The UK government has survived the no-confidence motion tabled on Tuesday by opposition leader Jeremy Corbyn; to no-ones surprise hence Sterling is little moved. We now await the government’s ‘’Plan B’’ response to developments that are supposed to come by Monday, the backdrop to which is mood music coming out for Brussels suggesting that they will be amenable to a request for an extension of Article 50- possibly until 2020 – so delaying the day when the UK formally leaves the EU beyond March 29 this year (if at all, of course). Nothing has happened in the last 24 hours to dissuade me from the view that we are headed in the direction of an Article 50 delay, softer Brexit (than Prime Minister May’s Withdrawal Agreement implied) or no Brexit.
To mark my 1750th 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 detail
For anyone following my Platinum Service it made 52 points yesterday and is now ahead by 857 points for January, having made 2803 points in December, 1541 points in November, 2094 points in October and 1279 points in September Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
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But it remains too soon to be buying Sterling with your ears pinned back, even if substantially higher levels are in prospect in coming months. After all, Jeremy Corbyn has made clear his no-confidence motion might not be ‘’one and done’’ with still some chance that members of the hard Brexit Tory ERG could yet decide that binging down the government is preferred to either a very soft or no Brexit scenario.
In the wider world, it proved a good session for US stock markets, with banks leading the broader Indices higher after both Goldman Sachs and Bank of America/Merrill Lynch (BoAML) reported better than expected earnings, albeit both suffered from extreme Q4 market volatility in their FICC businesses. Within the S&P 500, which closed up 0.5%, financials are up 2.6% but no other sector by more than 0.75%. Ford lost more than 5% after revising down its full 2018 earnings guidance to $1.30 a share from the $1.33 prior street consensus.
US economic news has seen the NAHB Housing Index improve to 58 from 56, with the recent decline in mortgage rates (tied to the fall in longer term US treasury yields) cited behind the improvement.
The Fed’s Beige Book released last evening (ahead of the Jan 29/30 FOMC meeting) reports 8 out of 12 districts reporting modest to moderate growth with outlooks generally positive in most districts if as less optimistic than previously. All districts noted that labour markets were tight and that firms were struggling to find workers at any skill level. So no real signs of economic slowdown here. The Philly Fed survey will be the main economic point of interest this afternoon.
Currencies
The NZD is currently the worse performing G10 currency of the past 24 hours, down just under 0.5%, following yesterday’s very weak credit card spending data likely to have been impacted by the fewer number of business days in December, there are some suggestions that weakness overnight might owe something to positioning in front of next week’s important Q4 CPI numbers and the risk of weak numbers.
AUD is also weaker (low of 0.7162) falling below the local session lows we saw after yesterday’s weak consumer confidence reading, perhaps for the same reason (Q3 Australia CPI is out of January 30th). There were also some comments from US trade representative Robert Lighthizer yesterday suggesting he had seen little sign of movement from China on some of the key trade issues, which might have produced a bit of delayed reaction on AUD and NZD.
As noted, GBP is little moved post the failed government no-confidence vote, the Euro is marginally weaker but the overall DXY Dollar Index unchanged.
Bonds
Bond markets see US 2-year Treasury yields up about 1bp and 10s +2bps, consistent with more positive risk sentiment. Earlier Wednesday, UK gilt yields ended up almost 6bps at 10-years, on the view that risk of an economically debilitating hard Brexit have receded.
Commodities
Most Commodities arel showing modest gains, be they oil, base metals, iron ore or precious metals, nickel (-0.4%) the one exception.
This morning on the Economic Front we have UK Bank of England Credit Conditions at 9.30 am. This is followed at 10.00 am by Euro-Zone CPI. At 1.30 pm we have US Weekly Jobless Claims, the Philly Fed Business Outlook and Housing Permits. Finally at 3.45 pm the Fed’s Quarles speaks at the Insurance Industry Forum.
March S&P 500
The S&P just fell shy of my 2630 sell level with a 2626 high print before selling off after the close on the weaker Netflix Earnings. I am still flat. As I mentioned yesterday I am reluctant to chase the S&P higher especially with the McClellan Oscillator still severely overbought as shown by last night’s unchanged +253 closing print. The 50 Day Moving Average is now slightly lower at 2630 and today I will lower my sell range slightly to 2628/2643 with a 2655 tight stop. One note of caution was the fact that despite the S&P rallying yesterday the VIX closed higher at 19.10. Meanwhile I will continue to be a buyer on any dip lower to 2572/2586 with a 2565 stop. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer from 2545/2559 with a 2536 stop.
EUR/USD
Shortly after I posted the Euro traded higher to my 1.1420 T/P level on my latest 1.1400 long position and I am now flat. Today I will again look to buy the market on any dip lower to 1.1310/1.1350 with a 1.1275 stop. With the Euro trading close to the key 1.1200/1.1300 support level I still do not want to be short the market at this time.
March Dollar Index
Earlier this morning the Dollar traded higher to my 95.90 sell level. In keeping with my theme of banking points when available I have now cut this position here at 95.78 and I am now flat. Today I will again look to sell the Dollar on any rally higher to 96.20/96.60 with a 96.90 stop.
March DAX
The DAX traded in a narrow range yesterday before opening lower this morning. Weakness is continuing with near term support at 10725. I am still flat and today I will now lower my buy level to 10680/10750 with a 10620 stop. I still do not want to be short the DAX at this time.
March FTSE
My FTSE plan worked well with the market trading lower to my 6785 buy level before rallying to my revised 6805 T/P level and I am now flat. In my opinion it is inevitable that Article 50 will be extended for at least a year and this will help Sterling to rally which may see renewed weakness in the FTSE. With this in mind I will now look to sell the market on any rally higher to 6840/6880 with a 6925 stop. My only interest in buying the market is on a dip lower to 6690/6730 with a 6655 stop.
Dow Rolling Contract
The Dow had its narrowest trading range since October 2 which was the day before the bear market started in earnest. However this morning the Dow is trading over 200 points lower and I am still flat. I will leave my 23680/23830 buy level unchanged given how severely overbought the market is after rallying from a low of 21700 on December 26. As I mentioned yesterday the Dow has very strong resistance at 24600 and it will take something special for this area to be broken. With this in mind I will now lower my sell level to 24350/24520 with a lower 24680 stop.
March NASDAQ
I am still flat the NASDAQ and I will continue to be a buyer on any dip lower to 6510/6560 with the same 6455 stop. The NASDAQ has strong resistance at 6800 and if the market rallies over the coming days I will be an aggressive seller from 6770/6840 with a 6895 stop.
March BUND
Frustratingly the Bund missed my 164.35 buy level with a 164.36 low print before rallying 50 points this morning and I am still flat. Today I will now raise my buy level slightly to 164.05/164.40 with a 163.70 tight stop.
Gold Rolling Contract
The 1300/1310 resistance area is proving extremely difficult to penetrate for Gold. This is no surprise as we have trendline resistance here going back to the highs over 1900 from 2011. I am still flat Gold and I am going to stay flat unless we break this key resistance area. If we do trade at a price of 1311 I will be a buyer with a 1297 stop. My profit target on such a break will be at 1325.
Silver Rolling Contract
No Change as I am still long the market at 15.60 with the same 15.25 stop. Meanwhile I will leave my T/P level unchanged at 15.75 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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