US Equity markets have been beating a retreat, the US Dollar is gave back some of its recent gains and Treasury Yields are mostly lower. These moves are fully consistent with position trimming/risk reduction ahead of this week’s key US economic releases which are seen as having a major bearing on whether or not the FOMC decide to announce an initial tapering of its $85billion monthly QE Bond purchasing programme as early as December 18. Certainly there was no news yesterday to drive the price action as the New York ISM showed a decent gain at 69.5 against 59.3 last month.
There was not much news out of Europe except for a strong UK Construction PMI which helped keep Sterling aloft. This news did not help European Equities with the FTSE, Dax and CAC loosing 1%,1.9% and 2.6% respectively. Overnight the big move was the Australian Dollar which fell another 1% to .9030 versus the US Dollar and is now down over 8% in the last three weeks.
Today is a very busy day for economic data. This morning we have UK and Euro-Zone PMI Services. This is followed by Euro-Zone GDP. At 1.30 pm we have the latest ADP Employment Change which will be closely watched as a pointer to Friday’s Non Farm Payroll Number. The US also releases its latest Trade Numbers, New Home Sales and the ISM Non Manufacturing Composite. At 7 pm the Fedaral Reserve will release its Beige Book.
December S&P 500
The S&P lost another 0.6% yesterday, closing down for the third day in a row as nervousness returns ahead of Friday’s Non Farm Payroll data.The market was heavy all day resulting in it being unable to get anything going on the upside despite some valiant efforts. Shortly after Chicago opened the S&P traded down to my 1793 buy level and after a small rally I was able to cover this position at 1798 and I am now flat. The S&P subsequently traded down to find support at 1787/1788. Today I will be a small buyer from 1786/1790 with a 1784 stop while I will leave my sell level the same at 1806/1810 with a 1815 stop as I do not want to chase this market lower ahead of the Beige Book release later this evening.
Euro/USD
My long Euro position at 1.3535 from Monday worked well as shortly after I posted the market rallied and I was able to cover this position at 1.3575. It continued to rally and traded higher to my 1.3595 sell level. I am still short and I will leave my stop the same at 1.3625. I will still be a small buyer on any dip to 1.3520/1.3540 with a 1.3495 stop.
December DAX
Finally, after weeks of gains, the Dax fell over 200 points from high to low yesterday. Shortly before I posted my commentary it started its sell-off and thankfully I had no buy levels for the market. My short Dax/long FTSE taken at 2818 yesterday morning worked really well and I was able to cover half of this position at 2725 and I will leave a 2750 stop on the other half as I look for this spread to narrow to at least 2500. The Dax found good support at 9200 and today I will be a small buyer on any dip to 9190/9220 with a 9170 stop. I will also be a small seller on any rally to 9300/9330 with a 9350 stop.
December FTSE
As soon as I posted yesterday morning the FTSE was in my buy level and I went long at 6532. The FTSE is still at the bottom of the Bollinger Band but the Williams Index has started to turn up. I will raise my stop to 6605 on this position which is is just below yesterday’s low. I do not want to be short the FTSE at this time.
Dow Rolling Contract
After what seemed liked weeks of frustration trying to trade the Dow, my latest short position taken against the 13 year trendline outlined over the last week has certainly worked out very well. Having covered half my 16140 short position at 16040 on Monday I will lower my stop to 15950 on the other half as I look to be flat ahead of Friday’s Non Farm Payroll data.
December BUND
Shortly after I posted yesterday morning the Bund started to rally and I was able to cover my 141.10 long position at 141.35 and I am now flat. The Bund has traded heavy over the last few days and today my only interest in buying the market is on a dip to 140.30/140.60 with a wider 139.95 stop.
Gold Rolling Contract
No change as I am still a buyer on any dip to 1198/1212 with the same wider stop at 1178. Remember the 1180/1200 is key support for Gold and a break and close below 1180 will be very bearish and could lead to an acceleration lower.
Silver Rolling Contract
I am still long in small size at 19.25. Silver is trading at the bottom of the Bollinger Band and Williams Index and even the RSI is getting oversold here but despite all these indicators Silver is struggling to rally. I dont normally move a stop but as I only have a small position I am going to lower my 18.85 stop to 18.50 to give this trade some room to breathe.
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