Yesterday was a distinctly ‘risk off’ trading session with US stock Indices closing 1% or more lower as financial stocks again took the worse beating with the S&P Banks Sub-Index closing down 2.75%. Increased dissolution about what Central policies will continue to do to the financial sector profitability may be a factor here, as too investors bracing for the Q1 earnings season that kicks off in earnest on Monday courtesy of Alcoa. Not helping the banking sector is the fact that banks are expected to report a truly rotten start to the year. However markets are rebounding strongly this morning led by the Nikkei which closed 350 points higher of its overnight low of 15450 as the continued theme of only been short the market for a few hours before buyers returns prevails.
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 85 points yesterday and is now ahead by 560 points for April, having made 2265 in each of the previous two months following a record 3365 points in January. Since I started this service last June it has made over 22,500 points.
The ‘risk-off’ tone sees US Treasuries smartly lower with 10 years closing down a sizeable 7bps to 1.69% which is their lowest yield since 25 February, with a similar story for 2 years which closed 4bps lower. Earlier the German Bund Yield fell 3bps as parity and a negative yield looms. It is incredible that supposedly 7 years into an economic recovery that we will soon see the 10 German Bund yield in negative territory. Meanwhile UK Gilts closed 5bps lower.
In currencies the big story continues to be the relentless strengthening in the Japanese Yen. From around 108.80 versus the US Dollar when I posted yesterday morning, the pair dropped to a low of 107.67 before a small bounce into the New York close. This bounce has continued overnight as predicted by USD/JPY trading outside the bottom of its Bollinger Band and right at the bottom of the Williams Index to currently sit just below 109.
The sell-off in equity markets saw the VIX close up nearly 10% at 16 having traded at just 13 last Friday, which gives you an idea of the recent volatility. A sea of red in industrial metals prices with the LMEX Index closing down over 2%. Gold had a strong rally as investors exited the stock market.
Not helping markets yesterday were comments from the Kansas Fed President Ester George who said the Fed should not delay in hiking rates. There is no doubt the conflicting comments from Fed officials is very worrying.
This morning on the economic front we have UK Industrial Production and the Trade Balance at 9.30 am. This followed at 1.30 pm by Canadian Unemployment. Finally on what is a very light day for economic data the only US release is Wholesale Inventories at 3.00 pm.
June S&P 500
The S&P had a wild ride yesterday as the market at one point traded lower to 2027 before rebounding into the close and this rebound has continued with a bang overnight as USD/JPY rebounded strongly which in turn helped the Nikkei. Yesterday’s sell-off has left a small ‘gap’ from Wednesday’s Chicago close at 2058 to yesterday afternoon’s 2052 high print and this ‘gap’ may have to be filled first before we go lower. However the large up move currently taking place has the potential to leave a much larger ‘gap’ from last night’s Chicago close at 2032 to the current price at 2046. The beauty of my Platinum Service is that having recognised how heavy the US stock market was trading and the fact that Yellen and the former Fed Chairmen (Bernanke and Greenspan) were all speaking in New York I emailed all my Platinum Members to cut their long 2048 S&P position for a small loss at 2047 and I am still flat. If anyone was stopped out of their long position at 2037 if they used my ‘5 Handle Rule’ then they would have made a lot of points overnight. I did not do this trade myself as I was lecturing and then had to go to dinner. This market is not easy to trade or indeed to go short as yet again we see the market trading over 20 handles higher from last evening’s low print and basically back to where we were trading at lunchtime yesterday. To me all these equity prices are false as the economic conditions do not warrant such a strong market but these are the times we live in namely the Central Banks who control everything. Today I will be a small seller into the ‘Open Gap’ from 2053/2059 with a 2065 stop. I will also look to buy the market on any dip lower to close last night’s potential ‘gap’ from 2030/2036 with a 2025 stop which is just below yesterday’s low print.
EUR/USD
My Euro plan worked well as shortly after I posted the Euro traded lower to my 1.1365 buy level before having a nice rally over 1.14 which enabled me to cover this position at my 1.1395 T/P level and I am now flat. The Euro has very good support at 1.1310 and today I will again look to buy the market on any dip lower to 1.1305/1.1335 with a tight 1.1290 stop. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer on any further dip lower to 1.1170/1.1220 with a 1.1130 stop. A break and close over 1.15 will be very constructive opening up the possibility of a move higher to 1.18/1.20 over the coming months.
June Dollar Index
No change as I am still a seller on any rally higher to 94.95/95.25 with a 95.55 stop.
June DAX
My DAX plan also worked well as shortly after the DAX hit my 9605 buy level I emailed all my Platinum members to cut this position at 9640 as we had too many positions open plus I wanted to be flat ahead of Yellen. I am still flat with the DAX rebounding strongly off its New York close. Today I will again look to buy the market on any dip lower to 9510/9560 with a 9470 tight stop. Given how oversold the DAX is trading and despite the negative price action I still do not want to be short the market at this time.
June FTSE
There is no doubt if you are going long a stock Index at this time the FTSE is the safest market especially with Sterling trading 17% weaker against the Euro since last December. The weakness in the currency is certainly underpinning the FTSE and this is why I will continue to buy the dip in the market. Yesterday my FTSE plan again worked well with the market hitting my 6095 buy level before rebounding strongly this morning to a high of 6135. Unfortunately as I wanted to be flat for today’s commentary I emailed my Platinum Members to cut this position at 6110. Thankfully just as I sent the email the market spiked thus giving everyone a better fill. As I am now flat I will again look to buy the market on any dip lower to 6060/6090 with a 6035 stop.
Dow Rolling Contract
As I was hit on my other three Index buy levels at the same time I did not buy the Dow as I had enough risk on. I do try to stair step my buy levels but unfortunately I did not stair step enough yesterday and I am still flat. Yet again the Dow has rebounded strongly off its late evening lows with the weaker Dollar a help. Obviously the very weak Banking sector is weighing on the market and this is why the earnings season starting on Monday have the potential for some serious fireworks. Today my only interest in buying the Dow is on a dip lower to 17480/17540 with a 17430 tight stop. Despite the overvalued price of the Dow, I still do not want to be short at this time.
June BUND
Very late yesterday the Bund traded higher to my 164.40 sell level. This morning the Bund is trading at 164.10 but as I mentioned at length above, to me it is only a matter of time before the Bund yield turns negative and for this reason I covered my short position earlier this morning at 164.25 and I am now flat. Today I will be a more aggressive seller on any further rally to 164.70/165.00 with a 165.30 stop. Despite me looking for higher prices I do not want to be long the Bund at this time.
Gold Rolling Contract
Gold had a decent rally which saw me buy Silver instead. I am still flat Gold and today I will raise my buy level to 1216/1223 with a 1207 stop which is just below last Friday’s 1208 low print.
Silver Rolling Contract
The rally in Gold pushed me into buying Silver at 15.30. I am still long and I will leave a stop at 14.80 on this position.
Recent Comments