It was a relatively quiet 24 hours compared to the previous day’s Greek-inspired moves. Global equity markets were generally a touch weaker. The Dow was down 0.3% or 55 points, to just below the 18,000 mark, while the S&P500 fell 0.5% or 10 points, to 2080. European Equity markets provided the negative lead, no doubt reflecting some continuing concerns from news of Greek elections in January, with most major European indices down 1-1.5%.
European bond yields generally fell to new 2014 lows including most peripheral markets, although Greek 10-year yields rose a further 7bps after the previous day’s 1 percentage point yield increase. The bid in European bond markets helped US Treasuries fractionally higher in price. With markets mostly stabilising overnight, the US$ eased moderately across the board which helped Gold recover all of its losses from Monday as it rose $25. The EUR (1.2156, +.0025), JPY (119.48, -1.20) and AUD (US$0.8180, +0.50) all strengthened and even the Ruble was able to stabilise/rise a little against the US$. Oil prices increased 0.5% (30 cents a barrel) to US$53.90 while Iron Ore prices increased a further $2.44 a tonne in Chinese trade yesterday, to close at US$71.15 a tonne ($4 a tonne off the year’s low of last week and $55 a tonne off the year’s highs).
With most European markets closed for today and tomorrow the only economic releases due today are from the US which is open for a full day’s trading. At 1.30 pm we have the Weekly Jobless Claims. This is followed by the Chicago Purchasing Manager’s Survey and Pending Home Sales at 2.45 pm and 3.00 pm respectively.
Finally I would like to wish all members a very Happy New Year and to thank you for your continued support. As the markets are closed tomorrow, the next update will be on Friday.
March S&P 500
Yesterday was very frustrating as the S&P just missed my 2073 buy level with a 2073.50 low before having a nice rally and I am still flat. As we approach Friday and the first trading day of 2015 the markets are likely to be very fickle and difficult to predict. I still believe that the S&P will run into a wall of resistance when we open for 2015. Given the fact that today is year-end I do not want to be short the market and I will wait until Friday to put on a short position as the market is too near 2100 for it not to test this level before trading lower. Today I will move my buy level higher to 2071/2076 with a 2065 stop.
Euro/USD
No change as I am still long at 1.2140 with the same 1.2085 stop.The Daily Sentiment Index Reading is now below 10% bulls for the sixth consecutive day but despite the bleak sentiment the Euro remains defensive.
US Dollar Index
Optimism remains at extreme levels towards the Dollar as we head into 2015. The Dollar still needs a sell extreme to show that we have put in at least a temporary top in the market. I am still short at 9035 with the same 9075 stop.
March DAX
The Dax plan worked out well as the market had a nice sell-off after I posted yesterday morning which enabled me to cover my short 9930 position at 9830 and I am now flat. With the Dax closed for trading today and tomorrow, I will wait until Friday to see what the price action is before deciding my next strategy
March FTSE
After I posted yesterday morning the FTSE continued to sell-off with the market eventually hitting my 6500 buy level. I am still long and I will leave my stop the same at 6460. Note that the FTSE closes for trading at 1.00 pm and will re-open again at 1.30 am on Friday morning.
Dow Rolling Contract
My short 18070 Dow position finally paid dividends yesterday as the market had a nice sell-off which enabled me to cover this position at 17950 and I am now flat. The main reason that I covered this position is the fact that today is year-end which seasonally tends to be very positive. My only interest in selling the Dow today is on a rally to 18150/18200 with a 18250 stop.
March BUND
I am still flat as the Bund made yet another new high as the 10-Year Yield is now substantially below 50bps, an incredible situation when we are 7 years into an economic recovery. With the market closed until Friday, I will wait to see where we open before deciding my next trade.
Gold Rolling Contract
Thankfully Gold traded higher all day yesterday which enabled me to cover my long 1193 position at 1205 and I am now flat. Today I will again be a buyer on any further dip to 1183/1190 with a 1175 stop.
Silver Rolling Contract
No change as I am still long at 15.80 with the same 15.45 stop. A break and close over 17.00 will be very positive and may finally signal that we will have seen a bottom of significance at the 14.49 low made earlier in December.
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