More positive US Economic news yesterday with Housing Starts rising 3.6% for October, versus a -3.7% reading in September, and relatively upbeat comments from Fed Chairman Bernanke however both have failed to buoy risk sentiment or hurt the US Dollar. This is not terribly surprising, if we remember that at least part of the reason for the Equity market sell-off since the US Elections is heightened fears that Capital Gains will rise in January incentivising those carrying Capital Gains to crystallise them before the year-end. Equity weakness has also been exaggerated by a double digit plunge in Hewlett Packard’s share price dragging the broader tech sector down by more than 1% after HP said it was taking a $8 billion write-down on it’s acquisition of UK software firm, Autonomy, citing accounting irregularities. Bernanke said that a solution to the Fiscal Cliff may bring a very good year for the Economy feeding concerns that the Fed may exit current policy earlier than expected which led to a rise in Bond Yields. The Euro and Stocks are lower this morning on deadlock in Greek Debt talks.
Today is very busy on the economic front with the UK releasing its Public Borrowing for October followed by the BOE releasing the Minutes from the latest MPC meeting, whilst in the US we get the Weekly Jobless Nos today as the US is closed tomorrow for Thanksgiving. We also have University of Michigan Consumer Sentiment for November and Leading Indicators for October.
Dec S&P 500
The S&P finally hit my 1388 sell level with a 1389 high overnight and I was able to take a nice gain this morning at 1380 and I am now flat. As tomorrow the markets in the US are closed for Thanksgiving traders will leave their desks earlier this evening and we will have less liquidity than normal. Today I am raising my buy level to 1370/1375 with a 1367 stop and I will also be a seller into strength from 1389/1393 with a 1395 stop.
Euro/USD
The Euro traded down to my 1.2775 buy level yesterday morning and I took a nice gain at 1.2820 and I am now flat. Despite the ongoing Greek saga I still like the Euro and I have gone long this morning in small at 1.2760 and I will leave my stop at 1.2730. I will look to take profit on any rally to 1.2800/1.2820.
Nasdaq 100 Rolling Contract
The Nasdaq traded heavy on the back of HP and Apple shares look tired after their 12% rally over the previous 2 days. This morning I will lower my sell level to 2600/2615 with a 2630 stop.
Dec BUND
Unfortunately after I cut my short Bund position the market sold off in response to Bernanke and this morning I am a buyer from 141.60/141.90 with a 141.50 stop. I will also be a seller on any rally to 143.00/143.20 with a 143.40 stop.
Dec DAX
The Dax looks very bid to me and I am a small buyer here at 7155 with a 7120 stop as I look for the Dax to retest the important 7200/7250 resistance area.
GBP/USD
No change from yesterday as I am a buyer from 1.5850/1.5880 with a 1.5835 stop on any long position.
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