Markets in general have been in a holding pattern over the past 24 hours with the US Dollar giving up some of its gains that it made on Monday. The German ZEW Survey for April came and went without fanfare, despite the Current Conditions spiking sharply higher as the Survey’s respondents (investors) rejoiced at the sight of the DAX soaring this year. But the sting in the tail was a fall in Expectations, so hardly a glowing endorsement of the outlook. Next Friday’s German IFO Survey of German Business is a more reliable reflection of the German economy than current investor spirits and expected to be marginally better.
There has been continuing Greece newswire coverage with ECB Member Juncker saying ‘a bigger effort is needed by the Greeks’. Meanwhile Euro-Group Finance Ministers head Dijsselbloem also pointed to the need for a ‘concentrated’ effort. More telling for markets was an unsourced story that the ECB was/is considering greater haircuts for Greek banks to tighten up on its Emergency Liquidity Assistance programme. In the end, the Euro is a tad stronger in net terms in the wake of a decline in the Dow and the S&P, while European stock markets closed higher, though not Athens which fell 3.33% with Greek 10 year Bonds jumping another 35bps following a sell-off in Greek bank credit.
This morning on the economic front we have the UK Bank of England Minutes at 9.30 am. This is followed at 12.00 pm by the US MBA Mortgage Applications. Finally we have the FHFA House Price Index and Existing Home Sales at 2.00 pm and 3.00 pm respectively. The only data of note due from the Euro-Zone is Consumer Confidence which will released at 3.00 pm.
June S&P 500
The S&P had another volatile trading session yesterday with the market trading on its highs soon after I posted yesterday morning before selling off shortly after the US markets opened. Subsequently the S&P traded lower to my 2092 buy level before opening strongly this morning which has enabled me to cover this position at 2098 and I am now flat. I still believe that this market is heading for a decent correction but as I mentioned yesterday until we get as sell-extreme that lasts for more than a few days it is very difficult to be short for more than a few hours. Today my only interest in buying the market is on a dip lower to 2071/2076 with a wider 2063 stop which is just below last Friday’s spike lower. My only interest in selling the S&P at this time is still on a rally to 2109/2114 with a 2117 stop.
EUR/USD
Unfortunately the Euro just missed my buy level by 10 points after I posted yesterday morning which is very frustrating when the Euro is trading at 1.0760 this morning having stopped me out of my long position early yesterday at 1.0695 and I am still flat. I am very surprised that more is not been made of the Dragi newspaper interview over the weekend when he said it was ‘pointless’ to sell the Euro. One thing is certain is that whenever Dragi comments on the Euro since he became ECB President the Euro always eventually moves in the direction that he wants. Thus in my view there is no point in been short now as the majority of this move is over or nearly over. Today I will move my buy level higher to 1.0700/1.0740 with a 1.0655 stop which is just below yesterday morning’s low.
June US Dollar Index
My short 98.60 Dollar Index position taken yesterday morning before I posted worked out very well as shortly after the US Markets opened the Dollar started to weaken which enabled me to cover this position at 98.00 and I am now flat. Today I will again be a seller on any rally higher to 98.30/98.60 with a 98.90 stop. The next main support for the Dollar comes in at 95.80/96.30 and if the markets trades down to this level over the coming days I will be a small buyer here with a 95.40 stop.
June DAX
I am still flat the DAX as none of my parameters were hit yesterday. It is incredible that the DAX rose nearly 500 points of its low made on Friday to yesterday morning’s high. If I am correct in believing that the Euro sell-off is over or almost over then it will be difficult for the DAX to rally further especially when you consider that it is already 25% higher so far for 2015. There is no doubt that the DAX has very strong resistance in the 12350/12450 area and it will take a large move lower in the EURO for this resistance level to be broken. Given my belief that the Euro is near a bottom I have decided to go short the DAX this morning at 12030 and I will leave a 12080 stop on this position.
June FTSE
My short 7055 position from yesterday morning finally worked out as the market had a nice sell-off after I posted which enabled me to cover this position at 7005 and I am now flat. Finally we may be seeing some nervousness ahead of the UK Election which is only two weeks away. Today I will again be a small seller from 7025/7050 with a 7075 stop which is just above yesterday’s high. I still do not want to be long the FTSE at this time.
Dow Rolling Contract
The Dow stopped shy of my sell level after I posted yesterday morning before having a nice 200 point move lower. Today I will lower my sell level slightly to 18040/18090 with a 18130 stop.
June BUND
Finally we got a sell-off in the Bund yesterday which enabled me to cover my 160.35 position from last week at 159.95 and I am now flat. I will continue with my strategy in selling rallies with a tight stop as in my opinion these low Bond Yields are unsustainable. Today my sell level will be from160.25/160.50 with a 160.75 stop which is just above last Friday’s 160.69 new all-time high print.
Gold Rolling Contract
Gold continues to trade in a very narrow range below the now key 1220/1230 resistance area. My long 1196 position worked out well yesterday as shortly after lunch we had a nice rally which enabled me to cover this position at 1203 and I am now flat. Today I will again be a small buyer on any dip lower to 1189/1195 with a 1183 stop.
Silver Rolling Contract
No change as I am still a buyer on any dip to 15.40/15.80 with the same 14.90 stop.
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