Resorting to national anthems this morning which is admittedly pretty lame, though a glance at the intra-day chart of the Canadian dollar offers some justification. In fact most of this volatility in the currency related not to the oil price – where WTI crude has punched up to its highest level since July 2015 (see below) – but the revelation by Bank of Canada Governor Stephen Poloz following an as expected unchanged Monetary Policy decision that the Bank ‘had actively discussed the possibility’ of further monetary policy easing at Wednesday’s meeting. This was despite earlier describing the risks to the inflation outlook as ‘roughly balanced’. That headline immediately reversed the earlier drop in USD/CAD from above 1.31 to within kissing distance of 1.30 and which had been the knee-jerk response to the Bank of Canada ‘no change’ decision.
To mark my 1200th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2750 for my Platinum Service which includes ¼ updated emails throughout the trading day. This offer is open to both new and existing members and if anyone is interested they can contact me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it made 60 points yesterday and is now ahead by 920 points for October having made 1142 points in September. The previous three months saw gains of 1782, 1682 and 2550 points respectively. Since I started this Platinum Service in June 2015 it has averaged a monthly gain of over 1900 points.
Sandwiched within this highly volatile two hour period was the news that US crude oil inventories fell by 5.25mn barrels last week according to the EIA, sharply at odds with an expected build of 2mn barrels. This news came a couple of hours after Saudi Arabia’s Minister of Energy and Industry Khalid Al-Falih said ‘many’ nations are willing to join OPEC in cutting production to secure a continued improvement in oil prices. He said negotiations will continue until the scheduled 30 November OPEC meeting. The net result of all this is that WTI crude has added more than 2% to its recent rally (to $51.44) and Brent crude 1.7% to close in New York at $52.56.
US energy stocks are loving the oil price news, and together with a boost to financial stocks after Morgan Stanley became the latest US bank to comfortable beat its own earnings and revenue guidance, means that the S&P 500 closed with gains of 0.25% having been 0.5% higher at one stage. Post close, Amex has reported and comfortably beat its earnings estimate ($1.24 vs. $0.96 expected). US Bonds Yields have also edged higher on oil though the yield rally has been pared to less than one basis point at 10 years in afternoon NY trade.
Given the oil price news, you would think that CAD and NOK would have easily outpaced AUD (and NZD) but not so in part given the BoC news. Also to note is the FT saying that a government appointed committee has recommended that Norway’s state oil fund should now invest 70% of its assets in equities, up from 60% currently. The small pull- back in the AUD overnight is due a newspaper interview by David Uren saying that the government fears the mid-year budget update could be the catalyst for Australian losing its AAA rating.
Finally the Fed released its Beige Book late yesterday with nothing new to report.
This morning on the economic front we have the ECB Current Account at 9.00, followed by UK Retail Sales at 9.30 am. Next at 12.45 pm we have the latest ECB Meeting and Asset Purchase Target. This is followed at 1.30 pm by the ECB Press Conference with ECB President Dragi. Also at 1.30 pm we have US Initial Jobless Claims and the Philly Fed Business Outlook. Finally we have the Bloomberg Consumer Comfort Index at 2.45 pm and both Existing Home Sales and the Leading Index at 3.00 pm.
December S&P 500
My S&P plan worked well yesterday with the market trading lower to my 2128 buy level with a 2126.50 low print shortly after 8.00 am before having a nice rally to 2143 which enabled me to cover my long position at my 2134 T/P level and I am now flat. I have been consistent all month in not trying to sell the S&P as despite all my technical signals on a ‘’Sell’’, I was never comfortable in going short the market as the price action did not seem right that we were going to break hard to the downside especially with the Fed buying the market to prevent a sell-off ahead of the US Election next month. Again for me to turn bearish I need the S&P to break and close below 2118 which so far has not happened. Today I will again look to buy the market on any dip lower to 2125/2131 with a 2119 stop. As we are so near critical support I prefer not to sell the S&P at this time especially with the October Options Contracts expiring tomorrow evening.
EUR/USD
The Euro finally traded lower to my 1.1062 average buy level. I am still long and today I will leave my stop unchanged at 1.0910. Given the fact that we have the Dragi press conference at 1.30 pm I will use any rally to go flat ahead of his talk. If the Euro subsequently declines after he speaks I will again look to buy the Euro on any dip lower to 1.0910/1.0950 with a 1.0880 tight stop.
December Dollar Index
I am still flat the Dollar and as I am currently long the Euro I will now raise my sell level in the Dollar to 98.30/98.70 with a 99.10 stop.
December DAX
The DAX continues to hold support at the 10460/10510 area and today I will raise my buy level to this range with a 10410 tight stop. Just like the S&P above I am not comfortable in going short the DAX especially ahead of an ECB Meeting and Dragi press conference.
December FTSE
The FTSE just missed my 6930 buy level with a 6938 low print before spending the rest of the afternoon rallying. I am still flat and today I will now raise my buy level slightly to 6915/6945 with a 6885 stop.
Dow Rolling Contract
The Dow is trying so hard to not break the key support level at 17960/18030 and I am still flat. Not helping the bearish case has been the dramatic improvement in the McClellan Oscillator which closed with a positive +7 reading last night. There is no doubt that the better Earnings results released so far is helping the internals of the market. Given this improvement I will now raise my buy level in the Dow to 18030/18100 with a 17950 stop.
December Bund
The Bund also just missed my buy level before trading in a narrow/higher range for most of yesterday’s trading session. The key level to watch for the Bund is still last Monday’s low at 162.81 and the September spike low print at 162.60. As long as we can hold the 162.50/163.00 area then the Bund should start to break higher. Given how oversold the Bund is trading I will move my buy level slightly higher to 163.20/163.55 with a 162.75 wider stop which is just below last Monday’s low print.
Gold Rolling Contract
I am still flat Gold which has now rallied $30 off its 1242 low last week. Today I will raise my buy level to 1253/1261 with a 1241 stop. Gold has strong resistance from 1277/1287 and a break and close over 1290 will be constructive.
Silver Rolling Contract
No change as I am still long Silver at 17.85 with the same breakeven exit point. Again if I manage to exit this long position I will again look to buy Silver on any dip lower to 17.40/17.75 with the same 16.95 stop.
Following the success of the NFP Live Trading Day and Education Session in London on September 2, Paul Wallace and I are bringing this event to Dublin for the December NFP day on Friday December 2nd. If anyone is interested in attending this event the details are on the following link:
https://www.eventbrite.com/e/live-nfp-trading-day-dublin-tickets-28159689389
Two more dates for your diary. On November 9th at 6.00 pm I am speaking in the offices of IG Index in Dublin on the impact of the US Election result for both Stock and Currency markets for the rest of 2016.
On Friday October 28 IG are hosting a half day seminar which unfortunately I cannot speak at as I am in Florida until the following week. If anyone of my members would like to attend they can register on the following link:
https://www.ig.com/ie/trading-summit
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