The European session, having started on a firm note yesterday morning, could not hold onto its gains after disappointing data out of the US which followed on from negative news from corporates in the UK and Europe. In the US, the earnings season continued with a positive tone in general with 71% of companies, who have reported so far, beating expectations (including Apple after the close last night) but yesterday markets fretted about companies such as Netflix and Waters Corp who had disappointing reports. The Richmond Fed Manufacturing Index fell to -11 from 8 and against market forecasts of 8. On the back of the weak report, which was a setback for the Fed’s tapering plans, US 10 Year Bond Yields rose by 3 basis points and the US Dollar continued to fall against its major trading partners with the US Dollar Index falling by 0.4%. All in all it was a very quiet trading session with the Dow rising by 0.1% and the S&P losing 0.2%.
This morning on the economic data front we have PMI Manufacturing/Services data for the Euro-Zone and hopefully these will bring volatility back into the markets. This is followed later in the US by New Home Sales.
September S&P 500
Yesterday was another very quiet day for S&P trading with volumes again very low. The market traded up to my 1693 sell level before having a small sell off on the back of the weaker Richmond Fed Manufacturing data and I was able to cover this position at 1687 and I am now flat. As I said yesterday I believe the S&P is trying to put in a top and today I will be a seller again from 1692/1697 with a 1702 stop. I still do not want to be long this market unless we trade down to 1670/1674 with a 1665 stop.
Euro/USD
Very unlucky yesterday as I had the correct view that the Euro would rally but unfortunately the market just missed my 1.3160 buy level by 3 points before having a nice rally to 1.3230 and I am still flat. I do not want to chase the Euro too much higher but today I will raise my buy level to 1.3160/1.3180 with a 1.3145 stop . On the short side, I will raise my sell level to 1.3270/1.3300 with a 1.3320 stop.
September FTSE
The FTSE plan worked well yesterday as after I posted the market traded up to my 6600 sell level before having a nice correction. I covered my position at 6560 and I am now flat. Just like the S&P above, I believe the FTSE is also trying to put in a top in the market and today I will be a small seller from 6575/6600 with a 6620 stop which is just above yesterday’s high. My only interest in buying the FTSE is on a dip to 6480/6510 with a 6465 stop.
September DAX
The DAX is trying to put in a bottom and today I will leave my buy level the same as yesterday at 8270/8300 with a 8250 stop. I will also still look to sell the DAX from 8400/8430 with the same 8450 stop.
September BUND
The Bund traded down to my 143.70 buy level and I am now long in small with the same 143.45 stop. As long as it can hold over the 143.30/143.50 support zone the market is still bullish, however a break and close below 143.30 would be a worry for the bulls.
Gold Rolling Contract
Just like the Euro I was very unlucky with my 1325 buy level for Gold as 1327 was the low before the market had a nice rally. This morning Gold is at the top of it’s Bollinger Band and Williams Index and I do not want to chase the market higher so I will leave my buy level the same at 1315/1325 with the same 1308 stop. Even though Gold is overbought I do not want to be short at this time.
Silver Rolling Contract
Silver worked well yesterday as the market traded down to my 20.20 buy level. I am still long and I will raise my stop to 19.95 which is just below the 20.10 low that we had yesterday.
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