Yesterday was a trading session of consolidation as we await the arrival of key data over the next six hours with ‘Super Friday’s deluge’. Overnight China set the scene following the release of its official Manufacturing and Non-Manufacturing PMI’s which came in at 50.2 and 49.7 respectively. Japan also released its Nikkei Manufacturing PMI and this printed 49.1 versus 50.1 the previous month. This data was not well received by the stock market with the Nikkei closing a hefty 3.55% lower at 16,164 and well below the key 16,900 pivot point. So far in 2016 the Nikkei has lagged the main European and US Indices.
To mark my 1050th 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 30 points yesterday to close the month of March with a 2265 point gain. The previous two months saw gains of 2265 and 3365 points respectively. Since I started this service last June it has made over 22,000 points.
Yesterday’s session has not been marked by the release of key data, though the Euro-Zone core CPI for February popped up to the dizzy heights of 1.0% from 0.8% and a little ahead of the 0.9% expected. Following this release the EUR/USD tracked up and tested 1.14, before consolidating just below the figure, where it sits in early trade this morning. Likewise, a modest upward revision to UK December Quarter GDP provided an excuse to buy Sterling as it pushed above 1.44, also before consolidating.
US equity markets have been flat-lining into the start of the first Quarter reporting season with markets braced for more fallout from low oil prices among energy-related stocks as well as the impact of the (then) stronger Dollar. Outlook statements will of course be key with some measure of stability of late in oil prices and the US Dollar pulling back from its highs in early February. US Bond markets remained bid yesterday with the US 2y Treasury Yield and 10s closing 4bps and 5bps lower respectively.
The Chicago Fed President Evans who is a non-voter this year has been speaking, saying the US economy is probably the strongest in the world right now, with news wires picking up a line that an improving outlook could warrant faster rate hikes, a big contrast to Ms Yellen’s speech last Tuesday. Evans sees one rate hike in the middle of the year and one at year-end.
Today is known as ‘Super Friday’ given the amount of economic releases due. First up we have German, Euro-Zone and UK Manufacturing PMI at 8.55 am, 9.00 am and 9.30 am respectively. This is followed at 10.00 am by Euro-Zone Unemployment. At 1.30 pm we have the US NFP data where the market is looking for headline Payrolls growth of 205K, and an Unemployment Rate of 4.9%. As usual the key component for me will be the Average Earnings which surprisingly fell 0.1% last month. The consensus is for a 0.2% rise this month. At 2.45 pm we have US Manufacturing PMI. Finally at 3.00 pm we have Construction Spending and the University of Michigan Consumer Sentiment.
June S&P 500
Yet again the S&P just missed my 2063 sell level before getting hit hard this morning following the 3.55% fall in the Nikkei which has seen the S&P finally hit my 2043 buy level. I am still long and I will now raise my stop on this position to 2036. As the only two times of the month that I go flat into an economic announcement namely the NFP data and the FOMC Meeting I will stick with this rule and I will look to cover my long S&P position ahead of 1.30 pm on any rally higher to 2048. Either way I will cut this position. Following the announcement I will be a seller on any rally higher to 2058/2064 with a 2069 stop which is just above the 2067.25 December 30th high print before subsequently the market fell off a cliff. I will also look to buy the S&P on any dip lower to 2030/2036 with a 2025 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
Looking at the monthly chart of the EUR/USD last night the Euro came within just 10 points of an upside Key Monthly Reversal which would have been very bearish for the Dollar as following the ECB Meeting earlier last month the EUR/USD hit a low of 1.0820 which was just above the 1.0810 low print in February. No matter to me it was an upside Key Monthly Reversal. As no Central Bank wants a strong currency my view is we will see the Euro trade to at least 1.20 and possibly back to 1.25 over the coming months as all Dollar longs scramble to get out of their long-term positions. Yesterday my Euro plan worked well with the market hitting my 1.1410 sell level before trading overnight to a 1.1367 low print. Unfortunately I covered my position at 1.1400 and I am now flat. I am going to stay flat ahead of the NFP data. The break and close over 1.1360 could be significant especially if we close the evening over this now key pivot point. Today I will raise my buy level to 1.1290/1.1320 with a 1.1260 stop. Given the fact that the Euro is trading near the top of both its Bollinger Band and Williams Index I will look to go short the Euro on any rally higher to 1.1450/1.1480 with a wider 1.1520 stop.
June Dollar Index
Significantly the Dollar had a downside Key Monthly Reversal. Technically this is very weak for the Dollar and should lead to a large move lower over the coming months. I am still flat and today I will lower my sell level slightly to 95.20/95.60 with a 95.95 stop. Despite the Dollar been oversold I do not want to be long the Dollar at this time.
June DAX
The official DAX market closes at 9.00 pm and and opens again at 7.00 am the next morning. The spread betting firms make their own market in the DAX outside the normal trading hours which I do not agree with as the prices are not real-time. This morning the DAX opened below my buy level from yesterday and as a result I am still flat. For these reasons I never leave an order on overnight in the DAX. Just like the other main Indices that I write about the DAX is following the Nikkei lower as the market again rejects the key 10100/10200 now major resistance level. Today I will look to buy the DAX on any further move lower to 9760/9810 in small size with a 9715 stop. Despite the negative price action I do not want to be short the market today especially as we are at the start of a new month/Quarter.
June FTSE
Early this morning the FTSE traded lower to my 6070 buy level. I am still long and I have now raise my stop on this position to 6035. If I am stopped out of this trade I will be a more aggressive buyer on any further dip lower to 5960/5990 with a 5930 stop.
Dow Rolling Contract
I am certainly not having much luck with my Dow calls this week as having got stopped out on Wednesday at 17750 on my then 17690 short position the market just missed my 17780 sell level with a 17758 high print yesterday and I am now flat. Just like the S&P above I will stay flat until we get the NFP data release. If the market rallies on this data I will again look to sell the Dow from 17740/17800 with a 17860 wider stop. I still do not want to be long the Dow at this time as this market is extremely overvalued in my opinion.
June BUND
No change as I am still a seller on any rally higher to 163.70/164.00 with the same 164.30 stop.
Gold Rolling Contract
No change as I am still a small buyer on any dip lower to 1212/1220 with the same 1204 stop.
Silver Rolling Contract
My long 15.25 Silver position worked out with yesterday’s rally as the market hit my 15.45 T/P level. Unfortunately as I am not happy when I do not have a long Silver position on board I bought the market again at 15.45. I am still long and I will now have a stop on this position at 14.95.
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