Silver finished last Friday’s trading with an Upside Key Day Reversal following a softer than expected Q4 GDP print and downside miss on Headline Durable Goods Orders. US Bond Yields dropped on the 1.9% headline GDP release while the US Dollar again weakened. In the Trumposphere, the US President signed an executive order making major changes to America’s policies on refugees and immigration. He suspended the US refugee program for 120 days, banned all immigrants from seven Muslim countries for 90 days and ordered his administration to develop “extreme vetting” measures for immigrants from those countries to keep “radical Islamic terrorists” out of America. This is bound to reverberate with risk of tit-for-tat responses (e.g. a ban on US citizens travelling to those countries most affected?). Short term market impact, if any, is not obvious though these actions do have the potential to undermine global risk sentiment.
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 contact me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it made 108 points on Friday and is now ahead by 1660 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.
Under the hood, the detail of the U.S. GDP report were more positive than the headline, with a big subtraction from growth from net exports (-1.7%) and where a reversal of the Q3 surge in soybean exports was largely to blame. Consumer spending at 2.5% was in line with expectations and business was also a reasonably healthy +2.4%. Ditto for Durable Goods Orders where the core measures (ex-transport and ex-defence ex-aircraft) at 0.5% and 0.8% were both better than the -0.4% headline print.
The S&P500 finished 0.09% lower at 2,296.68 (+1% on the week) and the Dow -0.04% at 20,093.78 (+1.3% on the week). Some note should be made of the VIX, which fell just 0.05 to 10.58 but is a point lower on the week and to its lowest since July 3rd 2014. The FT’s John Authers’ Friday night note (wittily titled VIX VapoRub ) highlighted research showing the cyclical low in the VIX tends to lead cyclical downturns in US stocks by a couple of months. He suggests it may be time to buy the VIX, but not (just yet) to sell US stocks.
In Bonds, US Treasury yields were modestly lower in a slight bull flattening move. 2s -0.6bp to 1.22% (+2.9bps on the week); 5s -1.9bps to 1.947% (+1.0bp on the week) and 10s -2.0bps to 2.485% (+1.7bps on the week).
In G10 FX, USD/JPY was the biggest mover, +0.5% to Y115.10, most likely reflecting catch-up to the rise in US Treasury Yields earlier in the week and buoyant risk sentiment, rather than responding to Friday’s post-US GDP dip. The BBDXY index finished just -0.01% lower to be 0.6% down on the week; DXY +0.15% to 100.53 and – 0.21% lower on the week. EUR/USD +0.16% to 1.0699; AUD/USD ended NY +0.21% to 0.7551 and compared to a week-ago close of 0.7555. It’s a touch higher at the reopen.
In commodities, gold and oil were down small; gold – $1.40 to $1188.4, Brent crude -$0.70 to $55.52 and WTI – $0.60 to 53.17. LME index +0.2%+1.45%. Iron ore (China import price) didn’t trade due to the start of the Lunar New Year holiday, neither did coking coal. Steaming coal lost $0.95 to $83.50. However on the back of the weaker US Dollar this morning gold is opening higher in Euro at $1193.
This morning on the economic front we have the Euro-Zone Business Climate Indicator at 11.45 am and this is followed at 1.30 pm by US Personal Income/Spending and the PCE Deflator. Finally we have Pending Home Sales and the Dallas Fed Manufacturing Index at 3.00 pm and 3.30 pm respectively.
March S&P 500
The S&P again traded in a very narrow range on Friday before re-opening lower last night to hit mt 2282 buy level. In the last 20 minutes the S&P has hit my 2286 revised T/P level and I am now flat. Today I will again look to buy the S&P on any dip lower to 2270/2276 with a 2265 stop. My only interest in selling the S&P is still on a rally higher to 2304/2310 with the same 2315 stop. As mentioned above in my economic commentary the VIX is getting very oversold and this measure tends to lead the S&P by two months so we are definitely getting near levels to put on a more long-term short position especially as the S&P approaches my long-term target at 2300/2334 outlined over six months ago.
EUR/USD
My Euro plan finally worked out with the Euro hitting my 1.0740 sell level overnight before selling off to a low at 1.0700 as I write this commentary. As I am also long the Dollar Index I emailed my Platinum Members to exit this short Euro position at 1.0716 and I am now flat. Today I will again look to sell the Euro on any rally higher to 1.0760/1.0790 with a 1.0825 tight stop. My only interest in buying the Euro is still on a dip lower to 1.0580/1.0615 with the same 1.0540 stop.
March Dollar Index
Overnight the Dollar traded lower to my 100.25 buy level. I do not want to risk too many points on this trade and I have now raised my stop on this position to 99.95. The Dollar has already had both a Downside Key Week Reversal and Downside Key Day Reversal already in January and if we break and close below the December 99.50 low then we will have had a Downside Key Month Reversal. This would be a very strong signal if this was to happen so all eyes will be on this major pivot point when trading finishes for the month tomorrow in New York.
March DAX
Late on Friday afternoon the DAX hit my 11800 buy level. As I did not want to have a long DAX position over the weekend I emailed my Platinum Members to exit this position at 11812 and I am now flat. Today I will again look to buy the DAX on any dip lower to 11650/11710 with a 11620 tight stop. Despite the DAX trading overbought I do not want to be short the market at this time.
March FTSE
The FTSE continues to trade in a very narrow range, unable to get anything going on the upside as the market is held back by the renewed strength in Sterling. I am still flat the market and today I will now lower my buy level slightly to 7005/7035 with a 6975 tight stop.
Dow Rolling Contract
My Dow plan also worked well with the market re-opening last night near the middle of my buy range at 20010. As the S&P had also hit my buy level and in keeping with my strategy of banking points when available I emailed my Platinum Members to exit this position at 20040 and I am now flat. Thankfully the Dow is now trading higher at 20060 this morning for those members who are still long. With the incredibly low VIX I am very worried about this market especially with the fact that the McClellan Oscillator closed barely in positive territory with a +7 reading in New York last Friday Evening. Today I will again look to buy the Dow on any dip lower to 19940/20005 with a 18995 stop. I will also look to sell the market on any rally higher to 20160/20220 with a 20270 stop.
March BUND
Unfortunately the Bund twice missed my buy level before rallying strongly on the weaker US economic data reported on Friday. However this morning the Bund has sold off with the market hitting my 161.40 buy level. I am still long and today I will now raise my stop on this position to 161.10 which is just below the key 161.15/161.25 support level. If I am stopped out of this position or I manage to T/P on this trade I will be a more aggressive buyer on any further dip lower to 160.60/160.90 with a 160.25 stop. Given how oversold the Bund is trading I do not want to be short the market at this time.
Gold Rolling Contract
Gold just missed my 1175 buy level with a 1180 low print on Friday before the market rallied strongly. While Silver had an upside Key Day Reversal, Gold just missed having one by $2. As I am back long Silver I will leave my buy level unchanged in Gold at 1167/1175 with the same 1161 tight stop.
Silver Rolling Contract
Silver had a volatile trading session with the market making a new low at 16.61 before rallying 4% to a high at 17.26. This rally enabled me to cover my latest 16.98 long position at 17.00. Subsequently I emailed my Platinum Members to re-buy Silver at 17.10. I am still long and today I will now raise my stop on this position to 16.75.
Recent Comments