Yesterday was a complete reversal of Tuesday’s gains in the Equity markets as world markets ignored the Australian gains of Wednesday and decided to prepare for New Year with red numbers on screens rather than green as almost every other Index closed up to 1% lower. One of the main catalysts for yesterday’s sell-off was the fall in Oil prices due to higher inventories and is back trading at $36.80 after falling over 3% yesterday. Iron ore continues its stealthy price increase rising almost 3% to $43.50/tonne while Gold close 1% lower.
With European and US Markets closed tomorrow for New Year’s Day this is my last update for 2015. My Daily Commentary will resume next Monday January 4th. Finally I would like to wish all my Members a Healthy, Happy and Prosperous 2016.
For anybody following my New Platinum Service it made 18 points and is now ahead by 2016 points for December.
John Mack, the former Morgan Stanley CEO and now a non-executive director of Glencore, gave an interesting interview covering a few industries yesterday. He was generally bullish on China and Commodities in the longer term but cautious on Coal prices. He also reaffirmed Glencore’s commitment to maintaining its investment grade credit rating as its cuts production where it can and retains its focus on its trading activities.
The NOK, SEK and CAD were all weaker yesterday while the Swiss Franc was the best performing currency. US Treasury did not rally as much as one would have thought after Tuesday’s sell-off closing down by only 1bp to 2.29%. I am closely watching the 5-Year Yield as a break and close over 1.88% will be very bearish as this is where most of the Fed’s funding is currently. Last night we closed at 1.80%.
Credit markets were uneventful but generally slightly tighter. Resource Companies fared poorly but Freeport-McMoRan, the struggling miner, saw some tightening in its CDS price, although this does remain at very wide levels. The company has been targeted by the activist investor Carl Ichan and his board presence is being seen following the announcement that its Chairman and co-founder will step down with a almost $100m payout and large ongoing consulting payments-not bad for a company which has lost over 70% of its value.
UK House prices rose the most in eight months in December with further gains expected which could push the average price of a home past £200,000. In contrast US Pending Home Sales fell by almost 1% in November whereas expectations were for an increase of 0.7%. The home market is likely softening although the previous month’s gains were revised slightly higher.
With most of Europe closed today and tomorrow the only economic data of note due today is the Weekly Jobless Claims at 1.30 pm and the Chicago PMI at 2.45 pm. The Chinese Manufacturing data is due tomorrow morning and this could well affect markets when they re-open on Sunday night.
March S&P 500
With 30 minutes left of yesterday’s US trading session the S&P, Dow and DAX all hit my buy level at the same time. I bought the S&P at 2055 and I emailed all my Platinum Members to exit this position at 2058.50 and I am now flat. The last week has been very frustrating for me as having gotten stopped out of my short 2068.50 S&P position on Tuesday at the highs of the day at 2074 only to see the market drop 20 Handles yesterday. The same thing happened last Thursday as soon after I was stopped out the S&P fell 20 Handles on Monday when the S&P re-opened. As I mentioned yesterday the move higher on Monday’s close to Tuesday’s low had left a large 2047.50/2061 ‘Open Gap’ which was mostly filled yesterday with its 2053 low print. Yesterday’s sell-of has left a small ‘Open Gap’ from 2067.50 which was yesterday’s afternoon high to Tuesday’s close at 2072.50 and as you know all ‘Gaps’ get filled at some point. Today I will be a small buyer on any dip lower to 2046/2052 with a 2041 stop. Given the fact that we are in the seasonally strong time of the year I do not want to be short the S&P at this time.
EUR/USD
No change as I am still long at 1.0930 with the same 1.0890 stop. I will use any rally today to 1.0960 to exit this position and go flat.
March Dollar Index
No change as I am still a small seller on any rally higher to 98.70/99.00 with a 99.25 stop.
March DAX
As mentioned above the DAX traded lower to my 10695 buy level. I am still long and I will leave a 10640 stop on this position.
March FTSE
No change as I am still a small buyer on any dip lower to 6145/6170 with the same 6125 stop.
Dow Rolling Contract
The Dow also hit my buy level at 17600 and as mentioned above as I was long too many markets I cut my Dow position at 17630 as emailed earlier to my Platinum Members and I am now flat. Today I will again look to buy the Dow on any dip lower to 17490/17550 with a 17430 stop. I still do not want to be short the Dow at this time. Just as a note the US Equity Markets have a full trading day as normal while the the FTSE is on a half-day.
March BUND
The BUND is closed until Monday when normal trading resumes. I am still flat the market and I will certainly be looking to build a more macro short position on any decent rally over the coming weeks.
Gold Rolling Contract.
I am still flat Gold which came close to my buy level. As I am still long Silver I will lower my buy level in Gold to 1046/1054 with a 1039 stop.
Silver Rolling Contract
Soon after I posted yesterday I was stopped out of my long 14.27 Silver position at 13.80. Subsequently I bought Silver again at 13.81 as emailed to my Platinum Members. I am still long and I will leave a 13.45 stop on this position.
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