It was a quite start to the holiday shortened week with European Equities closing marginally lower while US stocks have ended marginally higher. Other markets were also quiet, however we did have two Fed officials suggesting Fed hikes could be coming sooner rather than later. This morning markets are opening lower in Europe following the report of two bomb explosions at the American Airlines check in at Brussels Airport but details are sketchy as I post this commentary.
To mark my 1000th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2500 for my Platinum Daily Commentary which includes 1/4 updated emails throughout the trading day. This offer is open to both new and existing members and if anyone is interested please email me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it made 120 points yesterday and is now ahead by 1925 points for March having made 2265 points in February and a record 3365 points in January. Since I started this service last June it has made over 21,500 points.
Yesterday’s rally in Chinese equities failed to boost other markets with the rest of Asia closing flat to marginally lower. The Shanghai ended yesterday up 2.2% following news that controls on margin lending were loosened. This news was somewhat surprising, not only because it was unexpected, but also given the PBoC warnings over the weekend that the Country’s corporate debt levels were too high.
In Currencies the US Dollar has continued to recover some of its lost ground post the FOMC announcement last week. The USD closed marginally stronger against 9 of the G10 currencies with the Swedish Krona technically the only outperformer, up a whopping 0.04%. Sterling was as expected the weakest currency following the resignation of Duncan Smith who is a senior member of the UK Government and pro-‘Brexit’ supporter. Sterling was not helped by a report from the Confederation of British Industry which said that ‘Brexit’ could cost the UK GBP100bn and a million jobs.
The USD appreciation was also supported by a modest rise in US Treasury Yields. This move higher in Yields appears to have been propelled by comments from two Fed officials advocating for a Fed hike sooner rather than later. The Fed’s Lockhart who is a non-voter said that US data may justify a move as soon as April, warning that inflation was being kept artificially low due to falling oil prices and a stronger Dollar. Lockhart also predicted that consumer prices would rise ‘significantly’ as soon as oil prices stabilise. Lockhart’s upbeat assessment on the US economy was also shared by Williams who is also a non-voter. In an MNI interview, Williams said that ‘assuming everything else is basically the same and the data flow continues the way I hope and expect, then April or June would definitely be potential times to have an increase in interest rates,’
Oil prices again closed higher, boosted by a report from a private data provider noting that oil inventories at the key US delivery hub in Cushing, Oklahoma, declined last week. Meanwhile Iron Ore closed another 3% higher while Gold which closed lower yesterday is rebounding strongly this morning on the Brussels Airport attack.
Over night the RBA Governor Stephens was speaking. He said there was more room to ease Monetary Policy and that the Australian Dollar may have got ahead of itself.
This morning on the economic front we already had the release of French Manufacturing PMI which came in below 50 which signals contraction at 49.6 and versus 50.2 expected. At 9.00 am we have the German IFO Business Climate and Current Assessment. Next we have the UK CPI, PPI and the Public Finances. This is followed at 10.00 am by the German ZEW Survey. Finally we have the US FHFA House Price Index and the Richmond Fed Manufacturing Index at 1.00 pm and 2.00 pm respectively.
This evening the Fed’s Evans (non-voter) and Harker also a non-voter will speak on the US economy.
June S&P 500
Yesterday for anyone who followed my S&P plan and went short at my initial 2044 sell level this position worked out very well. Unfortunately I moved my sell level one handle higher to 2045 for my Platinum Members and this trade despite getting close a couple of times and again overnight did not happen for me. If you are still short I would cover this position here as the trend so far following any terrorists attacks that we have witnessed so tragically over the past 18 months and including the ongoing attack in Brussels this morning is for the Central Banks to buy the markets in order to make sure the terrorists are not going to economically effect the global economies. Today I will raise my buy level slightly to 2020/2026 with a 2013 stop. If I am taken long and subsequently stopped out of any long position I will use my ‘5 Handle Rule’ to go long again with a stop below whatever new low is printed. Given my fear of Central Bank intervention later I do not want to be short the S&P at this time.
EUR/USD
The Dollar is now strengthening across the board following the Brussels attacks and today I will now lower my buy level slightly to 1.1150/1.1180 with a 1.1120 tight stop. I still do not want to be short the Euro especially following the upside Key Day Reversal after the ECB rate cut.
June Dollar Index
I am still flat the Dollar and today I will raise my sell level slightly to 98.00/98.40 with a 98.70 stop. Remember the Dollar has had two downside Key Day Reversals in the past two weeks and I would still use any rally to set up a short position as no Central Bank wants a strong currency at this time.
June DAX
Yesterday my DAX plan worked well as shortly after I posted the DAX traded higher to my 10130 sell level before having a subsequent quick 100 points sell-off which enabled me to cover this position at my 10070 T/P level and I am now flat.
The DAX is getting hit hard this morning on the back of the Brussels attacks. I am still flat but I am now tempted to buy into this sell-off given as I mentioned above that the Central Banks will probably intervene to stem any further falls in the market. For these reasons I will look to buy the DAX on any further dip lower to 9790/9840 with a wider 9720 stop. I do not want to be short the market today. Remember the DAX needs to break and close over 10200 for the market to turn short-term bullish and negate the two downside 400 point Key Day Reversals that the DAX experienced in late January.
June FTSE
I am still flat the FTSE but just like the other Indices above I am tempted to buy into this weakness and today I will now look to buy the market on any further dip lower to 6025/6055 with a 5990 stop.
Dow Rolling Contract.
Unfortunately I moved my Dow sell level higher to 17670 yesterday for my Platinum Members but if you were lucky enough to sell at my initial 17650 sell level then I would look to cover your positions here if you already have not done so. I still believe that after the 2250 point rally in the Dow over the past five weeks that this market will soon run into trouble as yet again the McClellan Oscillator closed 40 points lower at +147 despite the Dow closing higher. I still do not want to be long the Dow at this time and today I will lower my sell level in the Dow slightly to 17650/17710 with a 17770 stop.
June BUND
I am still flat the Bund and today I will lower my sell level to 162.85/163.15 with a 163.45 stop which is just above the high print at 163.40 following the ECB rate cut earlier this month.
Gold Rolling Contract.
My long 1242 Gold position worked well as shortly before lunch Gold rallied to my 1248 T/P level and I am now flat. Obviously Gold is trading higher following the Brussels attack and today I will again look to buy Gold on any dip lower to 1235/1242 with a 1229 stop.
Silver Rolling Contrcat
No change as I am still long from last week at 16.00 with the same 15.45 stop.
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