Despite the continuance of the big chill in North America stocks staged a rebound yesterday, as expected, ahead of the the ECB Meeting tomorrow and the Non Farm Payrolls on Friday. The US Indices ended the day up 0.65%, following on from gains seen earlier in Europe of between 0.37% for the FTSE to 2.93% for the IBEX. The US markets were helped by the smaller US Trade Deficit, reported yesterday, driven by a fall in oil import volumes which highlights the United States increasing self sufficiency in energy. This has many analysts lifting their tracking estimates for 4th Quarter GDP to around 3%. Despite this, US Treasury 10 Year Bond Yields ended the day down another 2 basis points to 2.94% versus 3% seen late last week.
Also well received has been Ireland’s well return to the Sovereign Bond market, selling €3.75 billion of 10 Year Bonds, which has seen other Euro-peripheral bond yields fall with Spain and Portugal lower by 9 basis points and 18 basis points respectively. This has supported the Euro in the face of mild downside surprises in the latest Euro-Zone HICP Inflation data with headline and core both 0.1% lower to 0.8% and 0.7% respectively.
This morning on the economic front we have the German Trade Balance and this is followed by the latest Euro-Zone Unemployment Rate and Retail Sales. At 1.30 pm we have the MBA Mortgage Applications and the ADP Employment change which will be closely watched for any clues ahead of Friday’s Non Farm Payrolls. At 7 pm the Fed will release its latest Minutes from Chairman Bernanke’s last FOMC Meeting at which the decision to start tapering was taken.
March S&P 500
The market rallied nicely yesterday, as expected, ahead of Friday’s Non Farm Payroll report but unfortunately it did so without me being able to get a long position on and I am still flat. As I mentioned yesterday, my only interest in shorting the market is on a rally to 1840/1844 with a 1847 stop and if the market rallies to my sell level I will only put on a small position. Today I will raise my buy level to 1822/1826 with a 1818 stop. If I am taken long and subsequently stopped out I will be a more aggressive buyer on any dip to 1800/1807 with a 1797 stop.
Euro/USD
The Euro worked well yesterday as it traded down to my 1.3600 buy level before having a nice rally enabling me to cover this position at 1.3630 and I am now flat. I still believe the Euro will trade a lot lower this year but not at the moment when we are trading near the bottom of the Bolliner Band which has again proved itself a useful buy signal. It will be interesting to see how the Euro reacts to tonight’s FOMC Minutes. Today I will be a small buyer on any dip to 1.3530/1.3560 with a 1.3510 stop. My only interest in selling the Euro at this time is on a rally to 1.3700/1.3730 with the same 1.3750 stop.
March DAX
My plan to avoid shorting the Dax at this time proved to be correct but unfortunately, just like the S&P, I was not been able to get long position on and I am still flat. The Dax closed at important resistance at the 9510 level last night and a break and close over this level tonight will be bullish and will probably lead to a retest of the recent highs. I still do not want to be short ahead of tomorrow’s ECB Meeting and today I will raise my buy level to 9440/9470 with a tight 9425 stop.
March FTSE
My long 6660 FTSE position finally worked out yesterday but I am disappointed the FTSE could not rally stronger given what is gone on with the other major indices, especially the European Bourses. For this reason I decided to cover my long position at 6710 and I am now flat. Today I will be a small buyer from 6660/6680 with a 6645 stop. The key level going forward is 6660 and a break and close below here will be bearish. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
After I posted yesterday morning the Dow tried the downside but unfortunately the market just missed my buy level before spending the rest of the day trading higher and I am still flat. I still do not want to be short the Dow ahead of this evening’s FOMC Minutes and especially ahead of Friday’s Non Farm Payroll Report. Today I will raise my buy level to 16450/16480 with a 16415 stop which is just below yesterday’s low.
March BUND
The Bund traded down to my 139.60 buy level shortly after I posted yesterday and I am still long. It then traded in a narrow range and today I will raise my stop to 139.45 which is just below yesterday’s low. I will also be a small seller on any rally to 139.95/140.20 with a 140.40 stop.
Gold Rolling Contract
I am still long Gold from Monday at 1225. Gold, having tested the key 1245 resistance level, then dropped to a low of 1224 before rallying into the close. Today I am going to lower my stop to 1217 in order to give this position some room.
Silver Rolling Contract
I am very disappointed with yesterday’s price action in Silver as literally just after I posted the market started to sell off. I am still long at 18.90 and I will leave my stop the same at 19.50. If I am stopped out of this position I will be a more aggressive buyer on any dip to 18.90/19.10 with a 18.50 stop.
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