Yesterday was a mixed trading session for global equities while commodities traded higher. European markets ended the day in positive territory boosted by Italian banks following hopes of a Government support package while in the US, equity Indices erased earlier gains and ended the day marginally lower. In a backdrop of broad US Dollar weakness, oil prices have continued their upward trend boosting other commodity prices which in turn also helped commodity linked currencies outperform.
To mark my 1050th issue of Tradernoble Daily Commentary I am offering a special 2 year rate Euro 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 130 points yesterday and is now ahead by 850 points for April, having made 2265 points 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.
US equity markets have struggled for direction reflecting a lack of conviction ahead of the ‘true’ start of the Quarter earnings reporting season. After the closing bell last night, Alcoa unofficially kicked off the reporting season beating earnings expectations with a EPS of $0.07 versus $0.02 expected, but missing on revenue at $4.95bn versus $5.20 expected.
Oil prices have continues their recent upward trend ahead of the Oil Producers Meeting this weekend. Brent closed up 2.1% while WTI finished 1.8% higher at $40.42. Sound bites from different oil producers appear to have boosted hopes of a production freeze deal over the weekend. Venezuela said the first priority of the April 17 talks should be to cap output, while Azerbaijan said it backs a freeze. Iron ore also had a solid day, climbing 5% to $55.6, while Copper and Gold closed up 0.5% and 1.2% respectively. The biggest mover was Silver which gained nearly 6% to close just shy of $16.
The US Dollar is softer against all G10 currencies, barring CHF which is practically unchanged. Sterling was the standout performer with Reuters reporting a large GPB/JPY order as a factor for the outperformance. The fall in the US Dollar Index below its October low of 93.80 triggered a basket selling of US Dollars while the rise in commodity prices helped commodity linked currencies outperform with the Canadian Dollar again very strong rising 0.75%.
In other news the Fed Kaplan said he does not expect an interest rate increase this month in light of a puzzling weakening of economic growth, though a June tightening by the Fed remains a possibility.
European markets are opening stronger this morning helped by the 1.13% rise in the Nikkei which closed at 15,928. The final CPI data from Germany was reported earlier and came in as expected at +0.8% and this data is also helping the DAX. At 9.30 am we have UK CPI.PPI and the ONS House Price Index. This is followed by US NFIB Small Business Optimism and Import Prices at 11.00 am and 1.30 pm respectively. Finally at 2.00 p the IMF will publish its latest Growth Forecasts.
This afternoon we have the Fed’s Harper, Williams and Lacker all due to speak. That said with Fed Chair Yellen and Dudley speaking last week, regardless of what other Fed speakers may say, we know that the inner circle within the Fed remains ‘cautious’.
June S&P 500
My S&P plan finally worked out yesterday as the market traded lower in the final few minutes of trading to my average buy level at 2033.50. Earlier this morning I emailed my Platinum Members to cut this position on any rally to 2040 and we just got filled in the last 30 minutes and I am now flat. Unfortunately the S&P just missed my 2057 sell level with a 2056.50 high print and if you front ran my sell level then you had an even better day as the market quickly fell 15 Handles after making this high before rebounding. It seems that every night/morning the S&P rallies while once the US markets open we soon see a wave of selling hit the tape. As I mentioned yesterday last Thursday’s low print at 2026 is crucial for the market as a break and close below here could well see an attack into the high 1900’s. The fact that we have bounced off this support over the past three trading session may soon this support breached on the next sell-off and for these reasons my only interest in buying the S&P today is on a dip lower to 2012/2018 with a 2007 stop. I know this may seem optimistic that the market trades this low but I do not like the price action especially with the sell-off over the past three trading sessions in the last hour of trading. Today I will lower my sell level to 2049/2055 with a tight 2061 stop.
EUR/USD
The Euro has traded in a very narrow range over the past week with an upward bias. The fact that the market went net short the Dollar as mentioned in yesterday’s commentary is significant and to me it is only a matter of time before we take out the key resistance at 1.15. Today I will raise my buy level to 1.1360/1.1390 with a tight 1.1325 stop. I still do not want to be short the Euro at this time.
June Dollar Index
The break of the October low in the Dollar sees the Dollar under pressure with the Dollar now trading nearly 7% lower from its 100.65 peak last December which is not an insignificant move. I am still flat the Dollar and today I will lower my sell level to 94.50/94.80 with a 95.15 stop.
June DAX
I am still flat the DAX which literally took off to the upside just before I posted yesterday morning. Today I will lower my buy level slightly to 9540/9600 with a 9485 stop. The price action is telling me not to be short the market at this time.
June FTSE
Overnight the FTSE just missed my 6110 buy level with a 6120 low before rallying over 6150. Since the open this morning the FTSE is trading heavy and today I will now lower my buy level to 6050/6080 with a 6015 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
With the S&P having hit my buy level first I waited to buy the Dow near the bottom of my buy range at 17540. This morning I covered this position at 17575 before the market rallied to a high of 17605 and I am now flat. As I mentioned in the S&P commentary I do not like the way this market is trading and today I will now look to go short on any rally higher to 17670/17730 with a 17780 stop. For this reason I no longer want to be a buyer of the Dow at this time especially with the major Bank stocks due to report their earnings from tomorrow with JP Morgan kicking off the results.
June BUND
Just as I posted yesterday morning the French Central Bank announced that it was issuing Bonds in both the 20 year and 50 year which had a knock on effect for the BUND which had just missed my initial sell level be a few points before selling off aggressively. I am still flat the Bund and today I will be a small buyer on any further dip lower to 163.20/163.50 with a tight 162.90 stop. The Bund has good support at 163.10 and I would expect the market to initially rally off this level.
Gold Rolling Contract
No change as I am still flat Gold preferring instead to hold Silver which is less risky. My only interest in buying Gold is still on a dip lower to 1230/1237 with a 1223 stop.
Silver Rolling Contract
My long 15.30 Silver position from last Thursday finally worked out as the market hit my 15.60 T/P level before rallying over 16.00 and I am now flat. The fact that Silver broke and closed over 15.60 is short-term bullish and today I will again look to buy the market on any dip lower to 15.55/15.85 with a 15.20 stop.
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