A day of conflicting moves with the Euro and Commodities moving lower whilst US Equities had a strong rally in the last hour of trading as the S&P managed to close over the important 1325 level for the first time in two weeks. The market continues on a slow grind towards Spain’s inevitable bailout as we wait to see what the fallout from this is. This keeps the Euro subdued. The US economic data is relatively mixed at present with a decrease in Consumer Confidence whereas the Housing Market does appear to be stabilising as house prices are beginning to improve at the margin. Spain has backed off its plan to inject bonds into Bankia in a Debt/Equity swap and this really hit the IBEX hard over the last 24 hours.
NOTE: All comments below refer to the June Futures Contract in each instrument.
S&P 500
The S&P worked well yesterday as we traded up to my profit target at 1330. Indeed we just missed my sell level at 1335 with 1334 the high so far. This morning we have a gap down on the back of the weak Euro and IBEX market and I look to buy from 1320/1324 with a tight 1318 stop as I look to take profit again at 1330. I will still keep my sell level the same at 1335/1340 with a 1343 stop. I will only go short in small size as I am impressed the way the market is able to shrug off bad news. As long as the market stays over 1320 the bulls will be in charge.
FTSE
The FTSE managed to trade up to my 5390 sell level and I took profit again yesterday at 5350 and I am now flat. I am a buyer of the FTSE from 5300/5320 with a 5280 stop as I look for a retest of the 5350/5370 area where I will look to take profit.
Gold
It is good that I exited my long gold position at 1580 as we are now back to test the important 1525/1550 level. Today I look to buy in small size from 1530/1540 with a 1520 stop. If we break and close below 1520 it will be very bearish as it will be below the December 1528 low.
EURO/USD
The Euro continues to fall as we traded and closed below the key 1.2500 level. I was stopped out of my small long position on this break and I am now flat. The speculators have one of their biggest positions on record against the Euro and this makes me very nervous. If the Euro breaks back above 1.2520 I will go long again otherwise I am going to stay flat to see how we trade for the next 24 hours. If I am taken long I will leave a 1.2480 stop.
USD/JPY
No change as I am still long at 7960 with a 7920 stop. I am amazed with the weak Euro and weak European Equities that the Yen is not stronger.
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