For once the IT sector is supporting rather than weighing on broader US Indices, ahead of what is the heaviest week of the US reporting season (146 of the S&P 500 companies report this week (of which there are thousands in total, or so I heard Joe Kernon say on CNBC last night!) including several of the ‘’FAANGS’’. Instead, it’s financial and energy that have led the Dow and S&P lower, the latter as WTI crude languishes near a 5 month low, albeit it is not down on the day. Here, suggestions that Iran might flout sanctions on exports due to kick in on November 4th by selling to Russia who will then on-sell in its own name, and suggestions that Saudi Arabia may now be more not less inclined to pump more in an effort or re-ingratiate itself with key allies – the US in particular, might both be of some relevance. The S&P has closed down 0.44%, the Dow by 0.27% while the tech-heavy NASDAQ is up 0.27%.
To mark my 1700th 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 72 points yesterday and is now ahead by 1398 points for October, having made 1276 points in September, 599 points in August, 1074 points in July, 994 points in June, 1927 points in May, 1657 points in April, 1760 points in March and 2256 points in February. 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 notification
Currencies
In FX, yesterday’s moves, that saw the NZD and the AUD as the 2nd and 3rd worse performing currencies on the day after the British pound, have for now killed of any thoughts that these currencies were in the early throws of a decent recovery, albeit driven by little more than short covering in light of the extreme short positioning evidenced by the likes of the net balance of speculative positions on the Chicago Futures Market. The inability of either AUD or NZD to key positively off yesterday’s sharp (4%+) rally in the Chinese stock market, on top of Friday’s 2.6% gain, is also telling, though the failure of the latter to spill over into Emerging Markets more generally to which AUD and NZD have been so highly correlated of late, may be part of the story here. In this respect, suspicion of the influence of ‘’the big red hand’’ or ‘’team China’’ in driving stock market gains at a time when further weakness would have elicited some significant ‘’margin calls’’ from a multitude of borrowers who have pledged shares as collateral, is something that can’t be dismissed out of hand
Broader US strength is obviously part of the reason why AUD and NZD are lower, but here and as I have been saying for a while now, it is not so much outright affection for the big dollar that is at play here but rather than fortunes of two of the major constituent parts, The Euro and Sterling. The narrow DXY dollar index is up 0.3% since Friday’s New York close with EUR/USD -0.4% on the day and GBP/USD by twice that.
On Sterling, the rally last Friday sparked by reports that UK PM Theresa May was considering offering the EU ‘’indefinite’’ participation in the EU Customs Union (or ‘’territory’’ as she now refers to it – not the same as a Union apparently – has given way to a view that the complete unacceptability of this proposal to the ‘’Brexiteers’’ within the Tory party has now increases the prospects of a leadership challenge (even if, as I have been saying ad nausea, the chances of May losing a leadership contest are very much smaller than the chances of the Conservative MPs garnering enough signatories for just such a challenge). Mrs May has been invited to attend a meeting of the so called ‘’1992’’ Committee tomorrow, and soon after that we might learn if a leadership challenge is indeed afoot.
As for the Euro, the big rally in Italian government bonds at yesterday’s European open, following news late Friday that Moodys had shifted its outlook on Italy from negative to stable in conjunction with its one notch downgrade to the sovereign rating (to one above junk) initially saw the Euro strengthen (to 1.1550 versus the USD) but it now sits 70 points below this at 1.1470. This after Italy made clear it is still intent on a 2019 Budget that implied a deficit of 2.4% of GDP, albeit the government has said this is a ‘’ceiling’’. The EU is evidently not impressed notwithstanding Friday’s comments from EU Commissioner Pierre Moscovici that the EU would not meddle in Italy’s economic affairs and there now looks like being a three week period of toing and froing before we find out whether a compromise can be reached (chances are it will be).
Bonds
US 10 year treasuries have seen yields meandering around Friday’s 3.19% New York close which is where they sit currently. 2-year yields are about 0.5bp up, at 2.91%.
Italian government bonda (BTPs) have seen just over half of yesterday’s European opening fall retraced (from a low of 3.33% to 3.49%) and the 2yr from a low of 0.87% to now 1.16%.
Commodities
WTI crude is flat while Brent is 34 cents or 0.4% higher versus Friday’s close. Industrial metals are mostly higher led by a 1.1% rise for Nickel. Iron ore is up 0.7% and coking coal $1 (so this grade is essentially still maintaining the big gains we saw in late September/early October). Gold is again struggling to go better after the big mid-month run-up, down $3.79 to $1,222.70.
This morning on the Economic Front we again have no data of note from the UK. At 7.00 am the Bank of England Chief Economist Haldane speaks in Paris at 7.00 am. Finally we have the Richmond Fed Activity Index and Euro-Zone Consumer Confidence at 3.00 pm.
December S&P 500
Both the Dow and S&P gapped higher at yesterday’s open before reversing as the buying interest dissipated quickly. Subsequently the S&P which made a high of 2783 fell nearly 30 Handles to just miss my buy range before rallying. This rally also faltered late in the day with the S&P closing firmly below its 200 Day Moving Average. However just after 2.30 am the S&P traded lower to my 2741 buy level before rallying to a so far rebound high of 2746. For the second consecutive trading session I had to send an updated email to my Platinum Members which I apologised for but as you know markets never sleep especially when you have an open position. I cut this position at my revised 2745 T/P level and I am now flat.. Today my only interest in buying the S&P is on a further dip lower to 2718/2726 with a 2709 stop which is just below the October 3 low at 2712.25. Meanwhile I will also lower my sell level to 2792/2802 with a 2810 stop. The S&P needs to break and close over 2780 to negate the current negative sentiment.
EUR/USD
I am still flat the Euro which again traded in a narrow range around the 1.15 pivot point. Today I will now lower my buy level to 1.1360/1.1405 with a 1.1320 stop.
December Dollar Index
No change as I am still a seller on any rally higher to 96.20/96.60 with the same 96.95 stop.
December DAX
The DAX needs to break and close over 11800 or break the key 11400 support level to give us a clue to the next major move in the market. With the US markets in retreat yesterday the DAX held in pretty well and it is this price action why I am afraid to go short. Today I will again lower my buy level to 11250/11320 with a 11195 stop.
December FTSE
The renewed weakness in Sterling did not prevent the FTSE from reversing earlier gains to close near the lows of yesterday’s session. I am still flat and the FTSE needs to break and close over 7150 for the bulls to feel more comfortable. Today I will also leave my buy level unchanged from 6890/6930 with the same 6855 stop.
Dow Rolling Contract
With the VIX trading either side of 20 all day yesterday it guarantees plenty of intra-day volatility. For the last week the Dow has traded between its 50 and 200 Day Moving Averages which closed last night at 25987 and 25160 respectively. The Dow must hold the 24950/25150 support level or else we could see a further acceleration to the downside which takes out the recent 24898 support level from two weeks ago. Just like the S&P above the Dow hit my 25150 buy level overnight before thankfully rallying to my 25225 T/P level. As both the S&P and Dow hit near the same time I covered my long Dow position at my revised 25182 T/P level and I am now flat. Today I will again look to buy the market on any further sip lower to 24900/25050 with a 24795 stop. As the market is trading so close to its 200 Day Moving Average I do not want to be short the Dow at this time.
December NASDAQ
No change as I am still a seller on any rally higher to 7250/7310 with the same 7360 stop. The NASDAQ performed better than both the Dow and S&P yesterday and today I will now raise my buy level to 6970/7020 with a higher 6930 tight stop.
December BUND
No change as I am still a seller on any rally higher to 160.20/160.60 with a 160.95 stop.
Gold Rolling Contract
Gold has not moved more than 0.8% in either direction since we broke the key 1212 resistance level. Short positions have now started to recoil from their record net-short positions and this trend should continue as prices rise. I am still flat the market and today I will now raise my buy level slightly to 1201/1213 with a 1193 stop.
Silver Rolling Contract
I am still long at 14.65 with the same 14.75 T/P level and 13.80 stop. I will continue to add to my existing long position on any dip lower to 14.25. If any of the above levels are hit I will be back with a new update for my Platinum Members.
Recent Comments