Markets have been quite benign over the past 24 hours. There has been no news on US tariffs from the White House and no first tier data to trouble the scorers. Most major currency pairs have been relatively contained. The EUR/USD has traded in a 80 point range since I posted yesterday morning, while equities have been mostly higher, with very little change in major bond yields apart from Italian bonds that have rallied further. The big mover has been Sterling that has had a strong opening to the week. Notwithstanding some acerbic press commentary over the weekend from political protagonist Boris Johnson about the Prime Minister May’s Chequers plan, Sterling has responded positively to another slug of conciliatory comments from head EU Chief Brexit negotiator Michel Barnier, offering words that would have been music to PM May’s ears.
To mark my 1650th 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@tradernoblecom for details
For anyone following my Platinum Service it was flat yesterday as none of my calls were hit and is still ahead by 407 points for September, having made 599 points in August, 1074 points in July, 994 points in June, 1927 points in May, 1657 points in April, 1760 points in March, 2256 points in February, and 879 points in January. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
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Currencies
Barnier told a conference in Bled, Slovenia that it was ‘’realistic’’ and ‘’possible’’ to get an agreement by the start of November to allow time for the deal to be approved by both the British and European parliaments. ‘’I think it is possible to get a deal by the start of November, he said at the conference. We are not far from agreement’’. Despite still contentious issues to be resolved – the Irish border, getting the deal approved by the UK Parliament two big ones there has been no denying the recent pattern of EU conciliatory gestures, testing the nerve of GBP shorts. Barnier said last week that there are ‘’lots of useful things’’ in the Chequers plan.Separately, the FT reported that EU leaders would give new instructions to Barnier at the 20 September mini-EU summit to get a deal across the line, in the hope it can be agreed by mid-November (in time to be signed off by the respective parliaments).
Sterling immediately jumped by a big figure on the reporting of Barnier’s comments and is holding to its overnight highs. Sterling’s gain spilled over into some support for the Euro that has also benefited from somewhat receding concerns over Italy’s fiscal policy. There was a further sizeable rally in Italian bonds (10y yields eased 12.5bps to 2.91%) with Italian Finance Minister Tria saying over the weekend that the government recognised that a larger deficit would result in higher yields and greater interest expense. The Milan stock market rose 2.30%, well above a flat FTSE and a 0.22% rise in the DAX.
Economics/Fed Commentary
There was only second tier data yesterday, virtually nothing out of the US, several releases on the UK economy suggesting that growth remains choppy to positive into the September quarter. The UK notched up a much lower than expected Trade Deficit in July, monthly GDP for July rose 0.3%, up from 0.1% in June, Industrial Production in July rose 0.1% (F: 0.2%), but construction output rose 0.5% (F: -0.5%), together pointing to some positive momentum through the summer.
Speaking in Georgia, Atlanta Fed President Raphael Bostic (a voter on the FOMC this year) said that once the Fed gets to neutral, ‘’let’s stay there and see’’. He also repeated some anecdotes suggesting that trade uncertainty was hampering investment and slowing the positive changes expected from tax reform, tariffs also adding to inflation. He said that price increases is already happening in industries where tariffs went into place the earliest.
Commodities and Bonds
Other than rises in coal prices, it has been relatively contained. The LMEX base metals index is down 0.17%, oil prices are little changed overall, soft commodities have been mostly higher, while gold has been steady. In the bulks space, iron ore is lower, but coal prices have risen. Bond yields are little changed.
This morning on the Economic Front we have UK Unemployment and Average Earnings at 9.30 am. This is followed at 10.00 am by German ZEW Survey including Current Situation/Expectations. Next we have the US NFIB Small Business Optimism at 11.00 am. Finally we have Wholesale Inventories at 3.00 pm.
September S&P 500
The S&P continues to hold last Friday’s 2865.50 low print. This time it was the NASDAQ that was the strongest of the three main Indices with the Dow weaker. However the real leader yesterday was the Dow Jones Transportation Average which hit a new all-time high yesterday, closing up 207 points at 11,554, which was a gain of almost 2%. This is still a bull market. As I have consistently said all-month as long as the S&P can hold the initial 2860 support followed by the 50 Day Moving Average which has now moved higher to 2830, then I will continue to be a buyer on dips. Today I will now raise my buy level to 2865/2873 with a 2858 stop. I will also raise my sell level slightly to 2897/2905 with a 2912 stop.
EUR/USD
I am still flat the Euro which just missed my 1.1505 buy level with a 1.1526 low print shortly after I posted before rallying back to the 1.16 area. There is no doubt that the 1.1500/1.1540 area is strong support for the Euro and today I will move my buy level higher to this support level with a 1.1465 stop. The Euro has strong resistance from 1.1680/1.1725 and I will be a seller on any rally to this area with a 1.1760 stop.
September Dollar Index
I am still flat the Dollar and today I will now lower my sell level to 95.60/96.00 with a 96.35 tight stop. I still do not want to be long the Dollar at this time.
September DAX
Looking at the Weekly Chart for the DAX it looks to me that we may be forming a text book Head & Shoulders top. To confirm that this pattern is a Head – and Shoulders top, the DAX needs to dip lower and break the ‘’Neckline’’. In this case, that means the DAX needs to drop to around 11,725 level to confirm downtrend from here. That level is now critical for the DAX and is its key support level. Once the Index breaks the neckline, there is usually a pull-back or re-test of this level (11725) before the large move lower happens. The Index will likely be at oversold levels once it breaks below the neckline, which will lead to the retest as mentioned above. If the downtrend does play out, the Index is likely to drop to the length of the ‘’head’’ added to the neckline support. In this case, a confirmed pattern would likely lead to a drop near the 10,000 level, a 16% decline from here.
I am still flat the DAX and given the significance of the 11750/11830 support area I will continue to be a buyer on any dip to this area with a 11690 stop. If we do break the 11725 neckline I will then look to put on a macro short position.
September FTSE
Unfortunately the FTSE just missed my 7245 initial buy level with a 7256 print before rallying and I am still flat. If Sterling continues to rally from here, this will hinder the FTSE from following the US Indices higher. Today I will lower my buy level to 7195/7235 with the same 7160 stop. Given how oversold the FTSE is trading I still do not want to be short the market at this time.
Dow Rolling Contract
After holding in for the last few weeks the Dow had a small sell-off yesterday with the market for now holding the key 25700/25800 support level. I am still flat and today I will now lower my buy level slightly to 25600/25750 with a 25525 stop. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer from 25270/25440 with a 25195 stop. My only interest in selling the Dow is still on a rally higher to 26160/26320 with the 26405 stop.
September NASDAQ
As expected the NASDAQ held its key 7360/7400 support level. Frustratingly the NASDAQ just missed my 7405 buy level yesterday with a 7413 low print before rallying to trade at 7480 this morning. Today I will now raise my buy level to 7380/7430 with a 7345 stop. I still do not want to be short the market at this time.
December BUND
I had no luck with my calls yesterday with the Bund missing my 159.50 buy level by two points and I am still flat. Today I will now lower my buy range slightly to 158.80/159.20 with a 158.45 stop. Despite the negative price action I still do not want to be short the Bund ahead of Thursday’s ECB Meeting.
Gold Rolling Contract
No change as I am still a buyer on any dip lower to 1177/1185 with the same 1169 stop.
Silver Rolling Contract
I am still long at 14.15 with the same 13.75 stop. I have now lowered my T/P level to 14.30 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
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