All is well, solved, sorted; just not signed. As I have been saying for the last two weeks in my Daily Commentary Greece will get a deal .Markets are pretty content with the idea that Greece and its creditors will do a deal before the June 30 deadline. And the Fed will hike in September, and China can avoid an equity market accident. Excellent. That saw equities higher, Bond Yields higher in the US, Oil and Iron Ore prices higher, Gold lower and the US Dollar solid across the board.
For anybody following my new Platinum Service it lost 110 points yesterday which was its first down day since I started writing this new service six weeks ago. For the previous three weeks the Platinum Service generated a profit of 1010 points. 600 points and 955 points respectively.
Measures of market volatility and risk aversion have dropped back sharply too. Phew, everything’s done then. Except the deal isn’t signed, the expected Fed hike isn’t until September and China’s equity market dropped almost 4% yesterday before ending the day up 2%. So we know that events aren’t done, until they are actually done, and lots can happen in the meantime. The news yesterday was pretty positive: in the US the Durable Goods Orders were typically volatile and while causing a short-term negative sentiment blip, the Housing numbers and Fed speaker Powell reinforcing his dot point forecast, stating that he favours two interest rate hikes this year, meant that the positive outweighed the negative overall.
Powell noted that the US Dollar is strong because the US economy is relatively stronger than other countries. This is all true, and the US Dollar is duly appreciating. The EUR underperformed, continuing the recent correlation of higher European equity markets and lower EUR. The news there was also very good: no real negative Greece news, the Flash PMI for the Eurozone was solid and the ECB continued to increase its emergency funding to Greek banks- but they showed fewer outflows. We just need to see the reforms voted for in the Greek Parliament.
The news from the UK was mixed. The new Government has promised a referendum on Britain’s inclusion in the Eurozone and its exclusion is referred to as Brexit. The ratings agency Moody’s has noted yesterday that a Brexit would be negative for the UK. That’s not surprising really. But the BoE’s Weale, in an interview with the FT, notes that strong wages data point towards a rate hike. As a dissenter, that also should not be surprising. The Chinese equity market fell again yesterday; apparently driven by a desire by regulators to have banks improve their risk controls on margin lending. The better than expected, but still soft, Market PMI didn’t help either. It was good enough not to push for more PBoC easing, but not good enough to generate positive growth momentum. This negative sentiment supported the US Dollar.
This morning on the economic front we have the very important German IFO Survey at 9.00 am where the consensus is for 108 versus last month’s 108.5 print. The only other data of note today is the US GDP which be released at 1.30 pm.
September S&P 500
The S&P plan worked well yesterday as the market had nice sell-off on the release of the US Durable Goods Orders which saw me to go long at 2112 before having a nice rally into the close and this enabled me to cover this position at 2118 as outlined to my Platinum Members and I am now flat. The S&P is building a nice base and to me it is only a matter of time before we break higher. I expect this break to occur as soon as Greece signs a deal with her Creditors. Today I will again be a small buyer on any dip lower to 2107/2112 with a tight 2102 stop.
EUR/USD
Thankfully by the time the European Markets has started trading yesterday morning the Euro was already trading lower than both my buy level and stop at 1.1240. Subsequently the Euro traded lower to my second buy level at 1.1210 before stopping me out of this position for a small loss near the low of the day at 1.1150 and I am now flat. I am surprised how easily the Euro broke the previous support at 1.1170/1.1200 and unfortunately I have to respect this break. Unless the Euro can break back above 1.1250 then technically it looks like the Euro is heading lower in the short-term. Today I will be a small seller on any rally higher to 1.1220/1.1250 with a tight 1.1280 stop. My only interest in buying the Euro today is on a further dip lower to 1.1040/1.1080 with a 1.1015 stop.
September Dollar Index
Similar to the Euro above the Dollar gapped higher on the open yesterday morning with the first available price to go short was at 95.20. Soon after I put this trade on I was stopped out of this position at 95.40 and I am now flat. Just like the lower Euro above I did not expect the Dollar to rally this high. Today I will try the sell side one more time by looking to go short on any further rally to 96.00/96.30 with a tight 96.60 stop.
September DAX
Last week both the Bollinger Band and Williams Index were saying the DAX was a screaming buy and that is exactly what has played out with the market rallying over 800 points since last Thursday. There is no doubt the volatility in the DAX has made this market extremely difficult to trade especially with the market opening either with an ‘up gap’ or a ‘down gap’ from the previous day’s close. This move up has now priced in a deal with Greece and any disappointment on that front could see a nasty sell-off in the market. Today my only interest in trading the DAX is to go short on any further rally higher to 11690/11750 in very small size with an 11810 stop.
September FTSE
I am still flat the FTSE on what was a very quiet trading session yesterday. Today I will raise my buy level slightly to 6705/6745 with a 6675 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
Unfortunately the Dow just missed my 18080 buy level by 20 points before just like the S&P above having a nice rally into the close and I am still flat. Today I will raise my buy level slightly to 18040/18090 with a 17990 stop. Despite the confirmed Hindenburg Omen on the clock I do not want to be short the Dow at this time.
September BUND
No change as I am still a small seller on any rally higher to 151.10/151.50 with a 151.80 stop.
Gold Rolling Contract
My good run in Gold came to an end yesterday as I was stopped out of my long 1188 position for a small loss at 1179 and I am now flat. I am going to stay flat as I want to see if there is any follow through to the sell-off in Gold. Another reason that I want to be flat is the fact that I am already long Silver.
Silver Rolling Contract
No change as the market just missed my 16.25 exit level before following the Gold market lower. I am still long at 15.90 and I will leave my stop the same at 15.50. If I am stopped out of this position I will be a more aggressive buyer on any further sell-off to 14.80/15.25 with a 14.40 stop which is just below the 14.49 low made earlier this year.
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