S&P closes above 2000, Euro slips

There is no point fighting the market that is in front of you.

So if traders want to buy, buy, buy on the back of free money and ECB QE then no point trying to sell into the move unless or until you get a signal. That is what we have seen in both Euro and Sterling over the past few months, what we saw in gold a couple of years back and what we will eventually see in the S&P, Dow and other global stocks.

When or from where it is almost impossible to know but it will happen eventually.

So you either ride the tiger or like me – just wait for the signal.



Key to the performance – if you are a technician – is that this has been a bull market since 2012 and hasn’t changed yet.

So at the end of play last night the S&P 500 closed over 2000 for the first time ever – just. Settling at 2000.02 after a new intraday high of 2005.04 stocks were buoyed by both more ebullience from European stocks markets on the prospect of QE from the ECB together with some solid US economic data. The the Dow was up 0.18% to 17,107 and the Nasdaq up 0.3% to 4,571.

On the data front durable goods order surged 22.6% in July largely on the back of some large Boeing orders but non-defence capital goods were actually down 0.5%. The Case Shiller house price index was 0.2% with all cities lower than the previous months annual rate for the first time since 2008. But it was the huge jump in the Conference Board’s consumer confidence index to 92.4 this month which was the big news. This is the best result since October 2007 just after the collapse of Lehman Brothers.

In Europe its all about free money and ECB QE. The FTSE rose 0.7% to 6,823, the DAX was 0.82% higher to 9,588 while the CAC was up 1.17% to 4,393. In Milan and Madrid stocks rose 1.33% and 1.28% respectively.

Locally in overnight futures trade the SPI 200 September contract was up 8 points to 5605. The miners will have a little bit of relief given iron ore lifted 29 cents a tonne overnight to $89.54 but the price action on the local market hasn’t been very constructive the past couple of days so the outlook is a little uncertain.


Mmmm – SPI 200 not exactly strong

In Asia yesterday it was a poor day for stocks with the Nikkei down 0.59% to 15,521, the Hang Seng off 0.37% to 25,075 while stocks in Shanghai are perilously close to big break of 2200 with a fall of 1% yesterday to 2,207.

On currency markets the focus on QE is keeping the Euro under pressure with the brief foray above 1.32 giving way for weakness once again and the Euro is sitting at 1.31675. USDJPY is at 104.06, Sterling is at 1.6540 and the Aussie remains becalmed at 0.9306.


Slip sliding away….Slip Sliding awaaaay

On commodity markets iron ore lifted a little as noted above. Newcastle September coal was up 35 cents to $70 a tonne. Nymex crude was up 45 cents a barrel to $93.80 while gold is at $1279 and silver is $19.41 an ounce. Copper is at $3.20 as its recent strength persists. On the Ags soybeans are still ripping higher up 2.62% while corn rose 0.9% and wheat fell 0.18%.

On the data front we get construction work done in Australia today before the Gfk consumer confidence and trade data in Germany. In the US its quiet with only the MBA mortgage applications out tonight.

Greg McKenna

NB: Please note all references to rates above are approximate

To learn more about Greg McKenna, read on here.