IIFT Daily Note with Peter Brown

Finally some ECB action.

Posted by:  |  Time: 7:53 am  |  Topic:
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Commentary:

Well it went as expected with a little added stimulus. Stock markets got their jump, Dax breaking 10,000 at one point. Really the US market did better. The confusing move was the Euro. After reacting normally and touching 1.3500 the market then put in a serious bear squeeze and we sit at 1.3660 this morning.

Hopefully you took heed of our hurricane warning and if you got caught you stuck to the 75 point max loss rule for hurricane markets.

I think the Euro will resume it’s downtrend soon now that the profit take has taken place. We need to get NFP out of the way first.

Today’s NFP has been overshadowed by the ECB but is still important. 218k is what is expected. A figure below 200 may cause a profit take in stocks as we are overbought now on the 4h charts, so all the risk is to a Friday correction. The bounce will be small on a 200+ number given the overbought position. So money to be made to the downside either with a bad figure or after a bounce from a good one.

Latest Trading Strategies.

  1. Dax Fade.

 

We have noticed that after the initial 8am market move the DAX is reversing that move on a consistence basis. Look to fade the initial market move either higher or lower after the first 15/30 minutes. Unlikely to work on days where there is a big story in the market (rarely at present) or where my condition call is Hurricane. Trade is worth 40/80 points.

  1. Dow/S&P Gap play from below.

The gap play has a high success rate when traded from a down gap. Look to set trades between 11.30am to 12.30pm. Be careful if there are major news releases in from the US at 1.30pm. Market may wait until then to start the move. If the gap close has not completed by 3.30pm square up.

 

Wall St (DFB)

Market powered to another new high yesterday. Traders are happy with the US outlook and the news from ECB was taken very positively in the US.Quiet ahead of the NFP but market looks too high and overbought. Market likely sets up for a sell for today..

 

Conditions:Hurricane Resistance: 16900 Support: 16820

 

 

S&P June Future

Very hard to get the technical levels as we have never been here before. We have been experiencing that problem all year. Again NFP the key…

 

Conditions:Hurricane Resistance: 1946 Support: 1936

 

 

DAX (DFB)

Performed well initially breaking the 10,000 level. Like the Euro it ran into profit take. The measures announced by Draghi are more positive for other countries than Germany. Tricky market to call other than our usual 8am trade which is working well..

 

Conditions:Choppy Resistance: 10020 Support: 9940

 

 

FTSE 100 (DFB)

UK market is a bit side-lined. Too much action elsewhere. 6800 held very well and looks good support. Questions over the pace of UK economy recovery is slowing the FTSE advance. Range bound for now..

 

Conditions:Calm Resistance: 6840 Support: 6800

 

 

EUR/USD (DFB)

The big question is the long term direction for the Euro. I am still in the down camp. The bear squeeze yesterday was a profit take. We have the risk of a poor NFP today which may be dollar negative so be careful. Otherwise next week we will probably re-setting shorts..

 

Conditions:Choppy Resistance: 1.3670 Support: 1.3600

 

 

USD/JPY (DFB)

Even with the NFP today I cannot see a dramatic move in this pair. The wide range is 103  101 and little strategic direction. Biggest reaction will come from a very bad figure (sub 180) that might cause some heavy selling.

 

Conditions:Choppy Resistance: 102.80 Support: 102.30

 

 

AUD/USD (DFB)

We broke upside resistance on the back of the Euro jump. China news expected over the weekend and a bank holiday on Monday, otherwise pretty directionless..

 

Conditions:Choppy Resistance: .9380 Support: .9300

 

 

GOLD (DFB)

Gold got a serious jump on the back of all the action. Lower interest rates are more cash in the banks makes Gold an attractive asset. Some good news for the metal finally. Going to be short lived I fear. No inflation prospects and little in the way of big market fears will keep gold soft.

 

Conditions:Choppy Resistance: 1260 Support: 1250

 

 

SILVER (DFB)

Support held in very well and we have a serious bounce. 1920 will be key and another spike in Gold will be needed for that level to break. Silver was too cheap and we will likely trade in a 1920  1900 range provide gold is steady..

 

Conditions:Calm Resistance: 1920 Support: 1900

 

 

Market Conditions

Potential Moves:

  • Calm = 20/50 pts
  • Choppy = 60/80 pts
  • Hurricane = 100+ pts

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