The US market has returned after the Easter break for trading on Monday, trading in risk-off mode. The catalyst seems to have been the announcement on Sunday from the Chinese Ministry of Finance that it is increasing tariffs on up to 128 US products, higher tariffs on frozen pork, wine, aluminium scrap, and certain fruits and nuts, in response to the US tariffs on steel and aluminium, and broadly as forewarned, China having signaled tariffs on up to $3bn of US imports. The Nasdaq has seen larger losses in the wake of a tweet from the US President @realDonaldTrump on Twitter if you would like to stay up to date, on how the US Postal Service is losing money from Amazon deliveries; ‘’THEY LOSE A FORTUNE’’, he tweeted yesterday morning. Amazon stock is down 5.2%, the Nasdaq down 2.7%. Bonds have been generally been supported but without a sizeable rally, while in the currency space, the Yen has re-emerged as the weapon of choice, the AUD and the NZD back to lower levels again.
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. To demonstrate this value, a monthly subscription over the same period would cost 4440 euro in total. This offer represents a 38% discount and is open to both new and existing members. 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 240 points yesterday on the first trading session of April, having made 40 points on Thursday to close March with a gain of 1760 points, 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.
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Data released since we left on Thursday has been quite market friendly. The US Personal Income and Spending report for February out Thursday showed real consumer spending for February as flat after a downwardly revised 0.2% January dip (a slight disappointment after the tax cuts announcements), while the core PCE deflator was exactly in line with expectations at 0.2%/1.6% after 0.3%/1.5% in January, suggesting the Fed will continue on its ‘’gradual removal of policy accommodation’’ path. The PCE deflators are playing to the tune that inflation is on the rise in the US, having averaged 0.20% over the past six months, annualising to a rate of ~2%, US inflation back at the Fed’s target in essence. The preliminary German CPI for March missed expectations by a tenth at 0.4%/1.5% (L: 0.5%/1.2%, consensus 0.5%/1.6%).
The other big release over the weekend were the official Chinese PMIs for March, some of the first post Lunar New Year readings on the economy. The Manufacturing PMI rose to 51.5 from 50.3 and above the 50.6 consensus and inferring that manufacturing growth is running on a similar track to the second half of 2017 when this index averaged 51.8. The Non-Manufacturing Index was virtually unchanged at 54.6 (L: 54.4)), while the follow-up Caixin reading on Manufacturing came in at 51.0, down from 51.6.
Yesterday’s release of the US ISM Manufacturing report for February was another blockbuster-type number at 59.3 in March after 60.8 In February. It did reveal that the Prices Paid component jumped to 78.1 from 74.2, US manufacturers reporting increasing costs pressures, including from steel and aluminium, prices for which were already higher even before the US tariff increases. In the wake of the ISM report, the Atlanta Fed’s GDPNow estimate has been nudged back up to 2.8% from 2.4%, on a par with the upwardly revised 2.9% for Q4 released last week.
As I go to print, the AUD/USD is hovering just above 0.7660, with the EUR/USD unchanged at 1.2305. The moves in currencies in this last wave have been relatively orderly, with bond yields barely lower in the 10s and down 2bps for two year yields. I would expect that while today’s RBA post-Board statement will show no urgency in lifting rates, they nevertheless are watching local and offshore events closely. The local and overseas growth story continues, while trade/tariff news remains unsettling. More likely, markets will take a lead from tariff/trade news, and US Payrolls at the end of the week.
This morning we have no Economic Data of note from either the UK or the Euro-Zone, while the only US data today is ISM Manufacturing which is due to be released at 3.00 pm.
June S&P 500
Since my Daily Commentary last Thursday the S&P has traded to a high 2659 that evening before selling off aggressively yesterday to a low at 2554 late yesterday afternoon before having a small rally into the Chicago close. On Thursday the S&P having traded higher to my 2632 sell level with an initial 2642 high print before selling off to my revised 2628 T/P level. Subsequently the S&P traded to a high of 2659 before selling off into the close at 2635. However the renewed weakness in both the Dow and NASDAQ saw the S&P traded lower yesterday to my 2574 buy level before rebounding to a high at 2588 and this move higher enabled me to cover my long position at my 2584 T/P level and I am now flat. Thankfully we had lowered all buy levels below the 200 Day Moving Average suspecting that after five previous occasions at holding this price that we would finally break through. The 200 Day Moving average at 2595 should now act as strong resistance. However given the extent of the 110 Handle move since Thursday I would expect some of this move lower to be retraced. Today I will again look to sell the S&P on any move higher to 2610/2630 with a 2639 tight stop. Today I will again look to buy the S&P on any move lower to 2530/2548 with a 2521 stop. If I am taken long and subsequently stopped out of this position the next major support level is at 2482/2502 (which has been my initial target all along for the S&P) and I will be an aggressive buyer on any dip to this area with a wider 2469 stop.
EUR/USD
I am still flat the Euro which has traded in a narrow range since I posted last Thursday. Today I will lower my sell level slightly to 1.2360/1.2390 with a 1.2435 stop. I will also lower my buy level to 1.2205/1.2235 with a 1.2170 stop.
June Dollar Index
Yesterday the Dollar traded lower to my 89.50 buy level before rallying to my 89.65 revised T/P level and I am now flat. Today I will again look to buy the Dollar on any dip lower to 89.20/89.60 with a 88.90 stop. I still do not want to be short the Dollar at this time.
June DAX
I am still flat the DAX which was closed on Friday and Monday for the Easter break. The key level to watch in the DAX is from 11730/11800 and today I will continue to be a buyer in this area with a 11675 stop. As we are so close to major support I do not want to be short the market at this time.
June FTSE
Although the FTSE was closed yesterday the spreadbetting firms were making a market with the FTSE trading lower to my 6920 buy level before rallying to my revised 6940 T/P level and I am now flat. Unless we break and close below the key 6750 support level I still believe the FTSE to be a buy on dips. Today I will again look to buy the market on any dip lower to 6790/6850 with a 6740 wider stop.
Dow Rolling Contract
What a few days for the Dow with the market falling over 1000 points from late Thursday to yesterday’s low before rebounding a small bit into the New York close. Yesterday after the Dow traded lower to my 23650 buy level I emailed my Platinum Members to only add to this position on any subsequent move lower to 23450 before thankfully the market rallied to my revised 23620 T/P level and I am now flat. I have mentioned on countless times the importance of the 23150/23350 support level which is the spike low from early February. This support must hold or else we could see an acceleration lower to 22750, 20400 and finally 17500/19000 which is where the next support comes in. Today I will again look to buy the Dow on any dip lower to 23170/23370 with a 23090 stop. Given how oversold the Dow is trading plus the fact that I have a sell level already in the S&P I will not look to be a seller of the Dow at this time.
June NASDAQ
My NASDAQ plan worked well with the market selling off aggressively to my 6400 buy level with a 6366 initial low before rallying to my revised 6440 T/P level as emailed to my Platinum Members and I am now flat. Yesterday the NASDAQ closed below its key 6425 support level but not by much. This level is key, as a sustained break below here opens up the possibility of a further move lower to 6150/6300, 5800, 5700 and possibly 5500. I want to give this one more day before looking to set up a short position. Meanwhile I will be a buyer on any further dip lower to 6250/6310 with a 6210 stop.
June BUND
No change as I am still a buyer on any dip lower to 158.30/158.70 with a 156.95 stop.
Gold Rolling Contract
The renewed sell-off in Equities saw both Gold and Silver rally yesterday after both precious metals were weak on Thursday. I am still flat Gold and today I will now raise my buy level to 1315/1325 with a 1308 tight stop.
Silver Rolling Contract
Silver having traded lower on Thursday finally rallied to my 16.40 exit level on my latest 16.45 long position as yet again Silver has held the key 16.10 support level. Silver did trade briefly above 16.70 before having a small sell-off and I am still flat. There is not an awful lot to be said about Silver with the managed funds still holding a record short position which is bullish but I need to see Silver break and close over 16.90 for me to get more bullish. Today I will again look to buy Silver on any dip lower to 16.10/16.45 with a 15.75 stop.
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