One year ago the Nikkei 225 Index stood at 8800 with the Dow Industrial Average at 12,500. For a brief period before the markets opened yesterday the Japanese stock market was higher than its US counterpart having risen almost 80% over the last 12 months. Another 52 points on the Dow put the US back in the lead but the impact of Abenomics and the Bank of Japan’s QQME programme has been quite remarkable. The S&P also rose yesterday, for the 19th Tuesday in a row, having been down earlier in the session.
The US Dollar weakened across the board and the US Dollar Index at 8382 is again below the key 8410 pivot point as markets await directional clues from Fed Chairman Bernanke’s testimony on the economy to the Joint Congressional Committee, which is due to take place at 3 pm today. His comments on the likelihood of an earlier end to QE could have significant directional impact on the US Dollar and investors may be wary of placing large bets until they see the contents of the speech.
Today is extremely busy for economic data. This morning we have the Euro-Zone Current Account. The Bank Of England releases its Monetary Policy Committee Minutes and at 9.30 am we get the UK Public Sector Borrowing Requirement. Germany is also due to sell Bonds. Later from the US, we have Existing Home Sales followed by the Fed releasing its Minutes from the May 1st FOMC meeting.
June S&P 500
The winning Tuesday streak for the S&P continued yesterday and one of my members emailed me to say that the S&P has now closed over 2+ Standard Deviations above its 50 day average for 13 straight days which is the longest streak since 2004. The S&P rallied to my 1673 sell level before selling off and I was able to take profit at 1666 and I am now flat. I want to stay flat ahead of Bernanke’s Testimony at 3 pm and will try to react to the news after. If the market rallies after the testimony I will be a small seller again from 1673/1680 with a 1685 stop. If the market sells off after he speaks I will be also look to sell the market on any break of 1659 with a 1666 stop. I do not want to be long the S&P today.
Euro/USD
The Euro worked well yesterday as, after I posted, we traded in the 1.2850/1.2875 buy region for a long time before having a nice rally late on. I went long at 1.2865 and I took profit at 1.2905 and I am now flat. I will still look to buy the Euro on any dip to 1.2840/1.2860 with a 1.2820 stop. If I am taken long and subsequently stopped out I will be an aggressive buyer in front of 1.2750 with a 1.2725 stop. I do not want to be short the Euro today.
June DAX
Very unlucky yesterday as the Dax just missed my 8390 buy level before having a nice rally. Today I will leave my buy level the same at 8360/8390 with a 8335 stop. Given the volatility I am only trading in small size and I will also look to sell the Dax on any rally to 8490/8520 with a 8540 stop.
June FTSE
The FTSE rallied to my 6760 sell level and subsequently stopped me out at 6780 for a small loss and I am now flat. This market is very overbought and today I will look to go short again on any further rally to 6790/6810 with a 6825 stop. I do not want to be long the FTSE at this time.
June BUND
The Bund traded down to a low of 144.27 just missing my 144.25 buy level before having a nice rally and I am still flat. Today I will leave my buy level the same at 144.10/14425 with a 143.95 stop. I do not want to be short the Bund at this time.
June Nasdaq 100
No change as I am still short at 3030. I will leave my stop the same at 3050 and if I am subsequently stopped out I will be a more aggressive seller on any further rally to 3060/3080 with a 3105 stop.
Silver Rolling Contract
Silver worked well yesterday as we dropped down to my 22.20 buy level with a 22.08 low. I have taken profit at 22.60 and I am now flat. Today I will look to reset my long position on any dip to 22.00/22.30 with a 21.75 stop.
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