While European Markets started the week in lethargic mood, trading sideways for most of yesterday, US stocks opened higher following a series of merger announcements with the market also getting a boost from better than expected earnings reports. In Currencies, the US Dollar closed stronger across the board amid an improvement in risk appetite and better than expected data releases. These factors also contributed to a steepening in the US Treasury curve with the move led by longer dated Bonds.
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 1/4 updated emails throughout the trading day. This offer is open to both new and existing members and if anyone is interested can you please email me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it ended flat yesterday and is still ahead by 1065 points for October having made 1142 points in September. The previous three months saw gains of 1742, 1642 and 2550 points respectively. Since I started this Platinum Service in June 2015 it has averaged a monthly gain of over 1900 points.
US Equities closed between 0.4% and 1.0% higher after Rockwell Collins Inc. Said it would buy B/E Aerospace for $6.4bn and TD Ameritrade will acquire Scottrade’s brokerage operations. Meanwhile both AT&T and Time Warner shares slipped around 2% amid scepticism from investors on the benefits from a vertical integration and growing objections by politicians. T-Mobile US Inc. Jumped on better than estimated results.
As for data releases we have had a good start to the week with better than expected preliminary PMI readings across the board. Yesterday’s Japan’s PMI rose for a second successive month, Germany overturned the pullback seen in September with its Manufacturing Index climbing to 55.1 from 54.4 previously. The Euro-Zone Composite PMI also climbed in October, while in the US the Markit Manufacturing PMI recorded its highest reading in a year, climbing to 53.2 in October from 51.5 previously.
The positive start to the US equity market and better than expected US Economic data releases has seen the US Dollar perform against all G10 Currencies. NZD and JPY are at the bottom of the pile, down 0.43% and 0.41% respectively. The CAD closed down 0.4% with news that Canada’s EU trade deal is on the verge of collapsing probably a factor at play. After seven years of negotiations, the overdrawn affair was already raising concerns over the EU’s ability to strike a trade deal and it is an ominous sign of the difficulties the UK faces if it wants to negotiate a post Brexit trade deal with the EU.
We had quite a few Fed speakers yesterday and the general message appears to be that there is a growing consensus amongst Officials that a December rate hike looks more likely than not. Fed voter and dove Bullard says there is no urgency to raise rates, but December is ‘’most likely’’. The Fed’s Evans who is also a dove and a voter next year said that ‘’we need to get the level of the Federal Funds Rate up to a sustainable level as soon as the economy will allow it’’. Evans thinks the Fed will need to hike three times between now and the end of 2017.
This morning on the economic front we have German IFO Business Climate and Current Assessment/Expectations at 9.00 am. Shortly after this the European Commission will release its latest Economic Forecasts. This is followed at 2.00 pm by the US FHFA House Price Index. Finally we have the Consumer Confidence Index, Richmond Fed Manufacturing Index and the TIPP Economic Optimism at 3.00 pm.
December S&P 500
As expected the S&P rallied strongly after I posted yesterday morning with the market closing comfortably over its 100 Day Moving Average at 2135. The market also closed over its next resistance at 2142 and as I mentioned yesterday the fact that we only have five trading days left in October, to me it is only a matter of time before the S&P makes new highs especially as we have seen over the past six weeks it is just a waste of time trying to be short and at the same time try and take on the Fed. Today I will now raise my buy level to 2131/2137 with a 2126 stop. I still do not want to be short the S&P at this time.
EUR/USD
No change as I am still a buyer on any dip lower to 1.0825/1.0855 with a 1.0790 stop. Given how oversold the Euro is trading I do not want to be short the market at this time.
December Dollar Index
No change as I am still a seller on any rally higher to 99.00/99.30 with a 99.65 stop. Remember a break and close over the December 2015 high at 100.50 will be very constructive and could see the Dollar accelerate a lot higher.
December DAX
The DAX did indeed test the 10804 2016 high before having a small sell-off into the close. However the market again closed over the key 10680 now strong support level for the third consecutive trading session. Today I will move my buy level higher to 10660/10720 with a 10620 tight stop. Naturally I do not want to be short the DAX at this time.
December FTSE
The FTSE traded lower all afternoon with the market eventually hitting my average buy level at 6955. I am still long and today I will now raise my stop on this position to 6910. The 6920/6950 area should act as decent support for a test higher again of the 7000 resistance level. Remember the real resistance level for the FTSE is at the nine year trend-line at 7135/7145. A break and close over this latter level will be a major breakout to the upside.
Dow Rolling Contract
Despite the Dow and other US Indices closing between 0.4 and 1.0% higher the McClellan Oscillator only closed with a positive reading of +15 from -15 last Friday. I am still flat the Dow and today I will now raise my buy level to 18070/18130 with a 18010 stop. My own view is that this market will not fall ahead of the US Election which is on two weeks from today and that we will soon break higher over the coming days.
December BUND
The Bund finally traded lower to my 163.85 buy level with a 163.84 low print before having a small rally. As I wanted to cover my Silver loss I emailed my Platinum Members to exit this position at 164.00 and I am now flat. The fact that the Bund sold off into the close as it followed the US Treasury market lower probably means we have further to fall before attempting another rally. Today I will again look to buy the Bund on any dip lower to 163.10/163.40 with a 162.80 stop. Despite the late sell-off I do not want to be short the market at this time.
Gold Rolling Contract
I am still flat Gold and today I will leave my buy level unchanged at 1248/1255 buy level with a 1241 stop which is just below the October low print at 1242.
Silver Rolling Contract
Thankfully Silver finally rallied to a 17.87 high print which enabled me to exit my long three week 17.85 position for a small loss at 17.70 and I am now flat. Today I will again look to buy Silver on any dip lower to 17.15/17.45 with a 16.80 stop.
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