The US Dollar is overall slightly higher (about 0.2% in the last 24 hours and 0.1% from where we left off yesterday), Treasury yields are largely unchanged (and following a well received 5-year note auction that saw record indirect bidding, synonymous with Foreign Central Bank demand) while stocks are struggling, the S&P 500 closing just over 0.5% lower. Partly because of the US Dollar but also perhaps the confluence of several unrelated Emerging Market incidents, commodity prices are in a sea of red, including oil (down over a $1) traded metals and agriculture, the exception being Iron ore which continued to display resilience above $60 (the China 62% fines import price closing virtually flat at $61.70).
For any of my UK members who may be interested I am doing a special all-day trading seminar over the Non-Farm Payrolls in London on September 2nd 2016. I will be assisted by Paul Wallace who is a trader that I have done a lot of joint presentations in both Dublin and London over the past 12 months. Paul is a very engaging and interesting speaker and together we will try and take you through how to trade markets live over an important economic indicator. If anyone is interested in this not to be missed event in my opinion you can check the details out on the following link:
https://summer2016londonlivetradingday.eventbrite.com
For anyone following my Platinum Service it made 185 points yesterday and is now ahead by 1240 points for August having made 1682 points in July. The previous three months saw gains of 2550, 1532 and 2175 points respectively. Since I started this Platinum Service in June 2015 it has averaged a monthly gain of over 2100 points.
The EM stress points centre on South Africa, Turkey and Korea. The Won came under pressure at the open yesterday and later extended losses after news of another North Korea ballistic missile test. The Turkish stock market (but not as yet the currency) has been hurt by news of fresh military offences by the Turkish army against Syrian strongholds near the Turkish border. And in South Africa the Rand remain under strong downward pressure as Finance Minister Gordhan refuses to acquiesce to ‘requests’ to be interviewed over alleged misdemeanours. The backdrop of course is President Zuma’s demand that the Finance Ministry ‘re-prioritises’ its spending plans and as the ANC continues to lose support.
In the more mundane G10 world, Sterling continues to bask in the summer sunshine, with doubtless some covering of record extreme speculative short positioning in front of Jackson Hole one of the drivers. Into the New York close, it has just been pipped by the NZD into second place on the leader-board after Fonterra lifted its guidance on the 2016/17 dairy pay-out by 50 cents to $4.75 per kg.
The traditionally oil-sensitive CAD and NOK haven’t moved much on the latest oil price dip, while the AUD sits within 10 pips of where I marked prices yesterday morning.
Yesterday, Australian construction work done in Q2 surprised to the downside (-3.7%) driven by lumpiness in the unwind of mining investment. Although a weaker than expected outcome, it does not look like it will present a significant risk to the preliminary Q2 GDP expectation of 0.3% q/q with part of the engineering component feeding from next week’s capex release.
US Economic Data yesterday was confined to July existing home sales and which fell by a bigger than expected 3.2%.
This morning on the economic front we have German IFO Business Climate and Current Assessment/ Expectation at 9.00 am. This is followed at 11.00 am by CBI Reported Sales. At 1.30 pm we have the US Weekly Jobless Claims and Durable Goods Orders. Next we have US Markit Services and Composite PMI at 2.45 pm. Finally at 4.00 pm we have the Kansas City Fed Manufacturing Index.
September S&P 500
My S&P plan worked really well yesterday as the market traded lower after the European Markets opened to my 2182 buy level before having a nice rally to 2188 which enabled me to cover this position at my 2187 T/P level. Subsequently I emailed my Platinum Members to re-buy the S&P at 2180 before emailing them again to cover this position at 2182 ahead of another rally to 2184 before in contrast to what has gone on over the past number of days was to see the S&P get hit into the Chicago close. There is no doubt the market is getting nervous ahead of Fed Chair Yellen’s key speech tomorrow afternoon, but I suspect she will as usual say nothing to upset the stock market. Today I will again look to buy the S&P on any dip lower to 2163/2169 with a 2158 stop. Despite the market selling off into the close I do not want to be short the S&P ahead of tomorrow’s Jackson Hole speech.
EUR/USD
The Euro traded lower to my average 1.1260 buy level shortly after lunch. I am still long and today I will leave my stop unchanged at 1.1220.
September Dollar Index
No change as I am still a seller of the Dollar on any rally higher to 95.20/95.50 with the same 95.80 tight stop.
September DAX
For once the DAX was kind to me yesterday as shortly after the European Markets opened the DAX traded lower to my 10520 buy level before having a nice 120 point rally which enabled me to cover this position at my 10575 T/P level and I am now flat. With the IFO Survey due at 9.00 am we could well see some fireworks in the DAX if the Survey deviates much from expectation. Today I will again look to buy the DAX on any dip lower to 10460/10510 with a 10405 stop. As the price action has been positive in the DAX vis a v the other main Indices I do not want to be short the market at this time.
September FTSE
Just like the DAX above the FTSE also hit my 6825 buy level shortly after the open yesterday morning before having a nice rally which enabled me to cover this long position at my 6855 T/P level and I am now flat. The strength of Sterling is holding the FTSE back but until we break the key 6770 support level it is difficult to be short. Today I will again look to buy the market on any dip lower to 6750/6780 with a tight 6725 stop. I still do not want to be short the market at this time.
Dow Rolling Contract
Finally just before the New York close the Dow hit my 18465 buy level before mounting a late rally which enabled me to cover this position at my revised 18495 T/P level as outlined to my Platinum Members and I am now flat. Today I will again look to buy the Dow on any dip lower to 18375/18425 with an 18325 tight stop. I still expect the market to hold in to trading higher ahead of Yellen tomorrow and for this reason I still do not want to be short the Dow at this time.
September BUND
No change as I am still a buyer on any dip lower to 166.90/167.30 with a 166.55 tight stop. Remember a break and close below 166.60 will be at least short term bearish and should see the Bund trade lower.
Gold Rolling Contract
Gold finally followed Silver lower yesterday. As I am now long Silver I will reduce my buy level in Gold to 1307/1314 with a 1299 stop.
Silver Rolling Contract
My patience in waiting to buy Silver finally came through yesterday with the market hitting my 18.60 buy level with an 18.50 low print. I will now raise my stop on this position to 17.95.
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