US equities indices edged a little bit higher on Friday despite mixed corporate earnings while European equities ended the day practically unchanged despite the fact that European Flash PMIs for July were better than expected. The USD was stronger across the board with GBP the biggest loser on the back of soft PMI data, core global yields were little changed and in commodities, base metals and oil were softer.
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 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 50 points on Friday and is now ahead by 1217 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 service in June 2015 it has averaged a monthly gain of over 2200 points.
Under a light-trading environment, the S&P500 gained 0.5% on Friday climbing to 2175.03, a new record. The Dow Jones ended 0.3% and the NASDAQ was 0.5%. Honeywell International posted Q2 revenue and profit gains, however it downgraded its revenue outlook for the year. GE shares ended the day under pressure, falling 1.6%, the company reported better than expected earnings, but it noted a gloomier outlook given the current volatile and slow growth environment.
Softer than expected July UK services (47.7 from 52.3) and manufacturing (from 52.1 to 48.7) flash Markit PMIs saw the UK centric FTSE 250 index drop 0.4% while the FTSE100 index climbed 0.5%, supported by the performance of export orientated companies as Sterling weakened.
Indeed, on Friday GBP was the G10 underperformer, falling 0.94%against the USD. Markit noted that the decline in UK activity was consistent with GDP shrinking at a quarterly rate of 0.4%. NZD/USD was the best performer ending the day basically unchanged. The AUD/USD ended the week at 0.7462, 0.44% lower after trading to an intraday high of 0.7485. The EUR/USD also lost 0.44% with some of the losses recorded following the news of the Munich shooting. Canadian Retail Sales and CPI numbers were better than expected, helping USD/CAD move from 1.3109 to 1.3057, however as oil prices soften later in the session, the currency pair recovered, ending the day + 0.3%. The Yen lost a little bit of ground against the USD (-0.29%) and NOK was also under pressure (0.69%) on the back of softer oil prices.
Core global yields had a quiet and mixed trading session on Friday. 10y Bunds ended the week 1.2bps lower at -0.03% and 10y USTs rose 1bps to 1.57% after reaching an intra night high of 1.590%. 10y UST are now just over 20bps from the lows reached early in July, but they are well below their pre Brexit level (1.747%) reflecting a still high level of uncertainty on the global economic outlook.
As for commodities, oil prices ended the week a little bit softer with WTI down 0.3% to $44.26 and Brent down 0.4% to $45.74. Renewed over supply concerns, this time from Asia, dragged prices lower. Iron Ore dropped 2.27% on Friday, effectively reversing all the previous day’s gains. Base metals in general were also softer with the LMEX index falling 0.79% on Friday to be down 0.70% for the week.
Policymakers from the G20 economies said on Sunday that a) They recognise excess capacity in steel and other industries is a global issue that has had a negative impact on trade and workers and which requires a collective response b) They would resist all forms of protectionism while also reiterating that excess volatility and disorderly movements in exchange rates could have adverse implications on stability C) They are well positioned to proactively address potential economic and financial consequences of Britain’s decision to leave the EU.
This morning on the economic front we have German IFO Business Climate and Current Assessment/Expectations at 9.00 am. This is followed at 11.00 am by UK CBI Trends and Business Optimism. Finally at 3.30 pm we have the only US data today, namely the Dallas Fed Manufacturing Activity Index.
September S&P 500
On Friday afternoon I emailed my Platinum Members to raise their sell level in the S&P to 2172 which got filled at this price shortly after the markets opened last night before trading lower to my 2167 revised T/P level overnight and I am now flat. Today I will again look to sell the S&P on any rally higher to 2175/2180 with a 2186 stop. This market is so overpriced as well as overly-controlled by Central Bank manipulation and is due a sizeable correction, but as mentioned countless times until we get a sell extreme that sticks for more than a few hours we can only do the same with our short positions and this strategy has served us well all year. I will now raise my buy level to 2145/2152 with a 2139 stop.
EUR/USD
Late in Friday’s session the Euro traded lower to my 1.0960 average buy level. I am still long and I will now raise my stop on this position to 1.0905 which is just below the 1.0910 post-‘’Brexit’’ spike low print.
September Dollar Index
After the market traded lower to my EUR/USD buy level as outlined above I waited to sell the Dollar which I finally did at 97.55. I am still short and I will now lower my stop on this position to 97.90.
September DAX
No change as I am still a buyer on any dip lower to 9990/10040 with a 9935 stop. My only interest in selling the DAX is still on a rally higher to 10330/10380 with a 10440 stop. I will still be an aggressive seller in this area if the market trades this high.
September FTSE
Despite the awful UK PMI data on Friday the FTSE closed 0.5% higher led again by the weaker Sterling which closed below 1.31 against the US Dollar. Today I will raise my sell level slightly to 6730/6770 with a 6805 stop. I will also raise my buy level to 6580/6610 with a 6545 stop.
Dow Rolling Contract
The Dow continues to lag both the S&P and NASDAQ since the market made its new high last week. I am still flat the Dow and I will continue to look to sell the market on any rally higher to 18660/18740 with the same 18790 stop. My only interest in buying the Dow is still on a dip lower to 18330/18390 with a 18270 stop. Given how overbought the Dow is trading I still expect to see a decent correction before the next rally leg starts. Hopefully the Dow will oblige first by testing its 2015 high at 18351 before trading higher. Remember this level should provide strong support.
September BUND
I am still flat the Bund which closed just over its 166.50 pivot point. Today I will now raise my sell level to 167.25/167.55 with a 167.85 stop. Unfortunately the Bund just missed my 165.80 buy level with a 165.99 low print before rallying into the close. I will now raise my buy level slightly to 165.65/165.95 with a 165.30 tight stop.
Gold Rolling Contract
Overnight Gold traded lower to my 1314 buy level. I am still long and I will now raise my stop on this position to 1302.
Silver Rolling Contract
Silver traded lower to my 19.60 buy level on Friday. I am still long and I will now raise my stop on this position to 19.05 which is just below the key double bottom support at 19.20.
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