Initially yesterday was a quiet trading session until softness in oil spread into other commodities as it weighed on both the Australian and Canadian Dollars. With China and Honk Kong closed yesterday, Asian equity markets struggled for direction and this theme was carried into the European session. Last week’s boost to equities from Fed Chair Yellen’s message of lower rates for longer appears to be running out of steam with the market seemingly in a wait and see mode ahead of the earnings reporting season which begins later this week. On that score, market woes in Q1 suggest that for many companies and banks in particular, the start of 2016 should be one to forget.
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 and is now ahead by 65 points for April, having made 2265 points in each of the previous two months and a record 3365 points in January. Since I started this service it has made over 22,000 points.
US Equities closed yesterday marginally lower between 0.3% and 0.46%, while European stocks posted small gains with both the Eurostoxx and FTSE 100 Indices closing up 0.3%. WTI fell by 2.6% yesterday and is now back below the $36 mark for the first time since 3 March, with Copper, Gold and the CRB Index closing down 1.6%, 0.5% and 1.3% respectively.
Given this backdrop, commodity related currencies were naturally the G10 underperformers with both the NZD an AUD closing over 1% lower against the US Dollar. The Yen sits at the top of the leader board closing 0.3% higher and up over 2% in the past five days. This morning the Yen has continued to strengthen currently trading at 110.70 which has knocked another 2.5% off the Nikkei to 15,700. Doubts over the BoJ reflation strategy appears to be weighing on the Nikkei, thus pushing the Yen higher against the US Dollar.
In what was a quiet 24 hours for Bonds, 10 Year UK Gilts were the most volatile, moving 2bps higher and ending the day at 1.5%, while 10 Year Bunds closed 4bps lower at 0.12%.
Data releases had little impact on markets direction. The UK Construction PMI printed in line with expectations at 54.2. Meanwhile Europe’s Unemployment drifted a little bit lower to 10.3% in February from 10.4% and in the US Durable Goods Orders were a touch worse than expected.
This morning we already had the release of German Factory Orders which came in very weak at -1.3% versus 0.3% expected and is already hitting the DAX. Next we have German, Euro-Zone and UK Markit Services/Composite PMI at 8.55 am, 9.00 am and 9.30 am respectively. This is followed by Euro-Zone Retail Sales at 10.00 am. At 1.30 pm we have US Trade Balance and at 2.45 pm we have US Markit Service/Composite PMI. Finally we have ISM Non-Manufacturing and the JOLTS Job Openings at 3.00 pm.
June S&P 500
Shortly after I posted my short 2063 S&P position was stopped out at 2068. Subsequently the S&P traded lower to my 2057 buy level before having a nice rally to 2064 which enabled me to cover this position at my 2063 T/P level as outlined to my Platinum Members and I am now flat. This morning the S&P is opening lower as it follows the weakness in the Nikkei which has been slammed over the past week. In yesterday’s commentary I forgot to mention how weak the internals of the market are behaving and this was again emphasised last night with the McClellan Oscillator closing with a negative reading of -56 despite the S&P only 3% from its all-time highs last May. This should not be happening if we are in a proper bull market, but as you know it is so hard to be short for more than a few hours before we get strong buying. If you want to take a more long-term view of this market anywhere in front 0f 2070 is not a bad place to put on a Macro Short position with a wider 2105 stop. On a shorter term basis the S&P has strong support at 2040 and today I will look to buy the market from 2039/2044 with a 2034 stop. I will also look to go short on any rally higher to 2061/2067 with a 2072 stop which is just above yesterday’s high print.
EUR/USD
I am still flat the Euro which again traded in a very narrow range over the past 24 hours. Today I will leave my buy level unchanged at 1.1300/1.1340 with the same 1.1260 stop. I still do not want to be short the Euro at this time.
June Dollar Index
No change as I am still a seller on any rally higher to 95.10/95.40 with a lower 95.70 stop.
June DAX
This morning the DAX opened lower on the back of the much weaker than expected Factory Orders which were released at 7.00 am with the market quickly trading at my 9710 buy level. Given the weakness in the Nikkei and the price action in the DAX I have now cut this position at 9730 and I am now flat. Today I will again look to buy the DAX on any further dip lower to 9580/9630 with a 9535 stop as the 9500/9600 should act as strong support. Despite the negative price action I do not want to be short the market at this time.
June FTSE
No change as I am still a buyer on any dip lower to 6040/6070 with the same 6015 stop which is just below last Friday’s low print. The continued weakness in Sterling should support the FTSE near current price levels.
Dow Rolling Contract
As I did not like the price action in the US stock market I emailed my Platinum Members to cancel their buy level especially as the internals continue to weaken. If you did buy the Dow at my initial buy level the market had a subsequent 50 point rally before selling off into the close. Today my only interest in buying the Dow is on a further dip lower to 17560/17620 with a 17495 stop as the 17550/17600 should act as good support. I still do not want to short the Dow preferring instead to be short the S&P as the weaker Dollar should underpin the Dow.
June BUND
This morning the BUND has opened higher on the back of the weaker DAX and Factory Orders data which has seen me go short at 164.00. I am still short and I will now widen my stop slightly to 164.40 on this position. If I am stopped out of this position I will be a more aggressive seller on any subsequent rally to 164.60/165.00 with a 165.40 stop.
Gold Rolling Contract
Gold is trading higher this morning on the back of the weaker stock markets. I do not trust this rally in Gold and I am reluctant to chase this market higher. For these reasons I will leave my buy level unchanged at 1190/1198 with the same 1183 stop as I am still convinced we will get filled at this lower level over the coming days.
Silver Rolling Contract
I am still flat Silver and today I will raise my buy level slightly to 14.60/14.90 with a 14.20 stop.
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