US small business owners tend to be Republican, and those who are member’s of the National Federation of Independent Businesses (NFIB) overwhelmingly so. Thus optimism among NFIB members surged to its highest level since 2004 in December and with the monthly increase, from 98.4 to 105.8, the largest since 1980. Whether it’s unconditional joy at Donald Trump’s election victory, or the fact Republicans now enjoy a clean sweep of both the U.S. Legislature and Executive, that drove the index so high isn’t clear – probably a combination. Of course, sentiment and spending isn’t the same thing – as we often see with divergences between (strong) consumer sentiment surveys and (not so strong) retail sales data. But since we already knew last week that NFIB members’ hiring intentions also surged in December, there’s a fair chance at least some of the optimism reflected in the December survey will translate into stronger economic activity in coming months.
To mark my 1250th 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 made 69 points yesterday and is now ahead by 396 points for January having made 1351 points in December, 1971 in November and 1582 in October. The previous four months saw gains of 1142, 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.
The NFIB survey was the standout piece from yesterday’s economic news. We also had the U.S. JOLTS Report which suggest job opening remain fairly steady at a very high level, and U.S. Wholesale Inventories which rose by 1% last month and imply a net addition to Q4 GDP.
Market-wise, it hasn’t been a big past 24 hours. US equities ended the day little changed with the Dow closing 0.16% lower, the S&P flat while the NASDAQ again led the way with a new all-time high for a gain of 0.36%. Meanwhile US Treasury yields are just a basis point or so up on where I marked prices yesterday morning.
In currencies, the Turkish Lira was being pummelled as I posted 24 hours ago has slightly extended losses overnight, but the biggest loser has been the Norwegian Krone. This, followed softer than expected December inflation data (- 0.5% m/m against -0.1% expected). The Japanese Yen is about where we left it, while the Euro is a little lower in the context of a broadly stronger US Dollar post the aforementioned NFIB survey, albeit not much (the DXY index is 0.3%).
Yesterday, the AUD dipped on the release of weaker than expected November Retail Sales data, but more than recovered ground later in the session in the context of broad based US Dollar slippage. Following a bit of o/n chop it’s currently little changed at 0.7385.
Commodities have been a bit more interesting, with oil continuing to lose ground after Monday evening’s news of more North American drilling rigs coming back on line and the US releasing reserves from the SPR. Brent and WTI crudes are off $1.22 and $1.06 respectively. Metals prices are mostly firmer, including gold (+$6) and iron ore (+$1.70 to its best level of the year). In contrast steaming coal has lost another $1.45 and is down $8.45 a tonne year to date. Coking coal didn’t trade.
This morning on the economic front is all about the UK. At 9.30 am we have Trade Balance, Industrial Production and Construction Output. We have no data releases due from either the Euro-Zone or surprisingly the US as we await Fed Chair Yellen who is speaking tomorrow. Finally at 3.00 pm we have the UK NIESR GDP Estimate.
March S&P 500
The S&P which rallied strongly on the release of the US NFIB Survey spent the rest of the day trading sideways before getting hit in the last hour of trading. I am still flat as none of yesterday’s range got hit in what was a very quiet trading session. With no US economic news due today it is hard to see where the volatility will come from. I will leave my buy level unchanged at 2249/2255 with a 2244 stop. My only interest in selling the S&P is still on a rally higher to 2285/2291 with the same 2296 stop. Interestingly, despite the Dow closing lower yesterday, the McClellan Oscillator improved slightly to close with a positive reading of +38 from Monday’s +5 print.
EUR/USD
After two earlier attempts, the Euro finally hit my 1.0555 buy level. As I was long Silver and the fact that we had some nice points made earlier in the session I did not want to risk these gains and I emailed my Platinum Members to exit this position at 1.0564 and I am still flat. The Euro made an overnight low at 1.0536 before trading back to the 1.0560 level where it still trades as I write today’s commentary. Today I will again look to buy the Euro on any dip lower to 1.0470/1.0510 with a 1.0435 stop. Given the fact that the US Dollar Index had a Downside Key Week Reversal last week I do not want to be short the Euro at this time. The Euro needs to break and close below last Tuesday’s 1.0341 low print for me to turn bearish.
March Dollar Index
My Dollar plan worked well yesterday with the Dollar trading higher to my 102.05 sell level before trading lower and this sell-off enabled me to cover this position at my revised 101.70 T/P level and I am now flat. Key Week Reversals are rare events and can be a game changer. Last week’s KDR in my opinion is significant and will remain in place unless we break and close above last Tuesday’s 14 year high at 103.85. Today I will again look to sell the Dollar on any rally higher to 102.35/102.75 with a 103.10 stop. If I am taken short and subsequently stopped out of this position I will be a more aggressive seller in front of 103.65 with a 104.05 stop.
March DAX
Unfortunately the DAX continues to trade sideways which it has done for nearly three weeks now. In my 20 years of trading the DAX, I have never known such a lack of volatility for a market that normally trades in a 150/200 point range each day is now trading less than 70 points. Given the fact that the DAX is trading near all-time highs you expect to see more volatility but so far this is not the case. The Exchange where the DAX trades is called the EUREX and if this continues it will really hurt their bottom line. Today I will leave my buy level unchanged at 11440/11495 with a 11395 stop. I still do not want to be short the DAX at this time.
March FTSE
Unfortunately the FTSE just missed my 7230 sell level with a 7227 high print before spending the rest of the day trading sideways to lower and as a result I am still flat. It is very difficult to be short the market when you consider how weak Sterling is trading and as a result this market continues to be a buy on dips. Today I will raise my buy level slightly to 7120/7150 with a 7085 stop. My only interest in selling the FTSE is still on a rally higher to 7235/7265 with a 7290 tight stop. The FTSE is severely overbought but it will take a rally in Sterling to finally break this uptrend.
Dow Rolling Contract
The Dow continues to trade sideways and in the process is easing its overbought condition. The weakness in oil yesterday prevented another attempt of breaking the round number resistance level at 20,000 that the TV Business Channels are so obsessed with. I still believe that this magic number will at some stage get broken as I believe that the market will hold in until Trump’s inauguration at the end of next week with the best chance of a sell-off coming after he assumes power. Today I will leave my sell level unchanged at 20040/20100 with the same 20150 stop. I will lower my buy level slightly to 19730/19790 with a 19670 stop.
March BUND
Just like the DAX above, the Bund which also trades on the Eurex Exchange continues to trade in a narrow range. Today I will move my buy level higher to 162.30/162.60 with 161.85 wider stop. The Bund has very strong support at 162.05 and I would expect that any test of this level will initially see a decent rally first. I still do not want to be short the Bund at this time.
Gold Rolling Contract
No change as I am still flat Gold which continues to consolidate off the December low at 1123. One of the best trading signals is the Daily Sentiment Index and when this indicator recorded a series of below 10% bulls it was only a matter of time before Gold rallied strongly with the market now trading 6% higher off this low. It takes patience but the DSI works brilliantly in times of extreme readings. Today I will raise my buy level slightly higher to 1167/1175 with a 1159 stop.
Silver Rolling Contract
Finally my latest long 16.55 Silver position worked well with the market trading to a high of 16.93 yesterday afternoon. This rally enabled me to cover my long position at my 16.80 T/P level. I am not comfortable when I do not have a long Silver position on board and I subsequently emailed my Platinum Members to re-buy Silver again at 16.75. Today I will buy some more Silver on any dip to 16.45. I will have a 16.05 stop on this position.
This evening at 6.00 pm I am speaking in the offices of IG Index Dublin at 6.00 pm and if anyone would like to attend they can register on the following link;
Recent Comments