IIFT Daily Note with Peter Brown

US GDP the key today.

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Commentary:

A pretty quiet day yesterday. Market took the opportunity to trade sideways to slightly lower. The overbought position on some indices limited further gains. Today we have growth figures in Spain but most importantly the US. We need good results to keep the rally going. 1.30pm will be the key to sentiment for the rest of the week. Next week we are in for a serious few sessions, Draghi and NFP will ensure that. Presently however this market is going nowhere on the downside so still a buy on any dip.

Euro is behaving as predicted, sliding lower into next week ECB press conference. Yesterday we broke 1.3600 for the first time despite USD/JPY being lower. Simple trade this, even if it is a slow 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.

  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)

Market took a rest yesterday. Today the action will be around GDP at 1.30pm a good figure will reassure investors that the market is not overvalued from recent rallies. A figure that disappoints should lead to a small correction..

 

Conditions: Choppy Resistance: 16720 Support: 16620

 

 

S&P June Future

As above. In the absence of earning figures these two indices move hand in hand.

 

Conditions: Choppy Resistance: 1914 Support: 1904

 

 

DAX (DFB)

Big event for the DAX will be next week. France has a hole in it’s budget figures and indeed the French situation is very worrying. So far the market has chosen to ignore any bad news. This morning the trading range should be tight. Our DAX trade strategy has worked every day this week and expect the same this morning.

 

Conditions: Choppy Resistance: 9970 Support: 9900

 

 

FTSE 100 (DFB)

The news from Carney is that rates will rise sooner than expected. This is why the FTSE is dragging compared to other indices. Tight trading ranges expected with small reaction to other index moves.

 

Conditions: Calm Resistance: 6860 Support: 6825

 

 

EUR/USD (DFB)

Simple trade, sell all rallies ahead of the ECB next week. Despite the USD/JPY falling yesterday this pair broke 1.3600. Should continue declines today towards 1.3575 support. Hard for the bulls to rally the Euro with the market convinced Draghi will ease. Still feel 1.3450 may get hit before the meeting.

 

Conditions: Calm Resistance: 1.3630 Support: 1.3550

 

 

USD/JPY (DFB)

Some JPY buying overnight but expect the tight trading ranges to hold. Will be impacted by US GDP figures at 1.30pm.

 

Conditions: Calm Resistance: 102.00 Support: 101.50

 

 

AUD/USD (DFB)

Figures released overnight were mixed. However .9200 is major support and once that held there was a bounce which turned into a stop run to .9300. AUD is in decline but is volatile. We should slip back to major support at .9200 over time.

 

Conditions: Choppy Resistance: .9300 Support: .9200

 

 

GOLD (DFB)

The stunning correction in Gold continues. While markets are calm and the geopolitical tensions are under control, the need to buy Gold diminishes. We are in correction phase and the next major support is at 1230. Gold has a tendency to rally over the summer months so we are sitting back for this move but it is setting up for a long trade soon.

 

Conditions: Choppy Resistance: 1275 Support: 1230

 

 

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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