There was nothing not to like about last Friday’s US data deluge. Payrolls just beat expectations at 215K versus 205K with trivial revisions, the Unemployment Rate ticked up to 5.0% from 4.9% only because the participation rate rose again, while the 0.3% rise in Average Earnings merely countered the 0.1% February fall to leave annual growth steady at 2.3% after February was revised up from 2.2%. The Manufacturing ISM beat expectations at 51.8 which was up from 49.5 and consistent with stronger regional PMI’s, with new orders particularly strong at 58.3 from 51.5.
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 35 points on Friday on the first trading day of April, having made 2265 points in each of the previous two months and a record 3365 points in January. Since I started this service last June it has made over 22,000 points.
The economic data failed to provide more than momentary support for either the US Dollar or Treasury Yields while US equities shrugged off a weaker open following a bad morning for European stocks to close 0.6% to 0.9% higher with the S&P closing at a new year-to-date high. This puts us within 3% of the May 2015 record highs. The VIX dropped 0.85 to 13.1 so matching its mid-week lows.
In FX, the US Dollar closed within 0.1% of Thursday’s closes. EUR/USD ended +0.1% at 1.1380 aided in part by a small upward revision to the final Euro-Zone Manufacturing PMI. Meanwhile the Yen was the strongest G10 currency on Friday, with USD/JPY closing 0.8% lower at 111.69 following Friday’s very poor showing by Japanese stocks post a weak Tankan Report and rallying only briefly after US Payrolls before falling away again. Overnight the Nikkei has got no support from the US stock market closing 0.25% lower at 16,125. Sterling again got hit following a downside miss in UK Manufacturing PMI with EUR/GBP closing over 0.80 for its weakest close in over 15 months.. It probably will not be helped today by a weekend EU Referendum Poll showing 43% for ‘leave’ and 39% to ‘stay’.
In US Interest Rates, Yields spiked very briefly post – payrolls only to fully retrace, while Oil got hit hard after Saudi Arabia’s Deputy Crown Prince told Bloomberg that any production freeze was contingent on Iran agreeing to the same – which we know is not going to happen. Russia’a Energy Minister expressed some surprise at the latest public Saudi position. Chances of any production freeze being agreed in Doha on 17 April look remote.
This morning on the economic front we have the Euro-Zone Sentix Consumer Confidence at 8.30 am and this is followed at 9.30 am by UK Construction PMI. At 1.45 pm we have New York ISM. Finally at 2.00 pm we have US Labour Market Conditions Index Change and Factory Orders.
June S&P 500
My S&P plan worked well on Friday. Shortly after I posted the S&P traded higher to 2049.50 which enabled me to cover my long 2043 existing position at my 2048 T/P level. Subsequently after the NFP was released the S&P traded lower to my 2036 buy level with a 2035.50 low print before having a massive 31 Handle rally. Unfortunately as so many of my markets got hit at the same time I covered this long position at 2039.50 while at the same time I emailed my Platinum Members to raise their sell level in the S&P to 2061/2064 which got hit very late in the trading session at 2063. I am still short and I will leave my stop the same at 2068. There is no doubt the weaker US Dollar is helping the US equity market as both Europe and Japan are struggling following the huge move in their currencies over the past few weeks. For example the Nikkei is back to levels seen in May 2014 and is only 8% higher than its low made in early February after its dramatic near 25% sell-off over the previous six weeks. If I am stopped out of my 2063 S&P short position I will look to reset on any further move higher to 20752081 with a 2086 stop. The price action is very bullish despite the overbought condition of the market and I will also look to buy the S&P on any dip lower to 2052/2057 with a 2047 stop.
EUR/USD
Unfortunately the Euro just missed my 1.1320 buy level with a 1.1335 low print before rally to 1.1438 as the market again fell short of my 1.1450 sell level and I am still flat. There is no doubt the structure of the currency market has changed following the series of upside Key Day Reversals in the Euro especially with the market closing over the key 1.1360 pivot point on Friday. As I mentioned last week the ECB and Dragi will not be happy with this move but I have no doubt the German Bundesbank will have a wry smile with this large move higher. It will be interesting to see how the ECB responds as no Central Bank wants a strong currency at this time. Today I will move my buy level slightly higher to 1.1300/1.1340 with a 1.1260 stop. Despite the Euro been overbought I do not want to sell the Euro at this time.
June Dollar Index.
I am still flat the Dollar and today I will lower my sell level to 95.10/95.40 with a 95.80 stop. Despite the Dollar trading oversold I do not want to be long the Dollar at this time.
June DAX
Unfortunately the DAX traded through my buy level following the release of the NFP data and I did not buy the market before it subsequently rallied over 100 points and I am still flat. This morning the DAX is selling off again and today my only interest in buying the DAX is on a move lower to 9670/9730 with a 9625 stop. I still do not want to be short the DAX at this time despite the weaker price action as it is hard to be short when you see the US markets so bid as yet again the Fed are making sure these stock markets will never fall as long as they are in control.
June FTSE
Friday was an extremely frustrating day as shortly before lunch I was stopped out of my 6070 long position near the lows of the day at 6035 and I am still flat. Subsequently after I was stopped out of this position the FTSE rallied over 6100 helped by the weaker Sterling. With the pound so weak I do not want to be short the FTSE and for this reason I will look to buy the market on any dip lower to 6050/6080 with a 6015 stop which is just below last Friday’s low print.
Dow Rolling Contract
I emailed my Platinum Members to cancel their sell order in the Dow as there is no doubt the weaker Dollar coupled with the positive price action is telling me not to be short the Dow at this time despite the fact the market is very overvalued and overbought after its near 2500 rally in the past seven weeks. If you did go short at my initial 17740 sell level the market did trade back below 17700 before rallying into the close which did offer an opportunity to get out. Today my only interest in the Dow is to be a buyer on any dip lower to 17650/17720 with a 17595 wider stop.
June BUND
My Bund plan worked well on Friday as shortly after the NFP was released the Bund traded higher to my 163.75 sell level before subsequently selling off to 163.40 which enabled me to cover this position at my revised 163.55 T/P level. I also emailed my Platinum Members to go short again over 163.80 which happened shortly after the open this morning at 163.90. I have just covered this position here at 163.65 and I am now flat. It is incredible that the Bund is within striking distance of going negative despite all the QE to induce growth which is just not happening. Today I will again look to sell the Bund on any rally back to 163.90/164.20 with a 164.50 stop.
Gold Rolling Contract
I do not like the price action in Gold which is making a series of lower highs since its $1280 high print last month following the 16% rally in Gold in the first Quarter. Gold traded lower to my 1215 buy level with a 1208 low print and as I was not happy with the price action in both Gold and Silver I cut my long position for a small loss at 1214 before the market subsequently rallied back over 1222 and I am still flat. My only interest in Gold over the coming days is to buy the market on a dip to 1190/1198 with a 1183 stop as the 1180 area should act as good support.
Silver Rolling Contract
Silver got slammed on Friday and in the process had its worse trading day of 2016. This move lower stopped me out of my long 15.45 position at 14.95 and I am still flat. Today my only interest in buying Silver is on a dip lower to 14.35/14.75 with a 13.95 stop.
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