The market attempted a rally early in the trading session on the back of a news article in the Wall Street Journal suggesting the Fed is moving closer to additional stimulus. However it was halted on worse than expected results from Apple for Q3 together with downgraded Q4 guidance. Europe totally ignored the better than expected manufacturing No’s from China and the mood was not helped by Moodys putting Germany, Luxemburg and the Netherlands on negative credit watch which led to the large sell off in German Bunds. Poor Manufacturing data also weighed on markets whilst Spanish 10 Year Yields rose to a fresh high of 7.64% and 10 Year Yields in Italy rose to 6.57%. This morning we have the very important IFO Index from Germany with the market expecting another fall. In other news, we have GDP from the UK with the market looking for -0.2%, signifying a technical recession. Later today the US releases Home Sales for June.
Sept S&P 500
The S&P just missed my sell level at 1348 after the US market opened yesterday afternoon before getting hit hard on all the negative news coming out of Europe. I was stopped out of my 1334 long at 1329 and I am now flat. As mentioned above, the market is down hard on the back of the poor Apple results however it is very hard to go short with next week’s Federal Reserve meeting and the talk in the Wall Street Journal of further stimulus. In my opinion the Fed have no choice but to do something next week or else we are going to have a serious sell off in the market. We are at the bottom of the Bollinger Band and Williams Index and I will look to go long at 1316/1321 in smaller size with a larger stop at 1312 given the fact we are down 50 handles since last Friday morning. If I am taken long I will look for the market to close the gap at 1330 and I will target profit from 1327/1330. In view of next week’s two day meeting I do not want to be short this market.
EURO
My long position on Monday worked out well and hit my profit target at 1.2130. Yesterday the Euro sold off allowing me to go long again at 1.2060. I will leave my stop the same at 1.2025 and I will look to take profit again on any rally to the 1.2110/1.2140 level.
Euro/GBP
Similar to the Euro I took a profit on Monday at .7820 and I was able to go long again yesterday at .7775. I will leave my stop the same at .7750 and I will look to take profit on any rally back to the .7805/.7820 area.
Sept DAX
The DAX was hit hard late in the session and I was able to go long at 6330. Luckily I took profit before the close at 6367 and I am now flat. The Dax is one market I do not like to have a position overnight as the market is closed for 10 hours, making it very risky to hold a position. Today I will look to go long again from 6250/6280 with a 6230 stop. If I see 40/50 pips on this postion I will take profit.
Sept FTSE
The FTSE has not been my friend over the last few days and I was stopped out of my 5470 long at 5430 and I am now flat. Even though it is very oversold I am going to stay flat for the next 24 hours to see how the market trades.
Sept BUND
The Bund was hit hard on the backof the Moodys downgrade and I will look to go short on any rally back to 145.50/145.80 level.
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