Moves in Oil prices remain the main driver for markets amid a decline in trading volumes ahead of the Christmas holiday break. US and European equity markets traded in a sideways pattern yesterday before the US Markets again rallied in the last hour of trading to close higher by 1%, while OIL prices stabilised following the spike higher seen in the previous day.
Please note that this is my last Daily Report until next Tuesday as all European Markets are closed tomorrow while London and New York markets are only open for a half day. Finally I would like to wish everyone and their families a Happy and peaceful Christmas.
For anybody following my New Platinum Service it made 170 points yesterday and is now ahead by 2052 points for December. If anyone is interested in my Platinum Service please check out the Membership Link on my tradernoble.com website.
The resource-heavy FTSE100 index was the outperformer of the European Markets closing up 0.8% and following the inconclusive election results over the weekend, Spain’s IBEX35 rose 0.5% marginally offsetting the 3.5% loss from the previous day.
The stabilisation in Oil prices also benefited commodity related currencies while mixed US data releases (see details below) marginally weighed on the USD. Over the past 24 hrs, the NOK has been one of the strongest performers, up 0.88% while the NZD and AUD have also outperformed, up 0.65% and 0.54% respectively. Out of the G10 currencies, the GBP was the only underperformer against the USD, down 0.5%, following worse than expected UK Public Finances. UK Public Sector Borrowing rose 10% in November to £14.2bn, casting doubts over the Chancellor’s ability to meet his forecast for this financial year.
Core global Bond Yields drifted higher yesterday amid a decline in safe haven asset demand with UK gilts the underperformers given the prospect of an increase in issuance. 10y UK Gilt yields rose 5.9bps to 1.88% while US Treasury yields rose in a bear steepening fashion. 2y UST yields gain 2.7bps to 0.971% and 10y ticked 4bps higher to 2.237%.
As for data releases, Germany’s GFK Consumer Confidence Index rose to 9.4 from 9.3 previously, ending four consecutive months of decline. Germany’s consumer confidence was boosted by stronger economic and income expectations.
In the US, data showed that in Q3 the economy expanded at a slightly slower pace than previously forecasted. Q3 real GDP was revised down to 2.0% from 2.1% previously while the core PCE Price Index was revised to up at a 1.4% annual rate from 1.3%. The slight revision to GDP growth was due to a larger drag from inventories (0.7% vs 0.6%) with some commentators suggesting the drawdown in inventories could swing the other way in the Fourth Quarter. Finally, US Existing Home Sales fell 10.5% m/m to a 4.76M following a 4.1% decline in October. Although the number is disappointing, much of the fall in November is probably explained by delays related to mortgage disclosure rules rather than a sudden weakening in the trend.
March S&P 500
The S&P plan worked very well yesterday as the Santa rally finally started despite the much weaker than expected Home Sales. Shortly after I posted the S&P traded lower to my 2009 buy level before having a nice rally which enabled me to cover this position at my 2016 T/P level and I am now flat. This rally really got going a few hours after the US markets opened with the S&P closing 1% higher at 2032. The really weak Home Sales is another reason why I believe the Fed were wrong to hike Interest Rates last week and it is another reason why in my opinion the US stock market is going to run into a brick wall of resistance after we finish with this Santa rally. As expected the McClellan Oscillator closed positively last night with a reading of +54. The S&P has major resistance from 2040/2050 and today I will be a small seller on any rally higher to 2044/2049 with a 2054 stop. Despite the Santa rally I am reluctant to chase this market higher from here and today my only interest in buying the S&P is on a dip lower to 2015/2021 with a 2010 stop.
EUR/USD
I am still flat the Euro which is trying to rally on the weaker than expected US economic data. In my opinion the US is in or close to at least a mild recession despite the stronger Pay Roll data. Last month we had the awful ISM data and now we have Home Sales down hard for the past two months. Today I will raise my buy level to 1.0850/1.0890 with a 1.0825 stop.
March Dollar Index
The strong Yen is hitting the Dollar Index given its large weighting and I am still flat. Today I will lower my sell level to 98.70/99.00 with a 99.30 stop.
March DAX
The DAX plan worked well yesterday on what was another volatile trading session. Despite the stronger than expected Consumer Confidence data the DAX got hit hard after I posted which enabled me to buy the market at 10440. As all my Index calls got hit around the same time I covered my long DAX too early at 10465 and I am now flat. With the DAX closing this evening until next Monday I certainly do not want to have a position after the close especially with the volatility in the US markets which of course are open for a half-day tomorrow. My only interest in buying the DAX is on a dip lower to 10470/10520 with a 10430 stop. I still do not want to be short the market despite the weaker Dollar.
March FTSE
The FTSE plan also worked well with the FTSE trading lower to my 5990 buy level before having a nice rally which enabled me to cover this position at my 6020 T/P level and I am now flat. The FTSE was the strongest of the European Stock markets yesterday as the Santa rally finally got going. I still like the FTSE and today I will move my buy level higher to 6040/6070 with a 6015 stop.
Dow Rolling Contract
The Dow had another 1% move yesterday which was the 71st such move of 2015 compared to just 35 last year. This is great news for us traders as the more volatility we see the more chances to make points. Yesterday’s Dow plan worked well with the Dow hitting my 17210 buy level shortly after I posted. When I wrote my commentary yesterday I did not expect to get hit on all my Index calls at the same time. Unfortunately I covered my long Dow position too early at 17255 and I am now flat which is annoying when you see the Dow trading at 17480 this morning. The Dow has now rallied nearly 400 points since Monday’s low print and today I will look to buy the Dow on any move lower to 17320/17370 with a 17275 stop. I still do not want to be short the Dow at this time despite the weaker economic data.
March BUND
With the German Markets closed until Monday and the fact that I am not writing again until Tuesday I am going to stay flat the BUND over the Christmas especially as the US Treasury Markets are open tomorrow and again next Monday.
Gold Rolling Contract
No change as I am still a small buyer on any dip lower to 1058/1065 with the same 1046 stop which is just below last Thursday’s low print.
Silver Rolling Contract
Silver just missed my 14.20 buy level yesterday and this morning I have decided to buy the market again at 14.27. I will leave a 13.80 stop on this position.
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