US and European Equity markets ignored the negative lead from Asian markets and started the month of May on a positive note. While yesterday’s fall in the Nikkei, partly reflected a catch up move given Friday’s holiday in Japan, this negative sentiment spread throughout Asia with all markets excluding Thailand posting small declines for the day. Gains in US stocks were led by consumer discretionary shares with the softer than expected Manufacturing data seemingly having no dampening effect. The April ISM Manufacturing Index fell to 50.8 from 51.8 compared to 51.4 expected.
To mark my 1050th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2500 for my Platinum Service which includes 1/4 updated emails throughout the trading day. This offer is open to both new and existing members and if anyone is interested please email me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it made 100 points on Friday to finish April with a 2175 point gain. The previous two months saw gains of 2265 points each following a record 3365 point gain in January. Since I started this service last June it has made over 24,000 points.
The softer Manufacturing data had a bigger effect on the currency with the US Dollar softer across the board. The SEK and AUD were the G10 top performers over the past 24 hours with the AUD closing up 0.76% at 0.7670. In a broad soft US Dollar environment, the Euro closed over 1.15 for the first time since last August while the USD/JPY remains weak at 106.40.
Not helping the Dollar was the weak US economic data reported last Friday. The Chicago PMI disappointed at 50.4 down from 53.6 in March and 52.6 expected. Milwaukee fell to 51.05 from 57.7 while the final University of Michigan Consumer Sentiment Index was 89.0 down from the 89.7 preliminary reading and a rise to 90.0 expected.
In a light trading environment due to the London markets being closed, US Bond Yields pusher higher. This rise was due to the prices paid component of the ISM Manufacturing Index which rose to 59 from 51.5 in March and although the move higher in Yield was already underway the jump in the price index was an additional driver for the move higher in yields.
Despite a softer US Dollar, oil prices fell yesterday following a data release showing US stockpiles rising last week, while a Reuter’s survey suggested OPEC output rose in April. Looking at other commodities, Iron Ore is back above $66 while Gold is unchanged at $1292 following its huge move higher over the previous two trading sessions.
This morning on the economic front we have UK Manufacturing PMI at 9.30 am. This is followed at 10.00 am by Euro-Zone PPI and the latest EU Spring Economic Forecasts. Next we have the New York ISM at 2.45 pm. Finally at 3.00 pm we have the IBD/TIPP Economic Optimism. This afternoon we have three Members from the Fed due to speak, namely Mester, Williams and Lockhart who are all non-voters this year.
June S&P 500
Yet again the S&P sold off on Friday only to turn around in the last hour of trading and that rally continued yesterday as the mantra of only been short the market for a few hours continues despite the worsening economic situation. Obviously the weaker Dollar is as expected helping the US stock market while after seven straight trading sessions of declines the NASDAQ rose 0.9% yesterday which in turn helped the S&P. On Friday after the S&P traded lower to my average 2059 buy level I tried to exit this trade at 2064 which the market missed and I emailed my Platinum Members to exit this trade for a breakeven and I am still flat. If anyone used my ‘5 Handle Rule’ on Friday this trade would have worked out great but unfortunately I did not myself. To me this market is setting itself up for another fall but I really need to see the S&P close below the 2040/2045 area before I would look to put on a more macro short position which co-incidently was last Friday’s low print. The speed which the Nikkei reversed from 17,500 to under 16,000 at one stage on early Monday morning shows you how quick this rally can unravel. Today I will look to go short on any further rally to 2082/2087 with a 2092 stop. My only interest in buying the market is still on a dip lower to 2056/2062 with a 2049 stop. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer in front of 2042 with a 2035 stop.
EUR/USD
Wow the Euro has just exploded since late Thursday with the Euro closing at 1.1520 which is the highest level since last August. However this move higher sees the Euro trading outside the top of its Daily Bollinger Band and at the top of its Williams Index. The fact that the ECB’s Coeure is due to speak at a World Bank Forum this morning at 9.30 am you have to fancy he will try and talk the Euro lower as there is no doubt the ECB and in particular Dragi will not be happy with this move while in contrast the Bundesbank will be delighted. For these reasons I will be a small seller on any further rally higher to 1.1570/1.1620 with a 1.1655 stop. I will also look to buy the Euro on any dip lower to 1.1400/1.1440 with a 1.1360 stop.
US Dollar Index
I am still flat the Dollar which has got slammed over the past week with the huge 5% fall in USD/JPY enhancing this move lower. The Dollar is now extremely oversold and today I will look to buy the market on any further dip lower to 91.80/92.20 with a 91.45 stop. Given how oversold the Dollar is trading I do not want to be short the market at this time.
June DAX
As I was already long the S&P on Friday I waited to buy the DAX which I did at 10100. Unfortunately I emailed my Platinum Members to exit this position at 10135 and I am still flat. There is no doubt the much stronger Euro is weighing on the DAX and as I expect the Euro to correct over the coming days I will now look to buy the DAX on any further dip lower to 10020/10070 with a 9975 tight stop. I still do not want to be short the DAX at this time.
June FTSE
Unfortunately the FTSE just missed my 6180buy level by 6 points on Friday and I am still flat. Today I will raise my buy level to 6170/6200 with a 6235 stop. Despite the negative price action I still do not want to be short the market at this time.
Dow Rolling Contract
My Dow plan worked well on Friday as after the Dow traded lower to my 17710 buy level we had a nice rally which enabled me to cover this position at my 17770 T/P level as emailed earlier to my Platinum Members and I am still flat. There is no doubt the much weaker Dollar is helping the Dow and is one of the main reasons why I have stayed away from trying to short this market despite the weakening economic situation. Today I will again look to buy the market on any dip lower to 17720/17800 with a 17650 stop.
June BUND
I am still flat the Bund and today I will lower my sell level to 162.50/162.90 with a 163.25 stop.
Gold Rolling Contract
I am also still flat Gold and as I am now long Silver I am going to stay flat the Gold market and take another look tomorrow as I do not want to be long the market at these lofty levels while at the same time I am afraid to go short.
Silver Rolling Contract
As mentioned above Silver traded lower to my 17.50 buy level late yesterday evening. I am still long and I will now raise my stop on this position to 17.10.
Recent Comments