IIFT Daily Note with Peter Brown

Sideways trading expected.

Posted by:  |  Time: 7:44 am  |  Topic:  |  Comments: 3
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Commentary:

WE could be in for a couple of days of sideways trading ahead of the big events on Thursday. Today we have CPI and unemployment in Europe and Chain store sales and factory orders in the US. There will have to be a big miss on any of these figures to stir the market.

So range trading is the most likely outcome ahead of Draghi. Unrest in Spain is a sign of how important the announcement is. Europe is fed up with austerity and a new stimulus model is need. Do the politicians get it? We will see.

So sideways trading today with a slight slide on the Euro.

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 1.3550 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)

Market traded in a narrow range for the past few days. Market is very comfortable at these year highs. Expect the market to be fairly calm and range bound..

 

Conditions: Calm Resistance: 16750 Support: 16680

 

 

S&P June Future

Market has broken the 1900 level and is stabilizing. Good support and little to suggest that the market is not comfortable at these levels.

 

Conditions: Calm Resistance: 1925 Support: 1917

 

 

DAX (DFB)

Market is poised ahead of Thursday. News of a stimulus programme from Draghi, either now or in the future will be very supportive of the DAX. 10,000 looms might go Thursday..

 

Conditions: Calm Resistance: 10,000 Support: 9930

 

 

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: 6850

 

 

EUR/USD (DFB)

We had a bounce Friday to 1.3640 but have sold off since. Currently at 1.3600, much higher than I would have thought this close to the ECB. The big driver has been the dollar weakness effect in this pair. Still a sell ahead of the 12.45PM announcement..

 

Conditions: Calm Resistance: 1.3630 Support: 1.3580

 

 

USD/JPY (DFB)

Bit of dollar strength and we are back to 102.50. Frankly this pair is directionless and 101.5 support and 102.50 resistance should hold…

 

Conditions: Calm Resistance: 102.50 Support: 102.00

 

 

AUD/USD (DFB)

We can close the range to .9320 on the top side. .9200 still serious support. Policy announcements causing the volatility but the range still holds. This market is for the medium term strategic traders at present. Trades take a few days to play.

 

Conditions: Choppy Resistance: .9320 Support: .9200

 

 

GOLD (DFB)

There is just no reason to buy Gold. Low growth ,no inflation, and the Chinese have stopped buying. We have reached the first major support at 1235/40. This level may hold for some time. However we need some good news for gold to avoid a slip to 1180.

 

Conditions: Choppy Resistance: 1260 Support: 1235

 

 

SILVER (DFB)

Very similar story, and hard to differentiate the two. The big support in sliver is at 1865. We have not been below that level since 2010. However unless Gold can find some feet these levels will go. There is just not enough risk appetite in the market at present.

 

Conditions: Calm Resistance: 1880 Support: 1865

 

 

Market Conditions

Potential Moves:

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

3 Comments

Myles O'Reilly

June 3, 2014

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Good morning Peter. Hope all well

With regard to “Dow/S&P Gap play from below.” Do you have a minimum Downward gap in mind when looking to trade this?

Cheers
Myles

Peter Brown

June 3, 2014

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Hi Myles,

70+ points as a minimum.
30 at the moment so no gap today

Regards

Peter

Myles O'Reilly

June 3, 2014

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Cheers Peter