US Equities gave up some early ground on worries over the US Fiscal Cliff. Senate majority leader, Democrat Harry Reid, said that little progress has been made in talks to avert it. There are now only 33 days to go before the Bush temporary tax cuts and other measures expire causing a massive Fiscal Contraction in the US which the OECD has just warned is enough to push the World Economy into recession. The OECD Group of 34
Industrial Countries has released its latest outlook and slashed global growth predictions for 2013 to 3.4% from 4.2% in May. The key reason for the downgrade is the recession in Europe and the knock on effects to developing economies. US Durable Goods Orders came in flat, better than the -0.7% forecast by the markets, and the US Case-Shiller House Prices for September rose 0.4% in line with market forecasts to be up 3% year on year.
This morning we have Euro-Zone M3 and Italy has a Bill Auction. Later in the US we have New Home Sales followed by the Beige Book Report on the Economy. Charles Evans from the Fed is due to speak later in Canada.
Dec S&P 500
A very quiet day yesterday as the market tried to absorb the large gains made the previous week. The S&P is still dominated by two outstanding Gaps. We have a lower Gap from 1360/1373 from Monday November 12th and a higher Gap from 1414/1421 from the day after Obama was elected. If the market decides to go after one of these Gaps I will short this move aggressively.
This morning, despite the Fiscal Cliff worries, I believe the market is okay and I will look to buy the market on any dip to 1388/1392 with a 1385 stop and as outlined above I will be an aggressive seller from 1414/1420 with a 1424 stop.
Dec DAX
The Dax worked really well as we dropped down to my 7310 buy level before the market rallied to 7363. I took a nice gain on my long position at 7350 and I am now flat. I will still look to buy the Dax on dips and today I will be a buyer from 7275/7295 with a 7260 stop which is just below Monday’ low.
Euro/USD
At last the Bollinger Band and Williams Index indicators kicked in and we had a nice sell off in the Euro. I took a nice gain at 1.2930 on my 1.2995 short position and I am now flat. This morning I will be a seller on any rally to 1.2960/1.2980 with a 1.3015 stop which is just above yesterdays high. I will also look to buy the market on any dip to 1.2850/1.2880 with a 1.2840 stop.
Dec BUND
The Bund also worked well and I took a nice gain this morning at 142.40 on my 141.95 long position from yesterday morning. I still like the market as I fancy the Bund to retest the 143/143.20 resistance area. As we have broken the important 142.50 level this morning I have gone long again at 142.52 with a tight 142.28 stop which is just below the 142.30 low made earlier today.
Dec FTSE
The FTSE traded up to my 5820 sell level. As I said yesterday I felt the FTSE was trading heavy and I will lower my stop to 5800 to give the market some room to fall further. I will look to cover my position on any dip to 5750/5770.
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