The biggest currency mover over the past 24 hours was the Australian Dollar which is now at its lowest level since early July 2010, having retraced more than 50% of the entire 2008-2011 run up from 60 cents to $1.11. The Euro closed higher against the US Dollar despite the unexpectedly strong upward revision to Q3 GDP which came in at 3.9% from 3.5%. The fact that the revision was driven by higher inventories with a smaller contribution from net exports helps to explain the limited reaction. There was also a downward revision to nominal wages growth to +4.4% from +5.2% reported earlier.
The Dollar weakness was also helped by the surprisingly soft Conference Board Consumer Confidence Reading which printed 88.7 versus 94.1 last month. This had a brief negative effect on equities before yet again rallying into the close and are still trading near record highs. Today will be a very quiet trading session in the US with most traders leaving early for the Thanksgiving Holiday tomorrow. The other big news yesterday concerns Oil where a meeting of the Oil Ministers of Russia, Saudi Arabia, Mexico and Venezuela in front of the formal OPEC Meeting failed to reach any agreement on protection cuts. We did see a fleeting rally on a subsequent Wall Street Journal headline that OPEC members were moving towards cutting Oil supply but when this was revealed to be a comment about adhering to quotas rather than overproducing relative to quotas the Oil prices fell away to session lows. The Benchmark WTI Crude Contract closed at $74.07 having traded near $77 earlier in the day.
This morning on the economic front we have UK GDP and CBI Reported Sales at 9.30 am and 11.00 am respectively. We have no data of note due from the Euro-Zone this morning whilst at 1.30 pm we have the US Weekly Jobless Claims which are released a day early due to tomorrow’s Thanksgiving Holiday. Also at the same time Durable Goods Orders will be reported along with Personal Income/Spending. Finally we have the Chicago Purchasing Manager’s Survey, University of Michigan Consumer Sentiment and Pending/New Home Sales at 2.45 pm, 2.55 pm and 3:00 pm respectively.
December S&P 500
The S&P had another very quiet trading session which is to be expected given the fact that the US markets are closed tomorrow. All the action in the markets are now in currencies and the Oil market. I am still short at 2068 with the same 2073 stop which I would expect will be taken out today. If I am stopped out I will be a more aggressive seller from 2077/2082 with a 2086 stop. The S&P still has an ‘Open Gap’ from last Friday at 2050/2056 and I would expect this Gap to be filled when normal trading resumes next week. Today I will also be a small buyer on any dip to 2057/2062 with a 2052 stop.
Euro/USD
The Euro plan worked out well yesterday as just before lunch the market traded lower to my 1.2420 buy level and following a nice rally after the US markets opened I was able to cover this position at 1.2470 and I am now flat. As I have mentioned over the last three weeks it will take something drastic for the Euro to break 1.2350 as I still believe the Euro will have a decent rally before the market breaks lower. Today I will again be a buyer on any dip to 1.2430/1.2460 with a 1.2395 stop which is just below yesterday’s low.
US Dollar Index
Unfortunately the Dollar just missed my 88.50 sell level with a 88.42 high before trading lower and I am still flat. The Dollar is still very overbought and due a decent correction and today I will lower my sell level to 88.00/88.30 with a 88.55 stop.
December DAX
I have to bite my tongue in relation to this massive up move in the Dax over the last three weeks as in my opinion this market is still an accident waiting to happen. The move up is occurring despite the awful economic news out of Germany and with the real prospect of deflation. By the time I posted yesterday morning the Dax had already stopped me out of my latest 9800 short position at 9840. It continued to spike higher and after I went short at 9885 the market had a nice drop which enabled me to cover this position at 9850 and I am now flat. The Dax is again spiking higher this morning with the market outside its Bollinger Band and at the top of the Williams Index. I will try another short trade on any further move higher to 9945/9985 with a 10015 stop.
December FTSE
No change as I am still a small seller from 6760/6790 with a tight 6810 stop.
Dow Rolling Contract
I will continue with the same strategy of selling rallies with a tight stop until we get a decent sell extreme. After I posted yesterday morning the Dow just missed my 17870 sell level before having a nice sell-off and I am still flat. Today given that this is a seasonally strong week for equities I will raise my sell level to 17920/17960 with a 18030 stop.
December BUND
No change as I am still short in small at 152.10 with the same 152.52 stop which is just above the contract high made on October 15. It is amazing that Bond Yields are trading at such an historic low considering we are over 6 years into the supposedly economic recovery. If I am stopped out of this position I will be a more aggressive seller in front of 152.70 with a 153.05 stop.
Gold Rolling Contract
Gold continues to test this now very key 1200/1204 resistance level. Today I will still only be a buyer if Gold prints 1210 with a 1195 stop.
Silver Rolling Contract
No change as I am still long at 16.25 with the same 15.95 tight stop.
January NYMEX Crude
The Crude plan worked well yesterday after I posted it had a nice rally which enabled me to cover my 75.50 long position at 76.40. Crude then had a nasty sell-off into the close and I have gone long again at 74.10. I will leave my stop the same at 72.95 on this position.
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