Markets were extremely quiet yesterday as we await the final Fed speaker of the week, Fed Chair Yellen who is being eulogised on her ‘groundbreaking achievements’ at Harvard University where she will receive the Radcliffe Medal this afternoon. This event includes a panel session with a number of academics and reflections from further Fed Chair Ben Bernanke. It is unclear whether Ms Yellen would use such a forum to discuss the outlook for US Rates, in which case we may have to wait until next week for here views.
To mark my 1075th 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 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 42 points yesterday and is now ahead by 1232 points for May having made 2175 points in April. The previous two months saw the same gain of 2265 points for both February and March following a record 3365 point gain in January. Since I started this service last June it has made over 25,000 points.
US 10 Year Treasuries closed 5bps lower at 1.80% following a weaker than expected Core Durable Goods and Capex Orders Report, while another strong Bond Auction may have provided some support. What may have appeared to be slightly dovish remarks by the Fed’s Powell may also have contributed.
Weaker US Capex Orders served as a reminder that the investment data still looks sluggish in the US with Core Capex Orders declining 0.8% m/m, below the +0.3% expectation. However, all is not woe with the Atlanta Fed’s GDPnow pencilling in Q2 GDP at 2.9% up from 2.5% last week. US Weekly Jobless Claims were also positive at +268K, slightly better than the market consensus of 275K and continuing to tick back to their recent trend.
Yesterday the Fed’s Powell hit the newswires. While Fed voter Powell was casting his lot behind a rate hike soon: ‘Depending on the incoming data and the evolving risks, another rate increase may be appropriate fairly soon’ he also sounded a little dovish stating ‘but don’t want to hurry’ and that the UK’s EU Membership Referendum ‘presents reason for caution in raising rates’. I still believe that with the ‘Brexit’ vote coming one week after the June FOMC Meeting that the Fed will wait until July before making the next rate increase.
The other big story from yesterday was that oil briefly breached the $50.00 a barrel mark for both WTI and Brent. The move higher in the oil price was driven by a greater than expected drop in US oil inventories by 4.2m barrels while global oil production has also been affected by disruptions in Nigeria and Venezuela.
Against this background, equity markets were fairly quiet with the S&P500 closing unchanged and the Euro Stoxx increasing by 0.3%. With US and UK markets closed on Monday most traders have already left for the long weekend.
This morning we have no data of note due from the UK or the Euro-Zone. At 1.30 pm we have the US GDP and this is followed at 3.00 pm by the University of Michigan Consumer Sentiment before all the attention turns to Fed Chair Yellen and former Fed Chair Bernanke at Harvard University.
June S&P 500
Yesterday was probably one of the quietest and narrowest trading session for the S&P so far in 2016 as I mentioned above most traders have already departed their desks for the long weekend. Despite the lack of volume I would expect volatility to pick up this afternoon when we hear from Yellen and Bernanke. I am still flat the S&P and today I will raise my buy level slightly to 2074/2079 with a 2069 stop. I will also raise my sell level to 2097/2102 with a 2106 stop which is just above the 2016 high print at 2105. If I am taken short and subsequently stopped out of any short position I will be a more aggressive seller in front of 2113 with a 2120 stop.
EUR/USD
No change as my only interest in buying the Euro is still on a dip lower to 1.1110/1.1140 with the same 1.1070 tight stop. The move higher off the 1.1128 low print on Wednesday again showed what a fantastic short term signal the Daily Bollinger Band and Williams %R are.
June Dollar Index
Having covered my latest short Dollar position yesterday at 95.10 I am still flat and today I will lower my sell level slightly to 95.50/95.80 with a 96.15 tight stop.
June DAX
Remember I only trade the DAX during the regular trading hours from 7.00 am until 9.00 pm. However overnight the spread betting firms have indicated that the DAX hit my sell level with a 10325 high print. For anyone who was lucky or foolish enough to trade overnight in the DAX then you have a nice gain this morning and I would now use this gain to close out your position ahead of Yellen and Bernanke this afternoon. I am still flat and today I will leave my sell level unchanged at 10320/10360 with a 10410 stop. Given how overbought the DAX is trading my only interest in buying this market is on a dip lower to 10040/10090 with the same 9995 stop.
June FTSE
My FTSE plan worked yesterday with the FTSE trading lower to my 6230 buy level yesterday afternoon before having a nice rally to 6260. As I wanted to book some points for yesterday I emailed my Platinum Members to exit their long position at 6252 and I am now flat. Today I will again look to buy the market on any dip lower to 6190/6220 with a 6170 stop. I will also look to sell the FTSE on any rally higher to 6310/6340 with a 6370 stop.
Dow Rolling Contract
No change as I am still a seller on any rally higher to 17960/18020 with a wider 18080 stop to allow for the volatility. I will also leave my buy level unchanged at 17680/17740 with a 17630 stop in case Yellen says something negative to drive the market this low. I f the Dow does indeed sell-off I would expect the 17700 area to provide decent support initially.
June BUND
Wow the BUND is now trading 100 points higher off its 163.10 100 Day Moving Average which it tested on Tuesday morning. There is no doubt that with 10 year rates so near to going negative that at some stage we will test this negative rate which will attract a huge amount of media attention. If and when this happens I will then finally look to put on a more macro short position. It is incredible to think that supposedly 8 years into an economic recovery the 10 Year German Bond Rate is close to having a negative interest rate. Today I will move my buy level higher to 163.30/163.60 with a 163.05 stop. I still do not want to be short the Bund at this time.
Gold Rolling Contract
Gold again traded lower to my 1219 buy level. With Gold trading to a 1211 low print overnight which was just above my 1209 stop I emailed my Platinum Members to cover this position at 1221 ahead of Yellen this afternoon especially as I am back long Silver again. Given how oversold Gold is trading I will again look to buy the market on any dip lower to 1203/1211 with a 1195 stop.
Silver Rolling Contract
Silver traded lower to my 16.15 buy level overnight. I am still long especially as Silver has now retraced 10% from its recent high and is back trading at the bottom of its Bollinger Band and Williams Index. I will leave my stop unchanged at 15.55 on this position.
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