There has been a further step up in Treasury yields since I posted early yesterday morning following on the heels of the previous session’s jump in oil and base metals prices, however those prices having taken a breath and steadied over the past 24 hours. 10 year Treasury yields have risen just under 4bps to be back over 2.90%, the highest close since late February. European bond yields also shifted higher, including in the UK, shrugging off a weaker than expected Retail Sales report for March. German 10 year Bunds rose 5.9 bps to 0.60%, while UK 10 years increased 10.6bps to 1.52%. In the currency space, the US Dollar has regathered its composure with the DXY up 0.3% and the Bloomberg spot dollar index up 0.5%.
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 125 points yesterday and is now ahead by 1311 points for April, having made 1760 points in March, 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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Fed Governor Brainard, usually regarded as one of the ”doves” on the rate-setting committee, said yesterday that the fiscal stimulus would ”reinforce cyclical pressures”, adding to Fed rate hike expectations. The market now prices 54bps of rate hikes by the end of the year, slightly more than the 2 hike median set out in the latest set of Fed projections, and adding another 3bps of pricing to the 19 December expectations.
There has been little in the way of economic data news. UK retail sales in March missed the mark, put that was down to the bad weather and shrugged off by sterling. The five German institutes upgraded Germany’s growth forecasts by 0.2% for this year and next to 2.2% for 2018 and 2.0% for 2019.
Base metal prices have only partially retraced, WTI oil is only marginally off Wednesday’s gains, while Brent has risen another 20 cents. In the metals space, there are stories that Russia is endeavouring to channel its supply into China as an alternative. Among equities, it has been Apple and semiconductor stocks in Europe leading the way lower on reduced expectations for iPhone sales after Taiwan Semiconductor’s downbeat forecasts that cited a ”very high end smartphone”.
The Nasdaq has under-performed, but all three major Indices having closed lower by between 0.34% (Dow) and 0.78% (Nasdaq). Banking sector stocks outperformed for a change, helped by the rise in Interest rates and a steeper yield curve. Earnings results were generally better than expected, including from Proctor and Gamble, Bank of New York Mellon and Blackstone. 79% of US corporates have beaten analyst earnings expectations and 83% sales expectations so far this earnings season.
The AUD/USD continued to make some net commodity price-led gains during yesterday’s APAC session, testing 0.78, but has retreated lower overnight, along with most majors that have lost some grip against the USD. Those AUD gains did not get the further shot in the arm from Wednesday’s March Employment report that I was anticipating, the report under-clubbing expectations and my own reading of a still strong jobs market.
Oil continues to be some centre of attention, WTI giving back only a little of Wednesday’s rises and Brent marching on a little higher. As OPEC gathers to meet, unnamed sources from within OPEC have referenced that OPEC is within sight of reaching their producers target of reducing stocks to five year averages. That is consistent with the pattern in the US where inventories have changed little so far this year despite continued rises in US oil production with US inventories also back to their five year average. OPEC-inspired supply constraints seem to be part of the story, but stronger global demand is also part of the story. Brent for example is up 4.8% so far this month and year to date up a sizeable 23.9% on last year’s $67.81/bbl average
This morning on the Economic Front we have German Producer Prices at 7.00 am and this is followed by Euro-Zone Consumer Confidence at 2.00 pm. We have no US data of note but the Fed’s Evans and Williams are both speaking this afternoon at 2.40 pm and 4.15 pm respectively.
June S&P 500
My S&P plan worked well with the market trading lower to my 2695 buy level with an initial low at 2692.75 before rallying to my 2601 T/P level and I am now flat. Subsequently the S&P traded to a low at 2681.50 before rallying 15 Handles into the close. Yesterday’s move lower was enhanced by the fact that the VIX gave its first sell signal in two years. This is significant as the last time this happened the S&P fell 5% in four weeks and if this situation was to be replicated it would take the S&P down near 2581. With the Monthly Options Expiration this evening these Expiry Days can be tricky to trade and it will be Monday before we see if this sell signal for the VIX becomes real. Yesterday the S&P bottomed at important support at the 2680 level. Today I will again look to buy the market on any dip lower to 2673/2683 with a 2667 tight stop. So far the S&P has rallied back the 2718 level which was an ”Open Gap” from March 21 and today I will now lower my sell level to 2710/2720 with a 2727 stop. Again if I am taken short and subsequently stopped out of this position I will be a more aggressive seller from 2742/2752 with a 2759 stop.
EUR/USD
For the third consecutive trading session the Euro missed my buy level by a few points before rallying and I am still flat. Today I will again lower my buy level slightly to 1.2275/1.2310 with a 1.2240 stop which is just below the key 1.2255 support level from last month. I still do not want to be short the Euro at this time.
June Dollar Index
No change as I am still a small seller on any rally higher to 89.90/90.30 with a 90.65 stop.
June DAX
The DAX again tested its 200 Day Moving Average before we saw some more selling. I am still flat and I am reluctant to chase this market lower and will therefore leave my sell level unchanged from 12690/12750 with the same 12795 tight stop. I will also leave my buy level the same at 12320/12390 with a 12275 stop.
June FTSE
The continued sell-off in Sterling has certainly helped the FTSE to close the gap on the other major Indices over the past few days. I am still flat and will continue to be a seller on any rally higher to 7315/7345 with a 7380 stop. I will now raise my buy level higher to 7170/7205 with a 7135 stop.
Dow Rolling Contract
My Dow plan worked well with the market initially trading lower to my 24680 buy level before rallying to a rebound high of 24753. I used this rally higher to cover this long position to my revised 24725 T/P level as emailed to my Platinum Members and I am now flat. The Dow has strong support from 24400/24560 and today I will again be a buyer on any dip to this area with a 24320 tight stop. As today is Options Expiration I will wait until Monday to have a new sell level for the Dow especially in light of the VIX giving its first sell signal in two years.
June NASDAQ
After the NASDAQ traded lower to my 6770 buy level I emailed my Platinum Members to exit any long position for a small gain at 6780 as I did not want to risk the points already made and I am still flat. The NASDAQ has strong support from 6650/6710 and today I will be a buyer in this area with a 6605 tight stop.
June BUND
The Bund traded lower to my 158.40 buy level. I am still long and will only add to this position on any further move lower to 157.80. I have also lowered my T/P level on this position to 158.55 especially as we finally broke the 159.00 support area so easily yesterday.
Gold Rolling Contract
No change as I am still a buyer on any dip lower to 1323/1332 with the same 1315 stop which is just below the key 100 Day Moving Average at 1318.
Silver Rolling Contract
With the market just missing my 17.40 T/P level with a 17.37 high print I emailed my Platinum Members to exit their latest 17.15 long position at 17.25 and I am now flat. Today I will again look to buy the market on any dip lower to 16.80/17.10 with a 16.45 stop and a 17.35 T/P level if executed.
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