Yesterday after I posted markets were initially shaped by the decline in the Oil price, with the WTI Oil down towards $34 a barrel level with associated pressure on the oil linked currencies such as the CAD the NOK. WTI though recovered later in the session, closing up marginally for the session overall. The data that was released was very much second tier with the little-watched Chicago Fed National Activity Index under-clubbing expectations and Eurozone Consumer Confidence marginally less negative.
For anybody following my new Platinum Service it made 102 points yesterday and is now ahead by 1882 points for December. The previous six months saw gains of 1510, 1600, 2833, 2195, 1810 and 3045 points respectively. If anyone is interested in my Platinum Service please check out my Membership Link on the tradernoble.com website.
Spanish politics has been a watch point for markets since the weekend with the National Election not producing a clear majority for any one party and not an obvious Coalition likely to be formed, according to Spanish political commentators. The anti-austerity Podemos Party gained 69 of the 350 seats on offer. If a new Government can’t be formed within two months, new elections have to be held. It’s not been surprising then that Spanish Equity and Bond markets have under-performed at the start of week, the Madrid stock market leading Europe lower, down 3.62% and Spanish Bonds underperforming their Eurozone counterparts, by 6-8 bps for the 10 year tenor. So far however this has not inflicted any pain on the Euro which has made some gains against the USD since the start of the week.
The AUD has continued on pretty much where it left off yesterday with a slightly higher level against the background of somewhat firmer commodity prices on the day. The intraday recovery in WTI Oil came with higher LME base metal prices (copper up 1.13% and nickel up 1.43%), a 1.37% rise in the price of Gold to $1079.60 (up $14.60) and a further $0.36 rise in the spot price of Iron ore to $40.46/tonne.
Dennis Lockhart, President of the Atlanta Fed (a voter this year but not in 2016) did a radio interview with a local Atlanta station offering his view that “gradual” may mean rate rises at every other meeting. “… The rate of rising interest rates will be more like every other meeting. But the really important point is it’s going to depend on how the economy actually performs.” In short, it will be gradual and data dependent. The market is currently pricing in a near 50 (45%) chance of the first follow-up hike by the March 16 FOMC meeting, with the market expecting the Fed to hold steady at the January 27 meeting which will be the first FOMC Meeting of 2016.
This morning on the economic front we already had the release of German GFK Consumer Confidence which printed a reading of 9.4 versus 9.3 expected and this is helping the DAX to trade higher so far this morning. At 9.30 am we have UK Public Sector Net Borrowing and Public Finances. This is followed at 1.30 pm by US GDP where the consensus is for a 2.1% print similar to last month. At 2.00 pm we have the FHFA House Price Index. Finally at 3.00 pm we have Existing Home Sales and the Richmond Fed Manufacturing Index.
March S&P 500
Frustratingly the S&P just missed my 1993 buy level by less than 2 Handles yesterday afternoon which is annoying when you see the huge rally we had in the last hour of trading last night with the S&P trading at 2021 this morning and I am still flat. This move higher was signalled by the small change in the McClellan Oscillator on Friday which did not reflect the 367 point Dow fall with the MO improving yesterday to close with just a negative reading of -36. Yesterday seems to be finally the start of the Santa rally and I certainly would not be short ahead of the start of the new year from where I would expect the S&P to run into a lot of trouble. Today I will move my buy level higher to 2006/2012 with a 2001 stop. If I am taken long and subsequently stopped out of this position I will use my 5 Handle Rule to go long again with a stop below whatever new low is printed.
EUR/USD
The Euro having traded higher all day yesterday is trying to break down this morning. I am still flat and I will move my buy level slightly higher to 1.0820/1.0850 with a 1.0790 stop. I still do not want to be short the Euro at this time.
March Dollar Index
No change as I am still a seller on any rally higher to 99.20/99.50 with a 99.75 stop. Remember a break and close over 100.40/100.70 will be very positive and opens up the possibility of a move higher to at least 1.08 over the coming months.
March DAX
The volatility in the DAX is incredible with the DAX trading as high as 10800 after I posted before getting hit after lunch which saw the market trade as low as 10480. The sell-off in the DAX saw me go long at 10510 as indicated to my Platinum Members. Subsequently the DAX has traded to a 10638 high this morning which enabled me to cover this position at my 10550 T/P level and I am now flat. With the DAX closing tomorrow evening for the Christmas Holiday I would expect the market to mount some sort of rally ahead of year-end especially since the DAX is still over 700 points lower since the ECB Meeting on December 3rd. Today I will again look to buy the market in small size on any dip lower to 10420/10480 with a 10370 stop.
March FTSE
The FTSE plan also worked well with the market trading lower last evening to my 5980 level. The FTSE had a nice rally off this level with the market currently trading at 6030. Unfortunately given the fact that I was already long the DAX I cut my long position for a small gain at 5993 and I am now flat. Today I will again look to buy the market on any dip lower to 5965/5995 with a 5940 stop. I still do not want to be short the FTSE ahead of year-end.
Dow Rolling Contract
Hopefully you did better than me yesterday with the Dow missing my 17110 buy level by 1 point which is very frustrating when you see the huge rally that we had in the final hour of trading last night where the Dow is now 200 points higher. Today I will raise my buy level to 17150/17220 with a 17095 stop. I still do not want to be short the Dow at this time.
March BUND
The BUND plan also worked well yesterday with the BUND trading as high as 159.28 which enabled me to go short at 159.20. I have now covered this position at my 158.95 T/P level and I am now flat. Today I will again look to go short on any move higher to 159.45/159.75 with a 160.05 stop.
Gold Rolling Contract
I am still flat Gold and I will only raise my buy level slightly to 1058/1065 with a 1046 stop which is just below last week’s low print.
Silver Rolling Contract
My long 14.10 Silver position finally worked well yesterday as I covered this position at 14.32 and I am now flat. Today I will again look to buy Silver on any dip lower to 14.00/14.20 with a 13.65 stop.
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