I am still flat. Today I will raise my buy level slightly to 19.00/19.25 with the same 18.70 stop.
Recent Comments