The closure of US markets as Hurricane Sandy ripped along the Eastern Seaboard leaving a trial of destruction, and tragically numerous fatalities, in its wake has failed to prevent a decent rally in European Equity markets and a weaker US Dollar. New York City produces US$3.5billion in output per day and the cost of the storm looks like beating the huge $100billion cost of Hurricane Katrina which devastated New Orleans. This would represent about 0.7% of annual US GDP, most of which will fall in Q4 2012. Of course 2013 will benefit economically from reconstruction, repairs and replacement of damaged property which will boost GDP. Apart from 9/11 it is the first time in its history the NYSE was closed for two days in a row and is scheduled to reopen today.
Meanwhile European stocks rose, despite some poor economic data, as a result of good corporate results from Bayer and BP. The Bank of Japan eased monetary policy further, yesterday, adding 11 trillion Yen to its QE programme.
This morning on the economic front we have CPI and Unemployment for the Euro-Zone and later in the US, at the earlier time of 12.30pm, we have US ADP Employment No’s followed by NAPM and Chicago Purchasing Managers Survey.
Dec S&P 500
As the cash market was closed again yesterday the futures markets were only open
for a short time and the market just missed my buy and sell levels by one handle. This morning the market is a lot higher and as it is month end, coupled with the huge reconstruction prospects following the hurricane and I do not want to be short unless we close the Gap back to 1431 first. So today I will look to buy on any dip to 1408/1412 with a 1404 stop however if the Gap closes I will go short from 1425/1430 with a 1433 stop.
Dec DAX
Shortly after I posted yesterday the Dax dropped down to my 7250 buy level and I took profit last night before the close at 7290 and I am now flat. Similar to the S&P I do not want to be short the market today due to month end and as I believe the US Market will rally strongly today. This morning I will look to buy a dip from 7300/7325 with a 7280 stop.
Dec BUND
I am still short from 141.70 and I am surprised the Bund is not lower this morning. I will lower my stop to breakeven and I will also look to take profit on any dip to 141.00/141.20.
Dec FTSE
The FTSE just missed my 5770 buy level with a 5782 low and is following the other markets higher this morning. I will raise my buy level to 5800/5825 with a 5780 stop which is just below yesterdays low.
Gold – Rolling Contract
No change from yesterday and I am not going to chase the market higher. I will leave my buy level the same at 1698/1703 with a 1678 stop.
Euro/USD
Unfortunately I have had the correct view on the Euro but I got stopped out the last two times that I bought the market. The Euro is well supported on the downside from 1.2780/1.2880 and we briefly broke into this range before trading higher yesterday and today. I am still convinced we will have a test of the 1.3250/1.3400 area before the Euro comes under pressure and today I will look to go long from 1.2950/1.2980 with a stop at 1.2930.
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