There have been no major economic releases over the past 24 hours and the news has been more of another instalment of recent themes. China trade tension news was risk-supportive, China announcing a cut from July 1 of car tariffs from 25% to 15% and some car parts to 6%. Germany and then the US are the largest beneficiaries of this announcement, then the UK (Europe larger than the US) helping to lift sentiment in European stocks generally, the DAX up 0.71% with Volkswagen and BMW stock both rising by over 2% and Daimler (Mercedes of course) up close to 1%. US stocks did open higher but were unable to sustain the move, the Dow the heaviest among the major indexes, down 0.72%, the S&P down 0.31%, and the Nasdaq down 0.21%.
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For anyone following my Platinum Service it made 96 points yesterday and is now ahead by 996 points for May, having made 1657 points in April, 1760 points in March, 2256 points in February, 879 points in January and 946 points in December. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
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Also in the geopolitical sphere, President Trump has cast doubt on whether the June 12 summit will take place. ‘’There is a chance, a very substantial chance it won’t work out’’, he said during a meeting in his office with South Korean President Moon Jae-in. ‘’I don’t want to waste a lot of time and I am sure he does not want to waste a lot of time,’’ he said of Kim. ‘’So there’s a very substantial chance it won’t work out and that’s OK. That does not mean it won’t work out over a period of time.’’
On the currency front, the commodity currencies were bid higher for a time, the AUD/USD initially testing above 0.76 earlier in the session before relenting to below the figure where it sits at 0.7540 this morning, lifted perhaps initially be the backwash from a higher bid for Santos for Harbour Energy, rejected by Santos. Oil has changed little over the past 24 hours notwithstanding the sanctions pressure on Venezuela and the background pressure on Iran from the US Administration. The LMEX was up 0.58% with copper up a solid 1.45% to $6,979/t, other metals mixed (Ally and Zinc down, Nickel up).
There has also been something of a saw-tooth pattern in the Pound with the appearance of several BoE/MPC members appearing before a select Parliamentary Committee. MPC member Vlieghe’s view was that rates were likely to rise 1-2 times per year for the next few years, giving the Pound some initial support that faded, Bank of England Governor Carney and MPC member Saunders with more temperate view, Carney suggesting a more gradual approach along the lines of the recent BoE Inflation Report that suggested one per year, a view I agree with for this year anyway, next year open to Brexit developments.
The Italian political leadership situation remains in a state of flux with Italian President Mattarella taking more time to consider the credentials of the candidate for the top job of Prime Minister (law professor Giuseppe Conte) and Eurosceptic Savonna as the candidate for the key Finance post, nominations from the League/Five Star coalition. (There was also some questioning from the New York Times over Conte’s CV, coalition rejecting that as ‘’mud slinging’’.) The Italian press is reporting that a decision is expected perhaps today. Italian bonds however managed to claw back a little territory, down 6.1bps for the session, though are still 59bps higher so far this month, including against German Bunds. Italian credit default swaps though did not manage to pull back and sits at a seven month high of 139, up a little further on the day and up from as low as 84 in late April. US Treasuries have been rather range bound with little in the way of new moves.
This morning on the Economic Front we have German and Euro-Zone Manufacturing/Composite PMI at 8.30 am and 9.00 am respectively. This is followed by UK CPI, PPI and Retail Sales at 9.30 am. Next we have US MBA Mortgage Applications at 12.00 pm and Manufacturing/Composite PMI at 2.45 pm, and this is followed by New Home Sales and Euro-Zone Consumer Confidence at 3.00 pm. Finally at 7.00 pm we have the FOMC Minutes from the May 2 Meeting.
The Fed’s Kaskari is speaking after the FOMC Minutes at 7.15 pm.
June S&P 500
It took a while but finally just before 9.00 pm the S&P traded lower to my 2723 initial buy level with a 2721.50 low print before rallying back above 2727 into the 9.15 pm Futures close. As I had no interest in holding a position on board overnight I emailed my Platinum Members to exit any long position at 2725 or higher and I am now flat. The S&P has initial support from 2700/2710 and much stronger support at the 50 Day Moving Average which comes in at 2675 while the key 200 Day Moving Average is way below the current market price at 2631. Today I will again look to buy the S&P on any dip lower to 2701/2709 with a 2694 stop. The 2750 is proving difficult to break at this time which understandable after the recent 150 Handle rally. My only interest in selling the S&P is still on a rally higher to 2745/2755 with a 2761 tight stop.
EUR/USD
Initially the Euro rallied after I posted yesterday morning to a high of 1.1830 before selling off overnight to my initial 1.1750 buy level. Earlier this morning I emailed my Platinum Members to exit any long position at my revised 1.1765 T/P level, while in the same email I said to re-buy the Euro on any further dip lower to 1.1735 with a revised 1.1750 T/P level and in the last 20 minutes both of these new trades have now been filled. With the Daily Sentiment reading so negative towards the Euro I will continue to be a buyer of the market on dips and today my buy level is from 1.1655/1.1695 with a 1.1625 stop.
June Dollar Index
I am still flat the Dollar which traded sideways yesterday as it tries to work off its severely overbought condition. The 200 Day Moving Average is a long way below the market at 91.84 and with the DSI at 91% bulls it is only a matter of time before we see at least a small sell-off in the Dollar. Today I will lower my sell level slightly to 94.00/94.30 with a lower 94.65 stop.
June DAX
Unfortunately the DAX just missed my 13210 sell level with a 13206 high print. However in the last 20 minutes the DAX has got hit hard after much weaker than expected German PMI data. As a result the DAX has traded lower to my 13000 buy level with a so far low of 12981. I am still long and I will now lower my T/P level on this position to 13030 and this has just been filled as I go to press . I will now look to buy the DAX again on any further dip lower to 12880/12940 with a 12830 stop and a 12980 T/P level if filled.
June FTSE
The FTSE also just missed my 7895 sell level with a 7887 high print before finally selling off and I am still flat. The FTSE will have strong support at 7750 which is the level from which we broke higher late last week and today I will look to buy the market on any dip lower to 7730/7770 with a 7695 stop. Given how overbought the FTSE is trading I will now lower my sell level to 7875/7925 with a 7955 stop. With the market now 17% higher over the past two months we are long overdue a correction.
Dow Rolling Contract
Just like the S&P above the Dow traded lower to my 24825 buy level with a 24813 low print before the Cash Markets closed before having a small 40 point rally. As I did not want to have a long position on board overnight I covered this position at my revised 24840 T/P level and I am now flat. This morning the Dow is trading lower on geopolitical concerns. The 50 Day Moving Average is we below the market at 24403 and it will take a break and close below here for me to turn at least short-term bearish. The Dow is now approaching last Friday’s Gap at 24720 and today I will again look to buy the market on any dip lower to 24500/24640 with a 24390 stop. Please keep an eye on the VIX which closed last night at 13.22 which is just below its 200 Day Moving Average at 13.80. It will only take a mild sell-off for the VIX to break higher.
June NASDAQ
I am still flat the NASDAQ which has continued to underperform the Dow over the past six trading sessions. This morning the NASDAQ is approaching the key 6800/6840 support level as a break and close below here will be a short-term sell signal. Today I will lower my buy level slightly to 6780/6820 with a tight 6745 stop. As we are so close to initial support I do not want to be short the market today.
June BUND
Unfortunately the BUND just missed my 158.60 buy level and I am still flat. This morning the BUND is trading higher as expected at 159.40. Today I will now raise my buy level to 158.70/159.10 with a 158.30 stop. I still do not want to be short the Bund at this time.
Gold Rolling Contract
No change as I am still a buyer on any dip lower to 1276/1284 with a 1269 stop.
Silver Rolling Contract
Silver rallied higher to my revised 16.66 T/P level as emailed to my Platinum Members on my long 16.50 position. Subsequently Silver had a small sell-off and I bought the market again at 16.55 with a now higher 16.10 stop. I will now lower my T/P level on this position to 16.75 which is just below the key 16.80 resistance level. Remember a break and close over 16.80 is a buy signal for at least 17.50.
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