Broad US Dollar strength has been the main theme of the past 24 hours especially given the support from further weakness in the Japanese Yen, which is now trading near 105.30 versus the US Dollar, and some pull-back in Sterling, amid signs that the ‘no’ camp is losing poll support into September 18 Scottish Referendum. The US Dollar has been doing some heavy lifting too amid a stronger than expected US ISM Manufacturing Report for August, signalling manufacturing is doing its piece to further fire up the US economy through the second half of the year. The New Orders component was among a plethora of sub index rises and at its highest level since April 2004.
The Ukrainian situation remains troubling with fighting continuing and a war of words ongoing between Russia and Ukraine. European Equity markets are opening stronger this morning after China reported a stronger than expected Services PMI data overnight.
This morning on the economic front we have Euro-Zone Services/Composite PMI’s at 9.00 am and this is followed at 9.30 am by the UK equivalent. At 10.00 am we have Euro-Zone Retail Sales and GDP. The US will release its latest Factory Orders at 3 pm and this is followed at 7 pm by the Fed’s Beige Book and this will be closely watched by the markets.
September S&P 500
Finally we got some two way action in the the S&P yesterday as normal service tries to resume after the long summer vacation that the markets seem to have taken this year. The S&P plan worked well as it finally traded down to my 1995 buy level with a 1992.25 low before having a small rally into the close which enabled me to cover this position at 2000 and I am now flat. The S&P is opening higher this morning ahead of the very important Beige Book at 7 pm. Today my only interest in selling the market is on a rally to 2010/2014 with a 2017 stop. I will still be a buyer on any dip to 1990/1995 with the same 1987 stop which is just below last week’s low.
Euro/USD
No change as I am still long from yesterday morning at 1.3120 with the same 1.3075 stop as the market waits patiently for tomorrow’s key ECB Meeting and Dragi press conference which follows.
US Dollar Index
No change as I am still short from last week at 82.75 with the same 83.30 stop as the Index is a touch lower from where I marked prices 24 hours ago.
September DAX
The Dax plan worked well yesterday as finally after I posted it traded down to my 9495 buy level before having a nice spike higher which enabled me to cover this position at 9535 and I am now flat. Today I will still be a buyer on any dip to 9460/9490 with a 9425 stop as I still expect the market to mount some sort of rally ahead of tomorrow’s ECB Meeting. Given how much the Dax has under-performed the other major indices over the past six weeks I do not want to be short the market at this time.
September FTSE
The FTSE followed the Dax and S&P lower yesterday evening and eventually traded down to my 6815 buy level. I am still long and today I will raise my stop on this position to 6795 which is just below yesterday’s low.
Dow Rolling Contract
After I posted yesterday morning the Dow just missed my 17160 sell level before having a nice 100 point fall and I am still flat. The negative divergence between the Dow and the S&P continues as so far the Dow has failed to close above its July 17150 high. Today I will again look to sell any spike higher to 17170/17210 with a 17240 stop. Given how overbought the Dow is trading I still do not want to be long the market at this time.
September BUND
The Bund traded down to my 150.95 buy level yesterday. I am nervous at been long at this time given how low the yield is for the Bund and for this reason I will leave my stop quite tight at 150.65. I still expect to see a small rally ahead of tomorrow’s ECB Meeting and if this occurs I will look to go flat. I will still also look to go short the Bund on any rally to 151.60/151.90 with a 152.15 stop.
Gold Rolling Contract
Gold had a bad day yesterday with the market falling over 1.6%. Unfortunately I was stopped out of my long 1278 position at 1269.This morning it is trading at the bottom of its Bollinger Band but interestingly the Wiilliams Index has given a small buy signal. Today I will move my buy level slightly higher to 1260/1265 with a 1252 stop.
Silver Rolling Contract
No change as I am still long from last week at 19.40 with the same 19.10 stop as Silver continues to hold in better than Gold at this time. If I am stopped out I will be a more aggressive buyer in front of 18.75 with a 18.30 stop.
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