On the first full day of trading for May as London returned from Monday’s Bank Holiday, both equity markets and the US Dollar had a wild trading session with the Euro having traded as high as 1.1620 before getting hit hard to close just below 1.15 while equity markets again turned around after Apple shares rallied having closed lower in each of the previous eight trading sessions and avoided a ninth consecutive down day for the first time since 1991. Prior to yesterday’s rally in Apple the Computer giant had fallen a huge 16% in this period.
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 lost 55 points yesterday have unfortunately gotten stopped out of the S&P at the low of the day before the market rallied 20 Handles. My Platinum Service made 2175 points in April having made 2265 points in each of the previous two months following a record 3365 point gain in January. Since I started this service last June it has made over 24,000 points.
The Daily Bollinger Band and Williams Index again proved what valuable trading tools they are as the EURO/USD, USD/JPY and Dollar Index all had nearly 1% moves following a break of these indicators with the Dollar Index having the most impressive move from a low just above 91.80 to close above last August’s spike low at 92.60 with a 93.00 close.
One currency that did display some independent weakness yesterday and which may have had a hand in the broader market moves was Sterling. This was after a particularly disappointing Manufacturing PMI which came in at 49.2 down from 51.0 last month and 51.2 expected. The impending EU Referendum looks to have taken the bite out of both orders and output. Weaker oil prices saw the commodity currencies sit at the bottom of the G10 Leader Board, with the Australian Dollar hit hardest closing down at 0.7480 from 0.7670 when I posted early yesterday morning.
The surprise cut from the RBA by 50 bps to 1.75% doing most of the damage. This new Cash Rate is a record low for Australia with the market now pricing in another 0.25% rate cut over the coming months.
This morning on the economic front we have German and Euro-Zone Services Markit PMI at 8.55 am and 9.00 am respectively. This is followed at 9.30 am by UK Construction PMI while at 10.00 am we have Euro-Zone Retail Sales. Next we have the US ADP Employment Change and this number will be closely watched ahead of Friday’s Non –Farm Payrolls. At 1.30 pm we have US Trade Balance and the Non-Farm Productivity/Unit Labour Costs while at 2.45 pm we have the US Markit Services/Composite PMI. Finally at 3.00 pm we have Factory Orders and ISM Non – Manufacturing Composite.
It is also worth noting that at 4.30 pm UK Prime Minister Cameroon is due to answer questions on ‘Brexit’ by the House Committee.
June S&P 500
Some days you get lucky with your S&P calls but that certainly was not the case yesterday as having identified the significance of the 2040/2045 support I had a stop on my latest average 2059 long position at 2049 which was hit ahead of a 2048.50 low print before the market went on to have a 20 Handle rally and I am still flat. Again if anyone used my ‘5 Handle Rule’ to buy back in then this strategy would have worked well but as I was travelling I did not have internet access and thus missed this opportunity. There is no doubt if and when we do finally break this level then we will see an acceleration lower. I have no doubt that the Fed was scared after the incredible 16% fall in Apple Shares over the previous eight trading sessions and intervened to prevent a full blown sell-off. Yesterday’s move lower has left a small ‘Open Gap’ from yesterday afternoon’s rebound high at 2070 to Monday’s close at 2076 and I would expect at least an attempt to close this ‘Gap’ before we head lower. Today I will lower my sell level slightly to 2079/2085 with a 2090 stop. I do not like the way this market is shaping up and the fact that I am already long the Dow, my only interest in buying the S&P is on a move lower to 2039/2044 with a 2034 stop. Remember a break and close below 2040 is very bearish.
EUR/USD
As mentioned in my economic commentary above both the Bollinger Band and Williams Index on the Daily chart worked really well in identifying a temporary top in the Euro and bottom in the Dollar Index. After the Euro hit my average sell level at 1.1595 I emailed my Platinum Members to cut this position at 1.1550 as nearly all my trades had gotten executed at the same time and I had to try and reduce my risk and I am now flat. Today I will leave my buy level unchanged at 1.1400/1.1440 with the same 1.1360 stop. I will also look to go short the Euro on any move higher to 1.1570/1.1610 with a tight 1.1640 stop which is just above yesterday’s high print.
June Dollar Index
For the first time in many months I gave a recommendation to buy the Dollar yesterday with the market hitting my 92.00 buy level before having a nice rally over 93.00 which enabled me to cut this position again too early given the amount of ‘open’ positions that I had on board at 92.35 and I am still flat. Today I will again look to buy the Dollar on any dip lower to 92.10/92.50 with a 91.70 stop which is just below yesterday’s low print. I still do not want to be short the Dollar at this time.
June DAX
From this morning I am back to my normal time of posting at 9.00/9.30 am as I am back from my travels. Thankfully by the time you got to red my commentary yesterday morning the DAX was already in free-fall and through my buy level and I am still flat. Just to reiterate my DAX calls only work for the normal trading hours for the EUREX Exchange where the DAX trades and their opening hours are from 7.00 am to 9.00 pm. My DAX calls do not work overnight as the Futures Market is closed. I know the various spread betting firms makes a market in the DAX outside these hours but I do not abide by these prices as 1 they are not valid as the price is made up based on where they think the market is trading and 2 they widen the spread so as to take people’s stops out. My own view is the DAX is only for experienced traders as the volatility will kill most people. If you are trading the DAX please re-read the above commentary a couple of times and only trade this market in small size as both the S&P and Euro offer better opportunities as these markets trade nearly 23 hours. Today I will be a small buyer on any dip lower to 9790/9840 with a 9745 tight stop as 9800 should be good support.
June FTSE
The FTSE opened at the bottom of my buy range at 6170 and just like the S&P above I was stopped out of this position near the low of the day at 6135 before the market recovered and I am still flat. Given the weakness of Sterling and the fact that UK PM Cameroon is speaking this afternoon I am still a buyer rather than a seller of the FTSE. Today I will again look to buy the market on any dip lower to 6060/6090 with a 6045 stop.
Dow Rolling Contract
The Dow traded lower to my 17750 buy level. I emailed all my Platinum Members to exit this position at 17820 but the market fell shy with a 17805 high print. I will leave my T/P the same while at the same time I will raise my stop to 17690. I still do not want to be short the Dow at this time as the rally in Apple yesterday if sustained today should see the Dow recover some more ground.
June BUND
The Bund traded higher to my 162.65 sell level. I am still short and today I will lower my stop to 163.20 which is just above yesterday’s high. I still do not want to be long the Bund at this time.
Gold Rolling Contract
I am still flat Gold preferring instead to be long Silver. I have no edge in Gold at this time as I still do not trust this rally despite the weaker Dollar.
Silver Rolling Contract
No change as I am still long Silver from Monday at 117.50. Given the fact that Silver is overbought and over extended I will now look to exit this trade on any rally higher to 17.60. If I manage to exit this position I will again look to buy the market on any dip lower to 16.70/17.10 with a 16.35 stop.
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