Equity markets rebounded yesterday after the previous two days of losses with gains averaging 0.5% in the US and 1.3% in Europe. The uplift in the US was supported by a solid Consumer Confidence Reading which came in much better than expected at 82.3 in March from 78.3 in February, a new 6 year high. House prices also held up, with the Case-Shiller 20 City Index up 0.85% in January for a 13.2% gain year on year. However New Home Sales fell 3.3% in February following last week’s fall in Existing Home Sales of 0.4%.
In Europe, the German IFO Survey showed the Current Assessment Index improved to 115.2 in March from 114.4 last month but forward looking expectations declined to 106.4, from 108.3 previously, suggesting that Q1 could be the high point of German activity. The Euro lost ground after the IFO was released but gained ground after President Dragi’s speech in Paris where he was not as dovish as expected and said there were signs that accommodative Monetary Policy is becoming effective throughout the Euro-Zone.
This morning on the economic front we have the German GIK Consumer Confidence followed at 12.30 pm by the latest US Durable Good Orders. Later this afternoon the Fed’s Bullard will speak on Monetary Policy.
June S&P 500
The June S&P is still stuck in the 1836/1872 trading range. This range has existed for the last two weeks and a break of 1872 will lead to a test of 1890 and possibly 1910. On the down side I really need to see a closing break below 1825 before I will look to go properly short the market.
The S&P plan worked well yesterday as after I posted it traded up to my 1860 sell level with a 1864 high before having a very quick sell-off, enabling me to cover this position at 1853 and I am now flat. Later, it just missed my 1844 buy level before having a nice 14 handle rally into the close. As I mentioned yesterday I find it very hard to short the market with the Euro so strong versus the US Dollar. Today I will raise my sell level to 1868/1873 with a 1876 stop. I will also raise my buy level to 1848/1853 with a 1845 stop. If I am taken long and subsequently stopped out I will still be a very aggressive buyer from 1831/1835 with a wider 1824 stop.
Euro/USD
The Euro again held the key 1.3760 support level and for the second consecutive day it has rallied into the New York close. After I posted yesterday morning the market was trading below my buy level at 1.3785 on the back of the weaker IFO Survey and as a result I used a lower stop. The Euro having traded down to 1.3750 quickly turned around and after a nice rally I was able to cover this position at 1.3810 and I am now flat. As I mentioned yesterday I still like the Euro as long as we do not close below 1.3740 and today I will be a small buyer on any dip to 1.3765/1.3795 with a 1.3735 stop. I still do not want to be short the market at this time.
US Dollar Index
No change as I am still flat having cut my long 79.45 position yesterday morning at 80.05. Today I will still look to be a buyer on any dip to 79.60 with a 79.30 stop.
June DAX
There is no stopping the incredible volatility that has existed in the Dax so far this year and yesterday was no exception with the market rallying over 180 points after I posted yesterday morning. At least we were not short the market. Today I will raise my buy level to 9300/9330 with a 9280 stop. I still do not want to be short the Dax at this time.
June FTSE
The FTSE plan worked well yesterday as it had a nice move higher after I posted enabling me to cover my long 6470 position, from Monday, at 6535 and I am now flat. Today I will be a small seller on any further rally to 6585/6605 with a 6620 stop. I will also be a small buyer on any dip to 6480/6500 with a 6465 stop.
Dow Rolling Contract
The Dow plan also worked well yesterday as shortly after lunch it had a spike higher enabling me to cover my long 16250 position at 16360 and I am now flat. I still believe the Dow will break the Dec 31 high of 16589 first before the market trades lower and today I will again be a small buyer on any dip to 16280/16320 with a 16250 stop. I still do not want to be short the Dow at this time.
June BUND
I mentioned yesterday that I would give the Bund one more day to fall however it has failed to so with it at the same level that I posted yesterday morning and still holding over the key 143.00 support level. Therefore I covered my short 143.15 position at 143.18 and I am now flat. Today I will again be a small seller buy only if we rally to 143.45/143.65 with a 143.80 stop. I still do not want to be long the Bund at this time.
Gold Rolling Contract
No change as I am still long from Monday at 1315 with the same 1305 stop.
Silver Rolling Contract
No change as I am still long from Monday at 19.90. I will raise my stop to 19.60 as Silver is trying to stabilize after last week’s sell-off.
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