After another volatile US equity market trading session on Friday which saw US stocks recover some of Thursday’s losses, Bond Yields pushing back higher, while the US Dollar was again softer across the board. The speculative Futures Market is now short US Dollars for the first time in almost two years. Oil jumped by $2.5 in front of next week’s Doha Meeting of OPEC and non-OPEC producers but with no tangible reason for optimism that a production freeze will be agreed. Incidentally, after Friday’s close, Moody’s cut by one notch their rating on three oil majors – Chevron, Royal Dutch Shell and Total SA which sees Oil trading back below $40 at $39.50 this morning.
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 160 points on Friday and is now ahead by 720 points for April, having made 2265 points in each of the previous two months following a record 3365 points gain in January. Since I started this service last June it has made over 22,500 points.
The Canadian Dollar was the clear outperformer of the G10 FX Currency market, aided not just by oil but also by a stellar Employment Report which saw employment increase by 40.6K with the unemployment rate falling to 7.1% from 7.3% against expectations for no change. The Australian Dollar also benefited from firmer Commodity prices and the improvement in risk sentiment, finishing in New York at 0.7556 and after only a momentary dip below 0.75 last Thursday. Sterling held its own despite some dire production and trade data, while the latest ‘poll of polls’ on the UK EU Referendum shows the ‘remain’ and ‘leave’ camps neck and neck.
The S&P 500 closed 0.28% higher at 2047.6 but down 1.2% on the week. US 2yr Yields added 0.7bp to 0.695% and the 10s 3bps to 1.72%, so retracing a little of last Thursday’s sharp fall. In Commodities WTI added almost $3 to $40 and Brent $2.51 to $41.94. The LMEX Index closed +0.5% but Iron ore fell 18 cents to close at $54.57. Gold was virtually unchanged at $1240 but is firming in early trading this morning.
CFTC/IMM data for the week ended 2 April shows overall US Dollar speculative positioning turning to short for the first time since the week ended 6 May 2014. The prior week’s +25.6K went to -4.5K. This was a combination of a reduction in new EUR shorts to -53.5K from -62.8K and a further extension of JPY longs to +60.1K from +54.4K. This is the largest net Yen longs since March 2008 and has only been exceeded on 3 or 4 occasions in history – so clearly extreme.
New York Fed President and FOMC Vice – Chair Bill Dudley embellished his dovish credentials/firm alignment with Janet Yellen in a speech on Friday, although his acknowledgement of US Dollar weakness as having reduced ‘that problem’ could be telling, suggesting the currency may prove less constraint to tightening later this year than it evidently has done to date. Dudley said that low inflation expectations were cause for concern, and that there is no ‘significant uncertainty’ about growth prospects abroad and repeated the call for a cautious and gradual approach to rate hikes.
Earlier this morning we had the release of China CPI which printed +2.3% versus +2.4% expected while the stronger Yen which sees USD/JPY again trade with a 107 Handle saw the Nikkei close 0.5% lower. Surprisingly we have no data of note due on either side of the Atlantic today.
June S&P 500
My S&P plan worked really well on Friday as yet again both my sell levels and then my buy levels both got filled in what was another volatile trading session. Shortly after the US Markets opened to the S&P traded higher to my 2053 sell level with a 2054 high print before selling off which enabled me to cover this position at my 2047 T/P level. Overnight the S&P subsequently traded lower to my revised 2034 buy level before having a nice rally to 2041.50 which enabled me to cover this position at my 2039 T/P level as again outlined to my Platinum Members and I am now flat. With earnings season starting in earnest after the US Cash Equity markets close at 9.00 pm I would expect plenty of ensuing volatility over the coming weeks. The S&P has critical support at last Thursday’s low print at 2026, a break and close below could well open up a move lower into the low 1900’s over the coming weeks. Today I will again look to buy the S&P on any dip lower to 2031/2036 with a tight 2025 stop. I will also look to sell the market on any rally higher to 2057/2063 with a 2068 stop.
EUR/USD
No change as I am still a small buyer on any dip lower to 1.1305/1.1335 with the same 1.1290 tight stop. Again if I am taken long and subsequently stopped out of this position I will be a more aggressive buyer from 1.1170/1.1220 with a 1.1130 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 94.95/95.25 with a 95.55 stop.
June DAX
Earlier this morning the DAX hit my 9560 buy level with a 9550 low print before having an aggressive 140 point rally which enabled me to cover this position too early at my 9610 T/P level and I am now flat. It is these short sharp covering rallies out of nowhere that make me so reluctant to be short the equity markets at this time as the strategy of buying the dip continues to reap rewards – it is just knowing where to enter your buy level is the key. Today I will again look to buy the DAX on any dip lower to 9560/9620 with a 9525 tight stop which is just below this morning’s low print. I still do not want to be short the DAX at this time.
June FTSE
Unfortunately the FTSE just missed my 6090 buy level this morning and I am still flat. Today I will raise my buy level to 6080/6110 with a 6055 stop. Just like the other Indices I do not want to be short the FTSE at this time.
Dow Rolling Contract
As I already bought both the S&P and the DAX I did not buy the Dow despite the market hitting buy range late Friday. For anyone who did buy the Dow at 17540 or better the market is trading a nice 100 points higher as I write this commentary. As I am still flat the Dow and still so reluctant to go short despite all the negative press towards the market and how overvalued that the PE’s are at this time I will again look to buy the Dow on any dip lower to 17520/17580 with a 17470 stop.
June BUND
No change as I am still a seller on any rally higher to 164.75/165.05 with a 165.30 tight stop. So far the high this morning is 164.60.
Gold Rolling Contract
Gold has continued to trade higher with the market now trying to break 1250. I am still flat and today I will raise my buy level to 1223/1230 with a 1215 stop.
Silver Rolling Contract
I am still long Silver at 15.30 from late Thursday which having traded as low as 15.10 after I posted on Friday the market is now trading at 15.50. I will now look to cover this position at 15.60 and if I manage to T/P at this level I will again look to buy Silver on any subsequent dip lower to 15.10/15.40 with a 14.70 stop.
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