Anna Leadsom has stood down as a candidate for leadership of the UK Conservative Party, paving the way for Home Secretary Theresa May to be the next Prime Minister, expected to be formally installed tomorrow after PM Cameron’s resignation. Speaking to reporters outside Westminister, May said that ”Brexit means Brexit and we are going to make a success of it”. She also said there needs to a breather before formal negotiations start with the EU.
To mark my 1100th 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 105 points yesterday and is now ahead by 645 points for July having made 2550 points in June. The previous three months saw gains of 1532, 2175 and 2265 points respectively. Since I started this Platinum Service in June 2015 it has averaged a monthly gain of over 2200 points.
Sterling has had a relatively positive trading session yesterday and that trend has continued over night with Cable now trading at 1.31 and EUR/STG back below 0.85 at 0.8470 in the wake of the Leadsom announcement. This has led to higher stocks and Bond Yields in the absence of any major economic news. Noted Fed hawk and voter Esther George has been speaking saying that the Fed should resume rate hikes after last Friday’s positive Payroll Report.
The Eurostoxx 600 Index rose 1.64%, the FTSE by 1.40% and the Dow closed up 0.44% at the start of the US reporting season. US 10y Bond Yields rose 7bps to 1.43% with German Bund Yields up 2.1bps to -0.17%. UK Gilts also firmed 2.3 bps to 0.76%. Commodities have been mixed, the biggest mover being oil with WTI down $0.91/bbl to $44.50 and Brent off 1.50% amid signs of rising Canadian production and, over recent weeks, signs of decreased rig counts in the US.
Perhaps the biggest mover over the past 24 hours has been the increase in USD/JPY, which is now trading at 103.30 this morning after Sunday’s Upper House elections that PM Abe had won comfortably, with Abe as mentioned yesterday planning to use fiscal stimulus to support the economy, to the tune of Yen10 trillion in stimulus which is equivalent to 2% of GDP. This announcement has supported risk sentiment which is usually Yen negative. The Nikkei which rose 4% yesterday closed up another 2.5% this morning at 16, 095 and this movement is again helping the European markets on the open.
While risk sentiment has been positive, the commodity currencies have not made new headway on the topside. With the Euro back trading over 1.11 this morning this rise finally sees the AUD/USD back trading over 0.76. LME base metals again closed higher and this is helping Iron ore to consolidate ahead of the key Chinese activity data on Friday morning.
This morning on the economic front we already had the release of German CPI which printed as expected at +0.1%. At 10.00 am the Bank of England Mark Carney will speak on Financial Stability in the UK Parliament. This is followed at 11.00 am by the US NFIB Small Business Optimism. Finally at 3.00 pm we have Wholesale Inventories and the key JOLTS Job Openings.
This afternoon both the Fed’s Tarullo and Bullard will speak in Washington and St Louis respectively.
September S&P 500
My S&P plan worked well yesterday with the market hitting my sell range with a 2137 high print before selling off into the close with a 2128 low print. As I was having a good day yesterday and not sure which way the market was going to break in the last hour of trading I covered my short 2135 position for a small gain at 2133 and I am now flat. This morning the S&P is again testing yesterday’s high after an incredible 155 Handle rally over the past two weeks of the 1981 low. Today I will again look to sell the market on any rally higher to 2143/2148 with a tight 2153 stop. The S&P has important support at 2120 and today I will now raise my buy level to 2118/2123 with a 2113 stop. If I am taken long and subsequently stopped out I will be a more aggressive buyer in front of 2103 with a 2094 stop.
EUR/USD
Finally the Euro is starting to firm again as in my opinion the only hope that the world has in reflating is to let the Dollar weaken. I am still flat the Euro and today I will no raise my buy level to 1.1070/1.1110 with a 1.1030 stop.
September Dollar Index
I am still flat the Dollar and today I will now lower my sell level to 96.45/96.75 with a 97.05 stop.
September DAX
The DAX has finally caught up with the other main Indices after what had been a previous slow market. Yesterday after the DAX hit my 9790 sell level the market sold of to a low print of 9750. As I was not comfortable in being short the DAX I emailed my Platinum Members to exit this position at 9770 and I am now flat. This morning the DAX is trading at 9900 which is in the ”Brexit” gap from 9834 to 10090 and this area even though is very wide should act as strong resistance. Today I will look to sell the market on any rally higher to 9970/10050 with a wider 10120 stop. I will also raise my buy level higher to 9720/9780 with a 9675 tight stop.
September FTSE
Incredibly the FTSE has now risen over 16% off its post ”Brexit” low at 5700 in just two weeks. The market is severely overbought after this move but as yet we do not have a sell signal. Thankfully we have not been short for any of this move as yet again short positions in any equity market if held for too long just get slammed. The market will now go on hold to see what Bank of England Governor Carney has to say in his address to Parliament later this morning. The next major resistance is at the one year high of 6720 which may hold the market and given how strong this resistance should be I will now look to go short on any move higher to 6690/6730 with a 6775 tight stop. After this huge move higher I do not want to be long the market at this time.
Dow Rolling Contract
Late yesterday the Dow hit my 18280 sell level before having a nice 60 points sell-off into the close. Just like the S&P above I was not comfortable in being short and I emailed my Platinum Members to exit this position at 18255 and I am now flat. So far the Dow has failed to break its 18351 May 2015 high and today I will again look to sell the Dow on any rally higher to 18360/18420 with a tight 18460 stop. I still do not want to be long the Dow at this time especially with the McCellan Oscillator closing at a very strong +170 reading last night.
September BUND
My 168.00 short Bund position worked well yesterday with the market hitting my 167.60 T/P level and I am now flat. Today I will again look to sell the Bund on any move higher to 167.50/167.90 with a 168.20 tight stop. Naturally I do not want to be long the Bund at these levels.
Gold Rolling Contract
No change as I am still a small buyer on any dip lower to 1335/1343 with a 1329 stop.
Silver Rolling Contract
No change as I am still a buyer on any dip lower to 19.10/19.50 with the same 18.70 stop.
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