US stocks have failed to recover any of Tuesday’s FANG-led weakness, in part due to a 5% hit to Amazon after President Trump’s latest verbal attack on the on-line retail behemoth demanding more regulation (and which will probably be followed in short order by European demands to tax them more, such is the contrast between the current US and EU attitude towards the US tech-sector giants). The sell=off in technology stocks saw 10 year Treasury yields, having broken below the 2.80% level in late New York trade on Tuesday (the bottom of a six week range), have traded sub-2.75% overnight (2.77% now) with the 2-10s curve extending the recent flattening theme to now be at its flattest since about October.
To mark my 1550th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2750 for my Platinum Service which includes 1 to 4 updated emails throughout the trading day This offer is open to both new and existing members and if anyone is interested in this offer can you please email me on bryan@tradernoble.com for details
For anyone following my Platinum Service it made 205 points yesterday and is now ahead by 1720 points for March, having made 2256 points in February, 879 points in January, 946 points in December, and 823 points in November Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points.
I have a YouTube Channel which contains recent interviews I have given. This can be viewed by clicking HERE Please subscribe to this for new interview notifications.
Still weighing on risk markets are US-China trade concerns, with White House trade adviser Peter Navarro reminding us on Bloomberg television that the focus of latest planned tariff actions – utilising Section 301 of the 1974 US Trade Act – are the so called China 2025 industries. China in my view brazenly has released this China 2025 plan that basically told the rest of the world, ‘’We are going to dominate every single emerging industry of the future, and therefore your economies are not going to have any future’’. It is artificial intelligence, robotics, quantum computing — all those things, Navarro says. The Section 301, which is on intellectual property theft and forced transfer, is specifically designed to address those kinds of things. And I think the world should welcome that. Europe is getting hammered by the same thing. Japan is getting hammered.
As for Yen weakness in FX markets, the safe haven status we would normally associate it with given the broader market theme, has for now been usurped by two things. One is M&A news, where the Wall Street Journal reports that Takeda Pharmaceuticals Co. is weighing a bid for UK rival Shire, the latter closing Wednesday with market value of 32bn following the news. The other is more encouraging sound bites related to North Korea, where Kim Jong Un has reportedly offered talks with Japan, while China has said that following the talks between President Xi and Kim Jong Un earlier this week, de-nuclearisation is on the table for talks with US and others. President Trump’s latest tweets seem to imply this is almost a done deal. What could possibly go wrong?
My hesitancy in fitting facts to figures this morning (what some folks unkindly refer to as making up stories) is because month and quarter-end (and Japanese year-end) flows do appear to be figuring in current FX (and possibly bond market) moves and will continue to do so in what is the last working day of the month for most financial centres. The train of logic here is that with US stocks +/-4% down on the month, non-US fund managers will need to be buying US Dollars to bring their hedge ratios back in to line with current benchmarks. It seemed to work this way in February when the S&P finished the month down a similar amount and the DXY Dollar Index added over 0.8% in the last two trading days of the period.
If month-end is relevant, it can provide some additional weight on AUD today. Although it was one of the better (or least worst) performers on the day, it has made a near year to-date low of 0.7642 (0.7674 now). Note too that commodity prices are in a sea of red, including iron ore back below $70 for the first time this year- a month ago it was looking like it was about to knock on the door of $80.
Data wise, US 4th quarter GDP was revised up slightly (2.9% from 2.7%) and US Home Sales data was a bit better than expected (+3.1%) . The former at least looks to have provided a bit of post-release support for the USD.
This morning on the Economic Front we have German Unemployment at 8.55 am and this is followed at 9.30 am by UK Mortgage Approvals and GDP. At 1.00 pm we have the all-important German CPI. Next we have US Weekly Jobless Claims, Personal Income/Spending and the PCE Deflator. Finally we have the Chicago Purchasing Managers Survey and University of Michigan Consumer Sentiment at 2.45 pm and 3.00 pm respectively.
Later at 6.00 pm the Fed’s Harker will speak on Economic Outlook.
June S&P 500
My S&P plan worked really well yesterday with the S&P trading lower to my 2593 buy level before rallying to my 2632 sell level before the market got crushed again into the close to bottom at 2596 before a late rally with the S&P now trading at 2610. For housekeeping after the S&P traded lower to my buy level I covered this position at my 2601 T/P level and after the S&P hit my 2632 sell level I covered this short position at my 2625 T/P level and I am now flat. The big question as we approach month and Quarter end today is whether the market is going to breakdown before having a more sustainable rally. If the S&P does not break and close over its key 2640/2660 resistance area then this is the most likely scenario. Today I will again look to sell the S&P on any move higher to 2630/2650 with a 2662 stop. The S&P has now found support at its 200 Day Moving Average from 2585/2595 on five occasions since last Friday so the odds of a breakdown have increased. Today my only interest in buying the S&P is from 2560/2575 with a 2552 stop. I will also be an aggressive buyer on any further dip lower to 2518/2538 with a 2508 stop. Below here the next crucial level is 2480. Value below this level for 1 to 2 weeks with a monthly settlement below 2460 is the first signal of a top in the S&P market.
EUR/USD
For the second consecutive trading session the Euro traded the whole of my buy range for an average long position at 1.2345. I did not like the fact that we broke 1.2350 so easily and I emailed my Platinum Members to exit any long position at 1.2360 and I am now flat. The Euro has good resistance from 1.2400/1.2430 and today I will be a seller in this area with a 1.2465 stop. The main support is the 1.2255 low from two weeks ago and today I will be a buyer on any dip to 1.2225/1.2265 with a 1.2195 stop.
June Dollar Index
I am still flat the Dollar which never came close to my buy range yesterday as the Dollar has its largest one day intra-day rally in five months. This move was flagged on Tuesday when I mentioned that the large speculators had their largest bet against the Dollar since 2011 and could be the start of a major bull run for the Dollar. Today I will now raise my buy level to 89.10/89.50 with a 88.75 stop.
June DAX
Unfortunately the DAX just missed my 11765 buy level with a 11770 low print yesterday before rallying over 200 points and I am still flat. The last two trading sessions have seen both the DAX and FTSE outperform the US indices which may be due to month and Quarter-end rebalancing. Today I will now raise my buy level to 11780/11840 with a 11730 stop. I still do not want to be short the DAX at this time.
June FTSE
The renewed weakness of Sterling plus the severely oversold condition of the market saw the FTSE have a nice rally yesterday as the ramifications of a break and close below 6750 are huge. I am still flat the market which never came close to my buy level despite the weakness in the US Indices. Today I will now raise my buy level to 6880/6920 with a 6845 stop.
Dow Rolling Contract
Unfortunately the Dow just missed my 23680 buy level before rallying and I am still flat. The Dow continues to outperform both the S&P and NASDAQ as we hold the key 23300/23700 support range for now. Today I will move my buy level slightly higher to 23500/23720 with a 23390 stop. I will also be a more aggressive buyer on any further dip lower to 23050/23200 with a 22900 stop. As I have a sell level in the S&P above I will not have one in the Dow at this time especially as most European Markets are closed tomorrow and Monday for the Easter Holidays.
June NASDAQ
My NASDAQ plan worked well with the market trading lower to my 6440 buy level before rallying to my 6480 T/P level and I am now flat. The NASDAQ continues to hold the 6360/6410 support level and today I will again look to buy the market in this area with a 6315 tight stop. Given how oversold the NASADAQ is trading I do not want to be short the market at this time.
June BUND
I am still flat the Bund and today I will continue to be a buyer on any dip lower to 158.35/158.75 with a 158.05 stop.
Gold Rolling Contract
After my second buy level in Silver hit I emailed my Platinum Members to lower their Gold buy level to 1308/1317 which was never hit. For any member who did buy Gold in my original buy range I would look to exit this position. The main reason is with Dollar sentiment at extreme bearish levels in my opinion it will be difficult for Gold to rally especially if the Dollar rallies from here after its largest one day rally in five months yesterday. Gold has strong support from 1290/1300 which is where the 200 Day Moving Average comes in and today my only interest in buying Gold is on a dip to this area with a tight 1283 stop.
Silver Rolling Contract
Silver traded lower to my second buy level at 16.25 for a now average long position at 16.45. Given my concerns that we may be on the verge of a large move higher in the Dollar I will now lower my exit level on this Silver position to 16.40. The DSI for Silver is at a neutral 45% while the Managed Accounts have a record short position against Silver which is a conflicting signal and another reason why I will look to exit the market on any rally higher.
As most European Markets are closed tomorrow and Monday for the Easter Holidays my next Daily Commentary will be on Tuesday April 3rd. The US Markets are closed tomorrow but will have a full trading day on Monday. If any of my calls that are not hit today are subsequently triggered on Monday I will be back with an update for my Platinum Members during Monday’s US trading session. Finally I would like to wish all members a Happy Easter and to thank everyone for their continued support.
Recent Comments