IIFT Daily Note with Peter Brown

Time to pause.

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Well we had our big week and the news was more or less as expected. Draghi’s programme and rate cuts and the NFP slightly better than expected. It is time to take a look at these markets and review where we go from here.

Firstly the US stock markets which are punching new highs all the time. This market as we know is well supported by the medium growth in the US economy but mainly by the low interest rate argument. The market is overbought on the 4h charts and at these levels I am getting a bit nervous. We have not had any type of correction in some time. Until the overbought situation works out of the system I will not buy this market. I am looking for signs of a dip. Market will probably be very quiet today with no news expected and after the volatility of last week. It might be time to sit back and watch for a while.

On the Euro we are stuck mid-range at 1.3650. Draghi will drive it lower medium term however the bears are slightly stung by the bounce from 1.3500 and wary we may bounce to 1.3800. Certainly I want to sell but will sit back to see how this plays out first. It will take a while for a pattern to emerge and in the meantime I will be doing a bit of jobbing.

Latest Trading Strategies.

  1. Dax Fade.

This trade is working really well, mainly because there is no big news story to make the first DAX move a big one. Some days the trade is only worth 20/50 points but it is happening frequently. Good way to make money in a quiet market.

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.

A downside gap occurs when we have bad news in Asia or Europe so we are not getting many at present. However if one does present itself the chances of success are very high.

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 well supported but overbought. We need some sideways trading or a correction. No news today so expect the market to be quiet..


Conditions:Calm Resistance: 16960 Support: 16900



S&P June Future

Unless we get news from left field I cannot see a busy day..


Conditions:calm Resistance: 1950 Support: 1945




10,020 is proving major resistance. Higher is looking a bridge too far for a while. Expect a quiet day and narrow trading range..


Conditions:Calm Resistance: 10020 Support: 9980



FTSE 100 (DFB)

Market was very strong last week and benefited from the rallies in stocks elsewhere. Draghi’s stimulus programme will benefit the UK and the zero interest rates will bring flows to the UK. We are close to all-time highs at 6900 which I think will be breached in time. However I am going for a quiet start to the week and the below range should hold..


Conditions:Calm Resistance: 6880 Support: 6840




Foot on the ball! Need to see which way this market breaks below 1.36 or above 1.37.Longer term we know the direction is lower but for now it is a jobbing strategy.


Conditions:Calm Resistance: 1.3675 Support: 1.3620




Dollar neutral and nowhere can we see that better than in this pair. Totally range bound for the present.


Conditions:Calm Resistance: 102.80 Support: 102.30




Outlook for Asia and the Australian economy is improving. We have been in a tight range on the Aussie for some time. This .9380 has held on the topside but is now under pressure. A break above could signal am appreciation back to par. Holiday in Aussie today but worth watching…


Conditions:Calm Resistance: .9380 Support: .9300




This support at 1240/35 is holding and the announcements from the ECB means more cash, lower rates, an outlook which is good for gold. Good bounce last week and will be interesting if we get a follow through. Certainly this is worth a buy in and around 1240.


Conditions:Choppy Resistance: 1260 Support: 1240




Support held in very well and we have had a serious bounce. 1920 is 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 – 1880 range provide gold is steady..


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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