IIFT Daily Note with Peter Brown

Market rallies despite the elections.

Posted by:  |  Time: 8:00 am  |  Topic:  |  Comments: 3
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Commentary:

Despite the holidays market made gains again yesterday. We are now at all-time highs on the S&P and frankly this market looks set to rise further. We may be a little high this morning but there seems little to stop this bull-run. Consumer confidence out in Italy and France this morning but the main event is Draghi speaking at 2.30pm. That should be interesting as we will get his reaction to the European elections and hopefully a hint of stimulus. Euro should be the big mover here.

Little reaction from the elections which I find amazing. Though we would have a few jitters on the Euro bond markets. Market maybe sleep walking to a bath there long term.

 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. Gold Range Trade.

Buy Gold below 1288, sell above 1304, use 5 point stops and cut all trades at 1296. If Gold maintains a directionless path over the summer this trade will pay handsomely.

  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.

  1. EUR/USD sell.

Market is in a strategic down move. Initial target is 1.3450 but may be lower when Draghi speaks in June. Use bigger stops on this trade as it is silly to get stopped out on small bounces. Tech. levels are very sticky so use them for stops and cash in points.

 

 

Wall St (DFB)

A bit high first thing but definitely a buy on dips.

 

Conditions: Choppy Resistance: 16680 Support: 16600

 

 

S&P June Future

As above, currently at all-time highs. So a little correction early on but should rise this afternoon

 

Conditions: Choppy Resistance: 1906 Support: 1900

 

 

DAX (DFB)

Incredible rally in the DAX. Close to 9900 and now 10,000 is in sight. Any stimulus talk from Draghi will be very positive for the DAX

 

Conditions: Choppy Resistance: 9925 Support: 9850

 

 

FTSE 100 (DFB)

The FTSE is underperforming other markets. Probably because the UK is closer to the raising interest rates and this is taking some steam from the stocks. Still in an uptrend but slower than other markets.

 

Conditions: Calm Resistance: 6855 Support: 6825

 

 

EUR/USD (DFB)

Long term downtrend. Draghi speech the key to the next leg. Sell on any rally.

 

Conditions: Choppy Resistance: 1.3700 Support: 1.3600

 

 

USD/JPY (DFB)

Found support at lower levels (100.80) Dollar now looks a bit better supported. The leading indicator for stocks moves. Dollar and stocks are moving in the same direction.

 

Conditions: Calm Resistance: 102.05 Support: 101.75

 

 

AUD/USD (DFB)

On the latest leg down we have very strong support at .9220 Market is volatile and bounces can be large. But down trend should continue if dollar remains bid.

 

Conditions: Calm Resistance: ..9280 Support: .9220

 

 

GOLD (DFB)

Interesting sell off in Gold overnight. This will test our strategy to buy on dips and sell on rallies. Gold may reach 1277 on an outside move but I see it bouncing back into the 1300  1209 range .

 

Conditions: Choppy Resistance: 1305 Support: 1285

 

 

SILVER (DFB)

Good support at 19.25 should hold if gold finds support.

 

Conditions: Calm Resistance: 19.50 Support: 19.25

 

3 Comments

Herbie

May 27, 2014

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Peter, I almost took profits yesterday evening when the EUR/USD fell to 13643 level, and if I followed with another sale(limit order for the 13660 level based on the 15:12 levels of 22 May(although this was a bit masked by the movements around it)) I could have made quite a lot by early this morning. Do you think this would have been a good strategy? Are there any pointers for later today something like… “if the levels reach ???.?? during Draghi’s speech, then…. ” ?

Peter Brown

May 27, 2014

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Hi Herbie,

Draghi speaks at 2.30pm.
Market may be volatile around then.
If he mentions stimulus market will fall to 1.3600
There is a chance of a bounce to 1.3675 if he disappoints.

Your call on that one

Peter

brendan maher

May 27, 2014

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Great new update – I like the format and detail. Very positive.

Thanks

Brenda