IIFT Daily Note with Peter Brown

No growth in the US?

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Commentary:

Yesterday US GDP came in lower than expected. Despite all the QE and FED support for the market over the last 5 years the US economy is growing but not a lot. Oh dear. Just as the ECB is to embark on a similar course, we see the minimal outcome achieved in the US. Also some warnings in Asia that QE will not work there either. This will leave us with a low interest rate environment for many years to come.

Good for stocks and we saw a small rally after the GDP release. Bad for the dollar though, as the expected strength is some way off. Stocks are Teflon in this environment and again any dips are just a buying opportunity. FX a little more confused and Gold will sell off to the 1180 support probably.

Today not much on the calendar so another attach on 1.3600 on the Euro and stocks range bound around the highs.

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.

  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)

Sideways this morning but will probably put in a rally this afternoon. Value is to wait for a small dip towards 16620. Should stay within recent trading ranges. We have had a good run this week so expect some sideways trading…

 

Conditions: Choppy Resistance: 16720 Support: 16620

 

 

S&P June Future

Outperforming Wall St slightly. Pushing new highs all the time. I expect a quieter day today as the market takes a well-earned rest. Tops will probably hold..

 

Conditions: Choppy Resistance: 1920 Support: 1910

 

 

DAX (DFB)

Same levels as yesterday. Our DAX strategy is really performing well. Four out of four this week. Looking for that trade again at 8am. Some small news in the Eurozone this morning but nothing to get excited about..

 

Conditions: Choppy Resistance: 9970 Support: 9900

 

 

FTSE 100 (DFB)

The market is performing if only slowly. UK economy is standing out as the best performer. FTSE is putting on weight but the moves are very slow. Well supported market, near-term target is 6900.

 

Conditions: Calm Resistance: 6880 Support: 6860

 

 

EUR/USD (DFB)

Euro would be a lot lower but for the weak dollar. I was amazed yesterday with the dollar so weak the Euro cannot rally. We may not reach our 1.3450 target by next week as the dollar will remain offered. But 1.3630 should hold on the upside. Trade going to be very slow ahead of ECB next week..

 

Conditions: Calm Resistance: 1.3630 Support: 1.3580

 

 

USD/JPY (DFB)

Dollar just cannot get a decent rally. GDP hit this pair hard. 102 looks a journey too far for the present. Support is major at 101.40,  further down 100.80 Weakness to continue..

 

Conditions: Calm Resistance: 102.00 Support: 101.40

 

 

AUD/USD (DFB)

Aud got a big bounce from the weak dollar. We are in a wide strategic range on this pair, .9380  .9200 huge resistance and support in this area. Nothing in the middle is worth a trade..

 

Conditions: Choppy Resistance: .9380 Support: .9200

 

 

GOLD (DFB)

There is just no reason to buy Gold. Low growth ,no inflation, and the Chinese have stopped buying. This product is in a strategic correction. Likely to 1180 over time. Gold needs some bad news to get some support..

 

Conditions: Choppy Resistance: 1260 Support: 1250

 

 

SILVER (DFB)

Very similar story, however this area around 1900 to 1880 is good support. Silver may slow it’s decline before gold does so watch for that. A summer bounce will be in play here also.

 

Conditions: Calm Resistance: 1920 Support: 1880

 

 

Market Conditions

Potential Moves:

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

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