Back after the long weekend the Northern Hemisphere markets swung into action with the latest reading on US Consumer Confidence leading the way. It was another positive reading, this one from the Conference Board, confirming what was seen mid-month from the University Of Michigan Sentiment Reading. It showed that the US Dollar is stronger, US yields rose further and even US Stocks closed higher for the 20th Tuesday in a row although they lost a lot of their zip as the afternoon wore on. It was a combination of good numbers out of the US and a dour reading on French Consumer Confidence that gave extra force to the ‘buy the US Dollar’ story. French Consumer Confidence was expected to be little changed in May but fell a surprisingly large 4 points to hit the lows of 2008 giving voice to concerns the French Economy is struggling. A measure of Spanish Mortgage lending slumped back in March. The FT was running a now familiar story yesterday that Brussels will lighten up on its austerity in response to the Euro crisis and allow several of the indebted economies to miss their deficit targets but to deepen broader economic reforms.
In the US, the Case-Shiller House Price Index was very strong and showed re-sale prices rising at a 10.9% annual rate in March, the highest since April 2006. This led to 10 Year Treasury Yields rising 17 basis points to 2.17%.
On the economic data front today, the OECD releases their first half-yearly Economic Outlook. This morning we have German Unemployment and Euro-Zone M3 followed in the US by MBA Mortgage Applications. Later this afternoon former Fed Chairman Paul Volcker speaks in New York.
June S&P 500
The S&P worked really well after I was stopped out of my small 1659 short position at 1663 on strong US Economic data. The market rallied up to my 1669 sell level before sellers returned with a vengeance enabling me to take profit at 1657 on this position and I am now flat. It is amazing that despite how high the US stock market is this year the McClellan Oscillator is still in negative territory with a -100 reading. As I post this commentary the S&P is now 22 handles lower than the high made yesterday and yet it still managed to close up for the 20th Tuesday in a row. The fact the S&P was unable to close back above 1660 is bearish and today I will be a small seller on any rally to 1656/1660 with a 1663 stop. Given that month end is Friday I will be a small buyer on any dip to 1641/1645 with a 1637 stop.
Euro/USD
The Euro worked well as the market had a nice rally before lunch and I was able to take profit at 1.2940 on my 1.2900 long position and I am now flat. The next main support for the Euro comes in at 1.2750/1.2780 and I will be a small buyer here with a 1.2735 stop. A break and close below 1.2750 will be very bearish and it will then be time to change tack as I will then look for the Euro to test the lows at 1.2050 made last July.
June FTSE
No change as given we are approaching month end I will be a small buyer on any dip to 6670/6690 with a 6660 stop.
June DAX
Same story as the FTSE, I will be a small buyer on any dip to 8380/8400 with a tight 8360 stop. If I am taken long and subsequently stopped out I will be a more aggressive buyer on any dip to 8260/8290 with a 8240 stop. If the Dax breaks and closes below 8250 it will be very bearish and I would expect the market to test the 8020/8060 support zone before buyers return.
June BUND
I was lucky with the Bund as I took profit at 144.30 on my 144.10 long position before it sold off. This morning it is down to my 143.50 buy level with a 143.39 low. I have gone long here at this price and I will leave a 143.25 stop on this position as I look for the Bund to retest the 143.90/144.20 resistance area where I will look to take profit. If I manage to take profit in this area and the Bund subsequently sells off I will look to buy the market again on any dip to 143.30/143.50 with a 142.95 stop.
June Nasdaq 100
No change as I am still short at 3013 with the same 3040 stop. If the Nasdaq continues to fall today I will look to take profit on any further dip to 2970 which is just above the lows made last Friday.
Silver Rolling Contract
No change as I am still a small buyer on any dip to 21.70/22.20 with a 21.35 stop.
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