European and US equities have brushed aside the negative lead from Asia which saw the Shanghai composite down nearly 1% on the day and its fourth session of declines. The Euro has also come under pressure amid softer than expected German inflation with the move lower in the currency also affected by the widening in the 10y US-Bunds spread. Solid US economic data helped 10y UST yields climb back above 2.40% while 10y Bunds edged a little bit lower as investors rethink the prospects of the ECB retaining its loose monetary policy for a while longer. Energy shares on either side of the Atlantic have benefited by yet another jump in oil prices while US financial, Wednesday’s losers, led the move higher yesterday in the US, with a 1.40% gain.
To mark my 1300th 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 80 points yesterday and is now ahead by 1300 points for March, having made 1481 points in February, 1734 in January, 1351 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 1800 points.
WTI oil is up 1.5% over the past 24 hours and now trades at $50.35. The black gold was boosted yesterday following comments from Kuwait’s Oil Minister suggesting Kuwait and other countries support prolonging production cuts that are scheduled to expire in June.
DXY, the US Dollar index, is back above the 100 mark (up 0.50% over the past 24hrs) supported by an upward revision to the US Q4 GDP reading, up to 2.1% from 1.9% with real consumer spending climbing to 3.5% from 3.0%. The strength in the US Dollar has largely come from its outperformance against the EUR and JPY while buoyant risk appetite and a solid to steady day for commodities have kept the AUD, NZD and CAD essentially unchanged from where I marked prices 24 hours ago.
After trading to an intraday high of 1.0906 on Monday, EUR has fallen another 0.70% and is currently trading 1.0681. Softer than expected CPI readings from Germany and Spain have weighted on the currency union as investors reassess the timing on the ECB exit strategy, Germany’s annual CPI inflation fell to 1.5% in February from 2.2%, while in Spain inflation dropped form 3.0% to 2.1%. Comments from ECB Liikanen didn’t help the currency either as he noted that the Euro area still needs “a very substantial degree of monetary accommodation for underlying inflation pressures to build up and support inflation in the medium term.”
The rise in US Treasury yields has helped USD/JPY climb another 0.5% overnight. The pair is currently trading at ¥111.85 and if Asia takes the risk positive lead from the US, a move back above ¥112 today cannot be ruled out. US Dollar month end buying is potentially another consideration.
Lastly, Donald Trump has made few headlines warning House Conservatives Republicans that he would work against them if they don’t get on with the team and CNBC reported that the Trump administration was assessing the scope of its power to penalise countries whose currencies it says are undervalued.
This morning on the economic front we already had the release of Chines Manufacturing PMI which printed 51.8 versus 51.7 expected. We also had the release of German Retail Sales and they came in a lot better than expected with a 1.8% gain. At 8.55 am we have German Unemployment and this is followed at 9.30 am by UK GDP, Current Account, Index of Services and Total Business Investment. Next at 10.00 am we have Euro-Zone CPI. At1.30 pm we have US Personal Income data and the PCE Deflator. Finally we have the Chicago PMI and the University of Michigan Consumer Sentiment at 2.45 pm and 3.00 pm respectively.
June S&P
Some days trading like sport can be an environment of small margins as we have witnessed over the past two days in both the Dow and S&P. Yesterday the S&P missed my 2352 buy level with a 2353.25 low print before rallying to a high at 2366.75. Subsequently the market sold off again before rallying into the close and I am still flat. With Month and Quarter End today, it is difficult to be short with next week the better hope for another sell-off in the market. Today I will leave my buy level unchanged from 2346/2352 with the same 2341 stop. I will now lower my sell level slightly to 2367/2373 with a 2378 stop. Watch out for the last 15 minutes of trading as we could see a lot of volatility surrounding the close as Fund and Pension Managers square off for the Quarter.
EUR/USD
It took a while buy finally the Euro traded lower to my 1.0725 buy level before spiking to a rebound high at 1.0753. The beauty of my Platinum Service is my updated emails and following this rebound in the Euro I emailed these members to exit any long Euro position at 1.0740 as there was no follow through in the rebound and as a result I am still flat. The Euro subsequently got hit hard into the close with the market currently trading at 1.0680. The Euro has strong support at 1.0650 and today I will again look to buy the Euro on any further dip lower to 1.0635/1.0675 with a 1.0595 wider stop. Despite the negative price action I still do not want to be short the Euro at this time.
June Dollar Index
Unfortunately the Euro just missed my 99.65 buy level with a 99.73 low print and I am still flat. The Dollar rallied as expected and is why I had no sell level in yesterday’s commentary. However the move off last Monday’s low is getting extended and today I will look to sell the Dollar on any rally higher to 100.75/101.10 with a 101.40 stop.
June DAX
Unfortunately just before the close last night the DAX rallied to a high print of 12307 which just missed my 12310 initial sell level before subsequently trading lower and I am still flat. The 5.5 year trend line that I mentioned in the DAX over the past few days has now risen to 12270/12290. A break higher from this resistance level targets a more important 6 year trend line resistance at 12350/12370. Given how severely overbought the market is, I do not think we can break this latter level anytime soon . After the huge run higher over the past few months we are more than due a decent correction. Today I will leave my sell range unchanged from 12310/12370 with the same 12420 stop. If we do trade into my sell range I will only scale into selling the market in very small size given the volatility. I do not want to be long the DAX at this time especially ahead of what should be very strong resistance.
June FTSE
My FTSE plan worked well with the market trading lower to my 7280 buy level. As the rebound was tepid I emailed my Platinum Members to exit this position at 7300 and I am now flat. Certainly the rebound in Sterling has slowed the FTSE’s momentum especially with EUR/GBP back trading below 0.86. Today my only interest in buying the FTSE is on a dip lower to 7215/7245 with a 7190 stop. Given how strong the resistance level is from 7315/7345 I will be a seller in this area with a 7370 tight stop.
Dow Rolling Contract
The small margins that I mentioned in the S&P above certainly applied to the Dow again yesterday with the market missing my 20610 buy level with a 20629 low print before rallying strongly to a high at 20754 which unfortunately just missed my 20775 sell level and I am still flat. There is no doubt that a failure for the Dow to break and close over the key 20750/20800 resistance level is bearish. Today given the fact that it is month end I will only lower my sell level slightly to 20770/20830 with a 20885 stop. I will also lower my buy level slightly to 20520/20580 with a 20470 stop. If the Dow cannot break this key resistance level this evening then we could have another nasty sell-off next week.
June BUND
No change as I am still a samll buyer on any dip lower to 160.45/160.85 with the same 160.15 stop. The Bund has strong resistance from 161.90/162.20 and if we continue higher I will be a seller here with a 162.45 tight stop.
Gold Rolling Contract
Overnight Gold traded lower to my 1239 buy level. As I am back long Silver again I emailed my Platinum Members earlier this morning to exit this long Gold position at 1242.50 and I am now flat. It is a worry that Gold cannot break this key 1260/1265 resistance level and there is no doubt that some major players are selling Gold at these levels. Today my only interest in buying Gold is on a further dip lower to 1227/1234 with a 1221 stop.
Silver Rolling Contract
My Silver call worked well with the market spiking to a 18.04 low print yesterday afternoon and this spike lower hit my 18.10 buy level before the market rebounded to hit my 18.30 T/P level. Subsequently with Silver trading lower again I bought the market overnight at 18.05. I am still long and I will leave my stop unchanged at 17.55. I will have a T/P level on this latest long Silver position again at 18.30.
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