In a day of potential event risk as both the ECB and OPEC met, nothing really happened. Markets mostly treaded water, while US economic data was bang in line with Jobless Claims coming in at 267K and the ADP Employment Change at 173K ahead of today’s Non –Farm Payrolls at 1.30 pm. The UK Referendum on whether to leave the EU on June 23 continues to be the dominating theme with the latest Poll showing the ‘Exit’ camp marginally ahead.
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 85 points yesterday and is now ahead by 230 points for June. The previous three months saw gains of 1532, 2175 and 2265 points respectively. Since I started this service over 12 months ago it has averaged a Monthly gain of 2200 points.
With major Sovereign Bond Yields moving lower over the past 24 hours, there does not seem to be a clear catalyst. It appears that ‘Brexit’ fears are a factor. UK Gilt Yields declined by 3bps while US Treasury Yields also fell to close at 1.81%. The Fed’s Kaplan who is a non-voter was also speaking yesterday. He said he sees some immediate tail risks if the UK leaves the EU and that we need to be prepared if the UK does exit. Despite those dovish remarks, Kaplan still thinks that it is appropriate for the Fed to raise rates. My own view is that with the June FOMC Meeting happening one week before the ‘Brexit’ vote the Fed will wait until the July Meeting instead.
In related news, Q1 activity made have been stronger than the headline suggests with the statistical agency responsible for GDP reinforcing suggestions that Q1 GDP could have been distorted by residual seasonality with a paper stating that ‘real GDP exhibits residual seasonality’.
Equity markets were quiet yesterday with the Euro Stoxx 50 closing down 0.25% while the FTSE 100 closed just 0.1% lower. Meanwhile after a lower opening the S&P again turned around and closed 0.2% higher. The US Markets were helped by the 1.3% gain in Health stocks which continued their recent outperformance.
In Currencies the AUD and Yen were the two biggest movers but in opposite direction. The AUD closed 0.5% lower on weaker Retail Sales data while the Yen in contrast rose 0.6%. Mostly other currencies ended the day lower against a mostly stronger US Dollar.
The OPEC Meeting yesterday was of little significance as there was little coordination given the political tensions between Saudi Arabia and Iran. That initially saw oil trade lower before data which showed that US Inventories had fallen further leaving WTI unchanged at $49.
The ECB Meeting was also fairly quiet with some signs that Dragi appeared a little more confident stating the ‘probability mass had shifted upward although not dramatically’.
This morning on the economic front we have German, Euro-Zone and UK Services PMI at 8.55 am 9.00 am and 9.30 am respectively. This is followed by Euro-Zone Retail Sales at 10.00 am. Next we have the US NFP data at 1.30 pm and obviously this will be the main event of the day where the expectation is for a rise of 160K. To me the most important criteria is Average Earnings. Finally we have US Services PMI and Factory Orders at 2.45 pm and 3.00 pm respectively.
This morning the Chicago Fed President Charles Evans is speaking in London.
June S&P 500
My S&P plan worked very well yesterday with the market trading lower to my 2088 buy level before having the usual rally ahead of a main economic event such as today’s NFP data. This rally saw the S&P trade as high as 2104 before the close which enabled me to cover my position too early at 2091.50 as I had too many open positions at the time and after having a slow start to May I do not want to repeat this for June and I am banking points when available. I am now flat and as is normal I will stay flat until we get the NFP data at 1.30 pm. If the S&P subsequently sells off I will again look to buy the market on any dip lower to 2090/2095 with a 2084 stop. My only interest in selling the S&P today is on a rally higher to 2119.2125 with a 2131 stop.
EUR/USD
I am still flat the Euro which just missed my 1.1140 buy level overnight. Today I will now lower this buy level to 1.1070/1.1110 with a 1.1040 stop. The Euro has very good support from 1.1070/1.1100 and I would expect the Euro to rally initially if we hit this area. I still do not want to be short the Euro at this time.
June Dollar Index
I am still flat the Dollar and today I will also raise my sell level to 96.10/96.50 with a 96.80 stop.
June DAX
I am still flat the DAX and today I will now raise my buy level to 10120/10170 with a 10070 stop. The price action in the DAX is still telling me only to be a buyer on dips and not to short the market unless we hit the top of the Daily Bollinger Band like we did earlier in the week when the DAX sold off from the 10350 resistance level.
June FTSE
The FTSE plan also worked well yesterday with the market hitting my 6170 buy level shortly after lunch before having a nice 60 point rally overnight. As so many of my markets hit my buy level at the same time I cut this position too early at 6185 and I am still flat. With the FTSE back trading above the key 6200 pivot point I will now raise my buy level to 6185/6215 with a 6155 stop which is just below yesterday’s low print.
Dow Rolling Contract
For once I was lucky in the Dow as the market hit my 17700 buy level with a 17699 low print. This morning the Dow is trading 150 points higher which enabled me to cover this position at my revised 17735 T/P level and I am now flat. Today I will stay flat until the NFP is released and I will use any dip lower to 17690/17750 to buy the market with a 17650 stop. The Dow traded very well yesterday as despite Apple shares falling over 3% this week the Dow is still ahead. I still do not want to be short the Dow at this time.
June BUND
The move to negative rates for the 10 year German Bond market edges closer. I am still flat the Bund and today I will move my buy level higher to 163.70/164.00 with a 163.45 tight stop.
Gold Rolling Contract
No change as I am still a small buyer on any dip lower to 1195/1202 with a 1189 stop.
Silver Rolling Contract
No change as I am still long at 16.15 with the same 15.55 stop. Again if I am stopped out of this trade I will be a more aggressive buyer from 15.00/15.40 with the same 14.60 stop.
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