Lots of interest yesterday whether ECB President Mario Draghi would throw more fuel onto the ECB stimulus expectation fire, schedule to speak at a BoE sponsored open forum on Financial Market Reform event in London. The event was focused on the regulatory and financial market mistakes of the past and efforts to clean up the sector and its regulation, with speakers including Bank of England Governor Mark Carney, the Chancellor of the Exchequer, bankers and academia. Draghi stuck to his reform script, speaking about the need for credible institutions as a counter balance for the freedom of operation. In thinly veiled references structural challenges faced by the Euro, he said that Countries can’t fully enjoy open markets without agreeing to some form of shared political control.
For anybody following my new Platinum Service it made 95 points yesterday and is now ahead by 575 points for November. The previous five months saw gains of 1600, 2833, 2195, 1810 and 3045 points respectively.
There was also an EU Summit in Malta on the European refugee crisis; both big issues for sure but not market moving. It was Veterans’ Day Holiday in the US, but markets were open.
On the FX front, there was some buying interest in Sterling over the past 24 hours, the best performing currency among the majors, benefiting from a further reduction in the UK Unemployment rate in September quarter to 5.3%. the lowest level since 2008 and comments from BoE Chief Economist Andy Haldane suggesting he is shifting his ground towards a steady-to-higher rates from a more open view on direction.
The AUD has continued to trade in familiar territory, opening this morning towards the higher end of its recent ranges, not hurt by yesterday’s Chinese trio of activity data suggesting growth of Australia’s largest trading partner has not stepped down in net terms in October. Industrial Production growth was a tenth softer however Retail Sales growth a tenth higher, a little more evidence of China’s economic transition to greater reliance on consumption.
Commodities have been mixed since I marked prices early yesterday morning. Base metal prices rose on the LME by 0.56%, Copper up 0.36%, Spot Iron ore prices in China inched back a little, +0.7% to $48.58/t. Oil however took another turn for the worse, WTI down 2.74% and Brent declining 3.37% ahead of EIA weekly stockpiles data this afternoon. Gold eased further, down 0.43% to $1083.60/oz.
This morning on the economic front we have German CPI at 7.00 am. This is followed at 10.00 am by Euro-Zone Industrial Production. At 1.30 pm we have the US Weekly Jobless Claims and the Canadian New Price House Index. At 3.00 pm we have the JOLTS Jobs Openings which as we all know at this stage is a huge favourite of Fed Chair Yellen. Finally at 7.00 pm we have the US Monthly Budget Statement.
This afternoon we have the potential for more Central Bank-focused comments with several Fed speakers including Bullard, Lacker, Evans, and Dudley along with BoE Chief Economist Andy Haldane, again. Fed Chair Yellen is speaking, though only giving welcoming remarks at a Fed Policy Conference so likely silent on the economy and policy.
December S&P 500
The S&P plan worked well yesterday as shortly after the US Markets opened the S&P traded lower to 2069.50 which enabled me to buy the market at my 2073 buy level. Subsequently the market had a nice rally to 2082 but unfortunately I covered my position too early at 2075 and I am now flat. The S&P had a weak finish as it gave up all its gains in the last 90 minutes of trading to close 0.2% lower while the VIX rose 4% to settle just below 16. Since the post FOMC rally the S&P had made a series of lower highs while at the same time the McClellan has closed deep in negative territory as the internals of the market continue to weaken. However with all the Central Bank manipulation I am reluctant to go short the S&P preferring instead to buy the dips which has worked so well so far in 2015. The next big support comes in at 2061/2066 and today I will be a buyer in this area with a 2056 stop.
EUR/USD
Just like the S&P above the buy the dips in the EUR/USD has also worked very well this year. Yesterday after Dragi spoke the Euro traded lower to my 1.0710 buy level before having a nice rally which enabled me to cover this position at my 1.0745 T/P level as outlined earlier to my Platinum Members and I am now flat. Today I will again look to buy the Euro on any dip lower to 1.0680/1.0720 with a 1.0645 stop. I still do not want to be short the Euro at this time.
December Dollar Index
No change as the Dollar continues to trade in a very narrow range. Today I will still look to buy any dip lower to 98.20/98.50 with a 97.90 stop. My only interest in selling the Dollar is still on a rally higher to 99.60/99.90 with the same 100.20 stop.
December DAX
The weak Euro is preventing the DAX from falling at this time. However I do not trust this Euro currency at all and today I will leave my buy level unchanged at 10710/10760 with a 10660 stop. However the price action is still telling me not to be short the DAX at this time.
December FTSE
The FTSE again just missed my sell level yesterday and I am still flat. The FTSE continues to struggle and I definitely believe that the strong currency is having an effect on this market just like the strong Dollar is hurting the earnings of the major Dow stocks. Today I will lower my sell level slightly to 6330/6360 with a 6385 stop.
Dow Rolling Contract
Frustratingly the Dow again missed my sell level before going on to have a nice 160 point sell-off and I am still flat. As I do not want to chase this market lower I will only lower my sell level slightly to 17800/17860 with a 17910 stop. I still do not want to be long the Dow at this stage.
December BUND
The BUND has grinded higher over the past few trading sessions and I am still flat. Today I will raise my buy level to 155.20/155.60 with a 154.90 stop. The price action continues to tell me not to be short the market at this time.
Gold Rolling Contract
Shortly after lunch Gold traded lower to my 1085 buy level. As I am already long Silver I have decided to cut my long position here at 1089 and go flat. Today I will again look to buy Gold on any to 1077/1083 with a 1072 stop.
Silver Rolling Contract
No change as I am still long Silver at 14.36 from early yesterday with the same 13.95 stop.
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