Ongoing uncertainty about when Spain will formally request a bailout has Equity markets nervous. Spanish PM, Rajoy has said a request for bailout is not imminent but press reports suggest Spain is edging closer towards applying for the ESM and could make a request as early as this weekend if not in the next five days. The speculation is October 18-19th when the next EU Summit takes place in Brussels. These rumours buoyed Equity markets in Spain with the Spanish Equity Market closing up 1.1% whilst the 10 Year Bond Yield was 13 bps lower at 5.75%. Meanwhile the other major Equity markets are lower and the Troika have rejected a proposed €2 billion of spending cuts in Greece, requesting further cuts in wages and pensions.
Today, Services PMIs are released in Europe, UK and the US as well as the ADP No’s from the US which will be closely watched ahead of Non Farm Payrolls on Friday. Overnight the Purchasing Managers Index from China came in weaker than expected at 53.7 from 56.3 the previous month.
Dec S&P 500
The S&P worked well as we entered my sell zone with a 1446 high. I went short at 1443 and I want to stay short and I will lower my stop to 1447 which is just above yesterday’s high. I will look to take profit on any dip to the 1431/1434 area and as I said yesterday I will also look to go long on any dip to the 1423/1428 area in small with a wider 1418 stop. If the market drops to my take profit area and subsequently rallies higher from this level I will
still be a seller in the 1440/1444 area with the same 1447 stop on all short positions.
Euro/USD
The Euro rallied nicely to my sell level and I went short at 1.2940. I will move my stop to a break even and I will look to take profit on any dip to the 1.2850 area. I will still look to set up long positions in the 1.2820/1.2840 area with a 1.2795 stop.
Dec BUND
The Bund dropped down to my by zone with a 141.10 low. I went long at 141.15. I like the Bund and I will raise my stop to 141.40 as I look for a retest of the important 142.00/142.20 area where I will look to take profit.
Dec DAX
I was very unlucky on the Dax as I was stopped out of my 7340 short with my stop set too tight at 7370 and I am now flat. I still think the Dax is trading heavy and I will look to go short again from 7330/7350 with a stop at 7380 which is just above yesterdays high. I will still be a buyer in the 7210/7230 area with a stop at 7195 which is just below the now very important support at 7200.
Dec FTSE
Still no change as I want to buy in the 5725/5745 area with the low so far at 5760. If I am taken long I will leave my stop at 5700 and I will look to take profit on any rally to the 5800 which is now strong resistance level.
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