With US markets closed in observance of Martin Luther King Day, the relatively quiet trading session yesterday is probably not reflective of the current collective mood. Hence Super Tuesday is all about China which has the potential to set the mood for the rest of the week. This morning China released its GDP Industrial Production and Retail Sales. GDP came in at 6.8% versus a revised lower forecast of 6.4%. However Retail Sales and Industrial Production came in weaker than expected.
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For anybody following my new Platinum Service it made 160 points yesterday and is now ahead by 2435 points for January. Since I started my Platinum Service last June it has generated a return of over 17,500 points.
Yesterday China’s Shanghai and Shenzhen managed to end the day marginally in positive territory, however the start of the week for the rest of Asia was a bid softer with Hong Kong’s Hang Seng and Japan’s NIKKEI the worst performers down 1.45% and 1.12% respectively. The start of the European session saw equities markets move higher, but the lack of data releases meant that oil was the only game in town. Brent and WTI oil briefly traded above the $29 mark, but then drifted lower effectively erasing all the gains for the session. The Euro Stoxx index ended the day down by 0.58% and the FTSE100 was -0.42%. Brent closed at $28.6(-1.32%) and WTI at $28.94 (-1.6%).
However this morning on the back of the Chinese data European markets are opening strongly on the belief that the PBoC will soon cut Interest Rates leading to a nice rally in the Shanghai with the Nikkei also closing back over 17000.
In Currencies, the USD is stronger against all G10. The AUD and SEK are at the top of the leader board practically unchanged (-0.02% and -0.04%) while the NOK is at the bottom, down 0.79%. Overnight former Fed Chairman Bob Bernanke has being on the wires saying that the strong US Dollar has probably ‘run its course’ and that the Dollar should start to weaken from here.
In Bonds, while the US Treasury market was closed, 10y Bunds ended the day little changed at 0.537% and 10y UK Gilts were down 3bps to 1.689%. UK Gilts outperformance was aided by BoE’s Gertjan Vlieghe comments stressing that he was “patient” on interest rates and wants to see evidence of stronger price pressures before tightening policy.
Finally in Commodities, Gold is practically unchanged at $1088.9, Iron ore is up 3.8% to $42.7, its third consecutive day of gains and Copper has continued it miserable run, down another 2.1% ($4327.5), a new six year low.
This morning on the economic front we already had the release of German Final CPI which came in as expected at -0.1%. At 9.00 am the ECB will release its latest Current Account. This is followed at 9.30 an by UK CPI and the ONS House Price Index. At 10.00 am we have the German ZEW Survey for Current Situation and Expectations. The only US data is the Total Net TIC Flows which is not released until 9.00 pm. Governor Carney from the Bank of England is due to speak in London at 12.00 pm and it will be interesting to see if he mentions the weak Pound in his speech.
March S&P 500
Unfortunately I was stopped out of my long 1878 S&P position shortly after I posted yesterday morning near the lows of the day at 1971 which is very frustrating when you see the market trading at 1900 this morning which is over 50 Handles higher than last Friday’s low print. Again I cannot emphasise enough how important the McClellan Oscillator is as a technical signal as every time the MO prints at least a negative reading of -250 you get a huge rally in the US Stock market. We saw it last Thursday when the MO printed – 292 for the S&P to rally 50 Handles. This morning the S&P is trying to fill the ‘Open Gap’ from last Thursday’s close at 1923 to Friday’s day session high at 1883. However if we continue to rally then we will have another ‘Open Gap’ from last Friday’s close at 1883 to whatever low is printed in today’s Chicago trading session. Today I will again look to buy the market on any dip lower to 1883/1890 with a 1877 stop. Again if I am taken long and subsequently stopped out I will use my 5 Handle Rule to go long again with a stop below whatever new low is printed. I still do not want to be short the market at this time.
EUR/USD
No change as I am still a buyer on any dip lower to 1.0810/10850 with the same 1.0780 stop. I must say I was very happy to hear Bernanke’s comments overnight as it reinforces my view that the Dollar is a major sell.
March Dollar Index
No change as I am still a seller on any rally higher to 99.50/99.80 with a 100.10 stop.
March DAX
In contrast to the S&P above my DAX plan worked out very well yesterday and especially if you held onto this position overnight. Just as I posted the DAX was getting hit hard which enabled me to buy the market at 9500. Subsequently after a nice rally the DAX traded higher to my 9580 T/P level and I am now flat. Today I will again look to buy the DAX on any dip lower to 9550/9620 with a 9510 stop.
March FTSE
My FTSE plan also worked well as shortly after I posted the FTSE traded lower to my 5730 buy level. I kept this position overnight and I covered it at my 5780 T/P level and I am now flat. There is no doubt all the major Equity markets are due a major bounce after the carnage witnessed so far in 2016. Today I will raise me buy level to 5760/5790 with a 5725 stop.
Dow Rolling Contract
The Dow plan also worked well as shortly after I posted the Dow was trading at my 15990 buy level before having a nice rally which enabled me to cover this position at my 16090 T/P level and I am now flat. If you held onto this position overnight you are very happy with the Dow trading at 16240 as I write this commentary. Today given all the reasons mentioned above and with the MO giving a strong buy signal I will look to buy the Dow on any dip lower to 16040/16110 with a 15970 stop.
March BUND
No change as I am still a small seller on any rally higher to 160.55/160.85 with the same 161.05 stop.
Gold Rolling Contract
No change as I am still a small buyer on any dip lower to 1070/1077 with a 1063 stop.
Silver Rolling Contract
Thankfully Silver is back trading above $14 this morning as I am still long at 14.19 with the same 13.65 stop.
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