President Obama has been reelected for another four year term but as this commentary goes out it is unclear if he has won the popular vote. The US Senate will be controlled by the Democrats and the House Of Representatives will be controlled by the Republicans who garnered a large majority which is pretty much status quo. The divisive nature of US politics will likely continue with the next worry for the markets being the Fiscal Cliff. The news is good for Bernanke and his aggressive monetary policies which could be interpreted as positive for the markets short-term. Meanwhile in Europe the markets are waiting for the Greek austerity package to be passed. Spain is also a concern with Prime Minister Rajoy saying he is in no hurry, not ruling out an ECB rescue but noting that Bond spreads have already fallen and it make no sense to seek a rescue if spreads stay the same.
On the economic news front we have Retail Sales from the Euro-Zone and Industrial Production from Germany and later Dragi is speaking in Frankfurt. All eyes will then be on the US to see what the markets reaction to the election results and we will get a good indication of this when the the stock market opens at 2.30pm.
Dec S&P 500
The futures markets have taken the re-election of Obama in a positive manner and we are now back to the top of the 1394/1430 range that has held the markets for the last two weeks. As I have been saying a closing break of one these levels should result in a large move. This morning I will look to sell the S&P from 1430/1434 with a tight 1438 stop. I will also look to go long on any dip to 1417/1422 with a wider 1410 stop which is just below the overnight low.
Euro/USD
I kept my long Euro position into the election on the back of the very strong finish to the commodity markets yesterday. It just shows the importance of Bollinger Bands and the Williams Index and I was able to take a nice gain at 1.2870 on my 1.2795 long from Monday and I am now flat. I still like the Euro and I will look to reset my long position from 1.2790/1.2820 with a 1.2760 low which is just below the low made yesterday morning. I do not want to be short at this time as I still feel the market will have at least one test of the 1.3250/1.3400 area before the US Dollar starts to strengthen.
Dec BUND
The Bund has not moved in the last 24 hours and this morning I will look to rest my short position from 142.20/142.40 with a 142.60 stop.
Gold – Rolling Contract
Frustrating as I get stopped out of Gold at 1678 and we are now 45 Dollars higher. It just show the importance, especially in commodities to trade in much smaller size with a wider stop. This morning I will look to buy the market from 1700/1715 with a 1688 stop.
USD/JPY
This currency pair has been quite volatile since yesterday and this morning I will look to reset my long position from 7990/8010 with a 7975 stop.
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