It is getting very hard to have something new to say about the US data at present as everything has only one explanation – the weather! Whether that is true or not we will have to wait a month or so in order to get a less fogged over picture. Markets took yesterday’s data as generally negative with Equity markets mixed, Bond Yields lower, Oil lower and Gold higher. The biggest move over the last three days has been the rise and then fall in Natural Gas which has fallen well over 25% to post its biggest loss in 11 years.
US Consumer Confidence came in at 78.1 versus 81.6 last month but remains at relatively healthy levels. This data series closely follows equity markets and a rebound will be expected next month given the rise in US stock markets over the last three weeks. Householders should be somewhat encouraged by house prices which continued to hold up, as shown by the Case Shiller Index which came in better than expected as was the official monthly series. This was the December data and may worsen in the next month but it is also suggested to be a result of low supply of houses for sale which accounts for poor sales numbers but better prices.
The Bank of England Board Member, McCaffery. came out yesterday and said the present strength in Sterling was not a problem and that the market expectations of of a rate hike in the first half of 2015 was not unreasonable.
This morning on the economic front we have UK GDP and the German GIK Consumer Confidence followed at 1.30 pm by US New Home Sales. Later this afternoon, the new Fed Chair will give her delayed testimony to the Senate and she may change her original script in order to give the Fed’s take on all of the recent weather affected data.
March S&P 500
After Monday’s wild trading session, the S&P yesterday was a much quieter affair but interestingly it had a nice rally into the close and this theme has continued overnight with the market looking set to test Monday’s contract highs. Yesterday afternoon the market traded down to my 1840 buy level with a 1838 low before having a nice rally and I was able to cover this position at 1846 and I am now flat. The market is back trading over 1850 and I would expect the S&P to break the 1856.50 contract high and trade up to the next resistance at 1864/1870 before sellers return. Today I will be a buyer on any dip to 1843/1848 with a 1839 stop. My only interest in selling the S&P today is on a rally to 1865/1870 with a 1873 stop. We are still trading in the very seasonal strong time of the year and we have month end on Friday and the beginning of a new month on Monday which tends to see Fund Managers put money into the stock markets.
Euro/USD
The Euro traded in a very narrow range again yesterday. I still believe that it will test the key 1.3800/1.3850 resistance area first before the market decides what to do next. To me the Euro is still a buy on dips and today I will raise my buy level slightly to 1.3690/1.3720 with a 1.3670 stop on any long position. I will still be a small seller on any rally to 1.3820/1.3850 with a 1.3870 stop.
US Dollar Index
Again no change as, just like the Euro, the Dollar Index is stuck in a 30 point range. I am still long from last week at 80.20 and I will leave my stop the same at 79.70.
March DAX
I was very unlucky with my plan on the Dax yesterday as the market traded down to a low of 9632 and in the process just missed my 9630 buy level before trading a lot higher and I am still flat. The key level for the Dax is the 9800 contract high made in mid January and I still believe the market will test this level before sellers return. Today I will raise my buy level to 9630/9660 with a 9620 stop. As I mentioned yesterday I will be a reasonable seller on any rally to 9790/9820 with a 9835 stop.
March FTSE
By the time I posted yesterday morning the FTSE was trading at the bottom of my buy level at 6780. I bought the market here and after a small rally I was able to cover this position before the close at 6810 and I am now flat. The FTSE, having outperformed the other major indices over the last week, is now back to underperforming which is surprising given how strong Gold is trading. Today I will be a small buyer from 6765/6790 with a 6748 stop. As I mentioned over the last couple of days I will be a reasonable seller on any rally to 6875/6900 with a 6920 stop.
Dow Rolling Contract
The Dow plan worked well yesterday as, after I posted, it traded down to my 16160 buy level and after a nice rally I was able to cover this position at 16210 and I am now flat. The Dow has still got a lot of catching up to do versus the S&P and the Nasdaq and although I do not expect it to break the December 31 high of 16589 at this time I still expect it to trade higher in the short term. Today I will leave my buy level the same at 16120/16160 with a 16090 stop. I still do not want to be short the Dow at this time.
March BUND
As expected, the Bund is trading higher this morning and, just like the Dax, it just missed my 143.45 buy level with a 143.49 low. Today I will raise my buy level to 143.70/143.90 with a 143.45 stop which is just below yesterday’s low. I still do not want to be short the Bund at this time.
Gold Rolling Contract
Gold is now trading near the top of the Bollinger Band and Williams Index and in the process had traded up to my 1345 sell level overnight. I will lower my stop to 1352 on this position and if I am stopped out I will be a more aggressive seller in front of 1360 with a 1368 stop. I do not want to be long Gold at this time.
Silver Rolling Contract
After I posted yesterday morning Silver traded down to my 21.70 buy level. I am still long and I will leave my stop the same at 21.25.
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