Risky assets have continued to benefit from an improvement in sentiment. Bank stocks have led the surge in equity markets and most commodities have also enjoyed some gains, despite a pullback in oil prices and Gold. The US Dollar is broadly stronger with safe haven currencies the underperformers. The small downside Key Day Reversal in the EUR/USD is helping to push the Euro lower following the spike higher on Tuesday morning to 1.1465.
To mark my 1050th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2500 for my Platinum Service which includes 1/4 updated emails throughout the trading session. 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 82 points yesterday and is now ahead by 947 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.
The Nikkei’s solid rebound and China’s better than expected Trade data boosted Asian equity markets and this positive tone carried into the European session. Financials once again led the way with the deal to support the Italian banks which was announced late Monday seemingly still having a positive effect in the sector. The Euro Stoxx Index closed yesterday up an impressive 3.3% while the FTSE finally played some catch-up closing 2% higher. Better than expected earnings results from JP Morgan Chase dictated the tone in Wall Street with the S&P Financials Sector gaining 2.25%. At the end of the day the Dow, S&P and NASDAQ closed up 1.06%, 1.00% and 1.55% respectively and new highs for the year.
Oil prices fell as scepticism of a ‘Freeze’ agreement rose following comments from Saudi Oil Minister ruling out a production cut while US Industry data showed Crude stockpiles expanded last week. Still, other commodities had a good day, boosted by better than expected Trade data from China.
The NZD was the G10 outperformer managing to stay practically unchanged against the US Dollar. The big Dollar was stronger across the board with the safe haven Swiss Franc at the bottom of the leader board, closing down 1.10%. The CAD lost 0.5%, pulled down by lower oil prices notwithstanding the fact that the Bank of Canada was a bit more upbeat on the outlook of the Canadian economy. The Bank left interest rates unchanged at its meeting yesterday afternoon which was expected, but it brought forward the closing of the Output Gap to H2 2017 from end 2017. Meanwhile as reported yesterday morning the 2.8% rally in the Nikkei saw the Yen fall nearly 1% against the US Dollar on rumours the Japanese Government is considering low rate infrastructure loans.
The buoyancy in the equity markets meant that the softer US economic data releases were relegated to the back seat. March Retail Sales fell 0.2%, below the consensus of +0.1%, while PPI also came in weaker than expected at -0.1%. The Fed Beige Book notes US economic activity expanded with several regions seeing a pickup in wage growth.
Lastly, ECB’s Nowotny was speaking in New York and noted that if there is no clear improvement in inflation in the Euro-Zone then there is no room for changes to Monetary Policy which was a surprising comment.
This morning on the economic front we have Euro-Zone CPI at 10.00 am and this is followed at 12.00 pm by the UK Interest Rate decision. At 1.30 pm we have US Weekly Jobless Claims, CPI and Real Average Weekly Earnings. Finally at 2.45 pm we have the Bloomberg Consumer Comfort Index. Fed speaking wise we have Lockhart in Chicago and Powell appearing before the Senate Committee with both Fed Members speaking at 3.00 pm
This morning European Markets are opening mixed despite the 3.13% rise in the Nikkei which closed at 16900 for a 1500 point rise since its 15400 low print last Friday morning.
June S&P 500
In an email to my Platinum Members that I shared at lunch time yesterday it emerged that there had been two emergency meetings by Fed Governors last Monday and Tuesday, along with an unscheduled and impromptu and rare meeting between President Obama and Fed Chair Janet Yellen. Even rarer Vice President Biden attended this meeting. I am mentioning these two events as I wonder is there some sort of ‘Black Swan’ event in the horizon as the 50 Handle rally in the S&P came out of nowhere which in my view was orchestrated by all the World’s Central Banks as only last Thursday all the main Indices were on the verge of breaking down hard to the downside. This original move lower was led by the Nikkei and this is why I pay so much attention to the USD/JPY Exchange Rate which began to rally early on Tuesday morning and was probably the main reason why I emailed my Platinum Members to cut any short position that they may have had in the Dow and S&P. Thankfully we were not short for this aggressive mover higher and I am still flat. The S&P has strong resistance from 2082/2088 and I will be a small seller in this area with a 2093 stop. Yesterday’s aggressive move higher has left another large ‘Open Gap’ from 2054/2063 and today I will l move my buy level higher to 2055/2061 with a 2049 stop. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer in front of 2043 with a 2037 tight stop.
EUR/USD
The rally in equities has seen the Euro trade lower following its small Key Day downside reversal on Tuesday with the Euro hitting my average buy level at 1.1300. Overnight I was stopped out of my Euro position at 1.1260 and I am now flat. I will be a more aggressive buyer on any further dip lower to 1.1170/1.1210 with a 1.1125 stop. Despite the negative price action I 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 94.95/95.35 with a 95.65 tight stop.
June DAX
When I wrote my commentary yesterday that I expected the DAX to trade higher to the 10100/10200 major resistance level, I did not expect this rally to happen so quickly. Thankfully we have not been short for this large move higher and I am still flat. Today I will be a small seller on any further rally higher to 10170/10220 with a 10260 stop. Given the extent of the recent move higher I do not want to be long the DAX at this time.
June FTSE
Wow the FTSE just exploded after I posted yesterday morning and just like the other Indices thankfully we had no sell levels on board which is important as we try to protect our gains for April and indeed for the year to date. This rally sees the FTSE trading outside the top of its Bollinger Band and at the top of its Williams Index. I will now look to go short on any further rally to 6350/6390 with a 6420 stop. Despite the positive price action over the past 48 hours I do not want to be long the market at this time.
Dow Rolling Contract
The Dow has now rallied over 400 points since its closing low print last Thursday despite the weakening economic situation as shown yesterday by the very weak Retail Sales and PPI data. I am still flat the Dow but with the market now trading at the top of its Bollinger Band and Williams Index following its 2500 point rally since mid-February I will now look to sell the Dow on any further rally higher to 17960/18030 with a wider 18090 stop. I certainly do not want to be long the Dow at this time.
June BUND
My long 163.38 Bund position worked well with the market rallying to 163.90 which enabled me to cover this position at my 163.60 T/P level and I am now flat. There is no doubt the Bund has huge support at the 163.10/163.40 area and I will again look to buy the Bund on any dip lower to this area with a 162.80 stop. The price action is telling me not to be short the Bund at this time.
Gold Rolling Contract
My fears that Gold could trade lower certainly proved to be the case overnight with Gold trading lower to my 1233 average buy level. In the last few minutes Gold hit my 1243 T/P level and I am now flat. Today I will again look to buy Gold on any dip lower to 1221/1228 with a 1215 tight stop.
Silver Rolling Contract
Unfortunately Silver just missed my 15.90 buy level overnight with a 15.91 low print. As I am now flat Gold I have just bought Silver again at 16.05 with a 15.55 stop.
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