Irish Institute of Financial Trading

We have a correction!

Peter Brown — Thu, 23 May 2013 06:23:08 +0000

In the end the correction was triggered by a BIT of indecision by Ben Bernanke on QE going forward. Not a big event but it seems the market was ready to profit take and re-evaluate the bull run. Amazingly the S&P went from R3 to S3 exactly in a day ( 400 points ). Overnight the Asian market got killed.

Our job as traders now, is to decide whether this is just a correction, which may last a week, or a deeper re-think on this buy anything feeding frenzy. One thing for sure do not dive straight in here and buy. There could be a further sell off to come.

The answer is I don’t know. I suspect the market players have been given a shock. The one way bet has suffered a dent. We still have the zero interest rate effect so the market will stabilise and be attractive. The market may get a little more selective as to where they buy so periphery markets like Spain , Italy may take a bigger hit. The fact is we need to wait and see. Certainly I do not expect the market to re-bound and forget the shock they have just received. So today will be volatile but I favour a sell on any bounce. This un-certainty should last a week or so and the level it will retrace to should be come clearer overtime.

Levels today are S&P 1659 1632 Euro 1.2900 1.2750 USD/JPY 103.25 100.50 (Getting killed as I write)

As I write the market is still getting hammered. Dangerous to be a buyer here.

Ben Bernanke today.QE ending? I doubt it.

Peter Brown — Wed, 22 May 2013 06:38:23 +0000

3.00pm is the big event today. The US have been pouring 85 bln Us dollars into their system every month. We know what it has done and a lot of commentators credit it with the recovery in the US economy. Is it about to be tapered off? I don’t think the timing is right or the economy is strong enough yet. Remember he said he would continue with QE until the unemployment rate reaches 6.5%, we are not there yet. However the market will be focused on what he says and any hint of policy going forward.

Expect a pretty quiet session ahead of 3pm.

Yesterday we reached another high on the S&P, same old same old. Dependending on Ben we may get a small pull back or a surge. Any tapering of QE will cause some small selling but remember if the Fed Chairman is willing to unwind support for the market it is because he feels the market is strong. This is good for stocks so any sell off well be short lived.

Levels today are: S&P 1675 1660 Euro 1.2940 1.2840

Metals rebound

Peter Brown — Tue, 21 May 2013 06:41:03 +0000

A good bounce in Silver and Gold. S&P puts in another new high and retreats. Dollar weakens a bit. Fed Evans comments ended the lastest rally last night but the big event will be Bernanke later this week. It is highly likely QE will continue for a long time and this market rally will also. 1670 was reached briefly and it is probable we will trade to that level again today. This market could be described as boring, same pattern everyday but for those buying this stock market on dips it is a printing machine.

Levels today are S&P 1670 1660 Euro 1.2900 1.2840

Dollar Strength and stocks

Peter Brown — Mon, 20 May 2013 05:39:33 +0000

Market dominated by a strong dollar. USD/JPY reached 103.25 and the Euro bottomed at 1.2800. Stock markets continued to rise S&P closing at 1665 on Friday. More of the same is in order for the start of this week.

1.2750 is the big support level on the Euro a break through there would signal a move toward 1.2350

No sign of a correction in stocks so buy on dips again.

Levels are Euro 1.2900 1.2800 1.2750

S&P 1665 1652

Looks like a quiet day

Peter Brown — Fri, 17 May 2013 06:34:01 +0000

No news and the markets fairly calm. Looks like a Friday off! Market this week has been nicely volatile but we faded out of making a new high yesterday on the S&P, so today we may go sideways.

Technical trading ahead for today. Levels are S&P 1660 1646 Euro 1.2900 1.2840 USD/JPY 102.7 101.80 Gold 1400 1325

Slow trading day ahead I feel.

Inflation data up this morning.

Peter Brown — Thu, 16 May 2013 06:41:35 +0000

Euro zone inflation up at 10.00 am. 1.2% expected. If this figure comes in below expectations we could see a sell off in the Euro. 1.2840 is the key level and a close below there will bring 1.2750 (the Cyprus low) into play.

Elsewhere we saw the usual rally on the S&P. Reaching 1660 before a slight profit take.

Yesterday morning we saw bad growth figures in the Euro zone but the market mostly ignored them. We are in a strange market. Rallies with no correction and bad figures being ignored! We have to live with what the markets are doing and although it does not make a lot of sense to many, fighting the trend is useless.

Elsewhere Gold looks very soft and has broken 1400, there is little reason to buy gold when Equities are charging.

USD/JPY 102.50 may be a short term top and we may get a correction to 100.50 area.

S&P levels 1660 1644 Euro 1.2900 1.2890 1.2840 support.

No growth in Europe.

Peter Brown — Wed, 15 May 2013 06:44:00 +0000

Releases this morning for German and French GDP are very poor. The Euro area is close to returning to recession. The Euro is lower but stock markets are not. This is a result of the cash dynamic we have discussed all year. People are reluctant to sell equity markets because of the excees of cash available in the global market. Yesterday we saw another high in the S&P 1650.

The market is very relaxed about this data. And is hoping for a return to growth in the second half of the year.

We may see a small sell off this morning but not a major reaction to these figures as we would normally expect. The pattern has been for Europe to be negative and the US to bounce.

So we are still on the buy on dips strategy. Worked great yesterday.

Levels today are S&P 1633 1650 Euro 1.2940/50 is now a top 1.2900 support 1.2750 is the target.

Gold may find support at 1400/1410 USD/JPY looks a bit toppish at 102.50

Another new high.

Peter Brown — Tue, 14 May 2013 06:31:04 +0000

Same again in the markets yesterday. Most products trading sideways and the US making a new high. Market is trading slower but the fundamentals remain the same. Today we have had German CPI, as expected and no surprise there. We are facing a day of range trading and probably a buy on any dip in the S&P.

It is important to understand when the markets are not offering major profit opportunities and now is such a time. Outside taking 20/30 points jobbing the only other opportunity is buying the dips on the S&P. Same again today.

Levels are Euro 1.3040 1.2940 major support. S&P 1620 support 1635 on the topside but not major.

Dollar strength, equities look tired.

Peter Brown — Mon, 13 May 2013 06:31:06 +0000

Dollar is still strong this morning, Euro at 1.2975 USD/JPY at 107.75. Equity markets however seem to have stalled a little. We are now well into May and the confidence to drive this market higher is fading slightly. We may be in for some side ways trading on the equity markets for a while. We lack any decent economic stats toady with only Retail sales at 1.30pm set to add any direction.

Concerns that the single banking supervisory will require a treaty change may soften Euroepen equity markets this morning.

All in all not a lot to go for early in the week. Range trading and few serious profit opportunities.

Levels are S&P 1630 1622 Euro 1.3060 1.2940 Gold 1485 1425 USD/JPY 102.15 101.20

Dollar Strength abounds

Peter Brown — Fri, 10 May 2013 06:34:39 +0000

Good jobs figures and a surge in the dollar have dominated overnight trading. USD/JPY finally put to bed the 100 resistance level. The economic releases in the US of late will bring back discussions on ending QE. This should cause the stock market to pause and put some serious strength back into the USD.

Trading should be interesting today, expect some profit taking in Euro and USD/JPY but the medium trend is clear. 105 then 110 for the pair. Moves as always will be fitfull and pullbacks will be large. 100 should be solid support so buy on dips

Euro 1.3000 1.2980 are major support 1.3100 is a sell level. S&P 1630 1620 S&P may find it difficult to find new highs against this backdrop. Be careful on that one today. If it starts to sell off in US time the correction may be substantial. I don’t think the trend it over but being a Friday we may see a profit take.