Stock markets rallied yesterday as the Cyprus bailout settled investors nerves. They were also helped by some mixed data out of the US which the market assessed to be evidence that the US recovery remains on track. The exceptions to this trend were Spain and Italy with the Ibex down 1.8% as bank stocks got hit for 2.6%. The Italian stock market shed 1% as the banks lost 2.1%. US data was mixed with a much worse than expected fall in Consumer Confidence to 59.7 in March from 68 and below the market forecast of 67.5. However much better than expected Durable Goods Orders which rose 5.7% and House Prices rising 1% buoyed investors on both sides of the Atlantic. In Japan the newly appointed BOJ Governor Mr Haruhiko Kuroda, echoing the Dragi line (whatever it takes), told parliament that he would take responsibility for raising the Inflation Rate to 2% within two years. He also outlined a series of measures being considered for a more aggressive monetary easing in Japan. Japanese Bond prices surged on the news with the 10 year hitting a rate of 0.53% within 10 pips of its record low in June 2003.
Today is another busy one on the economic front as this morning at 9.30 am we have UK GDP and Current Account followed from the Euro-Zone by CPI and Consumer Confidence. Later at 12.30 pm we have Pending Home Sales from the US whilst Rosengren and Kocherfakota from the Fed are due to speak.
June S&P 500
It is amazing how resilient the S&P is as every single sell off this year has been met by aggressive buying as the market will not stay down for two days in a row. As I have been saying for the last month that the S&P will make a new high before rolling over and I think today we will do this. I took profit on my 1547 long at 1556 and I am now flat. Today I will look for this market to breakout to the upside and I will look to buy the S&P from 1554/1558
with a tight 1551 low which is just below the low made yesterday afternoon. If the market can break 1561 I am looking for a test of the 1570/1575 area where I will look to cover any long positions and start to set up a short position in small with a 1581 stop.
June DOW
The Dow continues to crawl higher and today given the expected breakout in the S&P I will look to go short the Dow on any rally to 14550/14600 with a 14630 stop.
Euro/USD
No change as the Euro just missed my sell level yesterday at 1.2900 before grinding lower ll day. We have now closed below the 1.2875 level for a second day which is a big worry for Euro Bulls and this morning as I do not want to chase this market lower,I will lower my sell level to 1.2875/1.2900 with a tight 1.2920 stop. I do not want to be long at this time unless we traded down to 1.2680/1.2710 where I will look to set up longs with a 1.2650 stop.
June DAX
The Dax continues to trade heavy as the fallout in Europe from Cyprus continues. In contrast to the S&P above if the Dax breaks 7875 and stays below this level for 30 minutes I will be a seller in small with a 7910 stop, otherwise I will stay flat.
June BUND
The Bund continues to rally without hitting my 144.30 buy level helped by the actions from the BOJ and flight to safety in Europe as Cypriot woes continue. Again just like the Euro I do not want to chase the Bund here but this morning I will raise my buy level to 144.30/144.60 with a very tight 144.20 stop. I do not want to be short the Bund at this time despite how overbought the market is
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