As a BBC commentator described it last night, providing it does not violate the laws of thermodynamics, anything can happen inside the British Conservative Party. When the former Mayor of London Borris Johnson fronted his press conference yesterday, it was a real shock when he said the leader ‘would be someone other than me’. Nominations for the leadership were subsequently announced and Theresa May looks to the front runner. The Pound slumped but so far has recovered nearly half of its lost ground.
To mark my 1100th 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 85 points yesterday to close June with a gain of 2550 points. The previous three months saw gains of 1532, 2175 and 2265 points respectively. Since I started this Platinum Service in June 2015 it has averaged a monthly gain of over 2200 points.
The Ratings Agency S&P cut the EU’s rating from AA+/Negative to AA/Stable, with the agency noting ”Brexit” would hurt the EU’s flexibility, also highlighting the EU’s cohesion risks. Fitch offered warnings and stern words but no immediate ratings changes.
Despite these further hits to sentiment, equity markets have closed higher on both sides of the Atlantic, while the S&P 500 VIX Index closed down further to 15.86. Remember on Monday the VIX was trading north of 25. The big mover has been the FTSE which has now risen 950 points of 16% since its panic lows of last Friday morning as the September Futures Contract surged once it broke its April high at 6385 to close at 6500.
The reason: the prospect of stimulus to support growth and the markets, from the Bank of England and maybe the ECB too. BoE Governor Mark Carney spoke and said that the Bank had been preparing for ”Brexit” exit risk, is dealing with the uncertainty shock and, more tellingly, signaling to the market the prospect of an easing in the Summer. He noted that the MPC would be weighing the downside risks to growth against the upside risks to inflation from the lower Exchange Rate. His summary was that ”in my view, and I am not prejudging the views of the other independent MPC Members, the economic outlook has deteriorated and some monetary policy easing will likely be required over the Summer”. The July 14 MPC Meeting is now looking potentially ”live”, though I would not be surprised if they wait until we get the full economic forecast review and inflation Report for presentation at the August Meeting. There were reports that the ECB was said to be weighing looser QE Bond-buying rules.
US data was inconsequential with still low Weekly Jobless Claims which came in at 265K from 258K last week. The Chicago PMI bounced from 49.3 to 56.8. Meanwhile in a speech in London Fed St Louis President James Bullard said the size of the ”Brexit” shock in global terms is manageable, that the US Dollar has not risen a lot, and affirming that negative rates are not a likely outcome in the US.
This morning on the economic front we have German, Euro-Zone and UK Manufacturing PMI at 8.55 am, 9.00 am and 9.30 am respectively. This is followed at 10.00 am by Euro-Zone Unemployment Rate. Finally from the US we have Manufacturing PMI at 2.45 pm and ISM Manufacturing at 3.00 pm.
September S&P 500
Unfortunately the S&P just missed my buy level before rallying another 30 Handles to just shy of 2090. This rally has now extended to 109 Handles since last Monday evening as the Bulls are very determined to recover all the ”Brexit” shock losses. There is no doubt that trying to short the market is too risky as shown by my failed attempts on Wednesday. As I mentioned yesterday the Fed were determined not to have a downside Key Month Reversal for June and wow did they achieve that goal. These are the most manipulated markets that I have ever witnessed but at the end of the day the market is always right and these are the facts that we have been dealt with. Today I will move my buy level higher to 2070/2076 with a 2063 stop. Given the fact that the US is closed on Monday for the July 4th Holiday I do not want to be short the S&P at this time.
EUR/USD
My Euro plan worked well yesterday with the Euro trading higher to my 1.1150 sell level before having a nice 80 point fall which enabled me to cover this position at my 1.1110 T/P level as outlined earlier to my Platinum Members and I am now flat. With the Fed on hold for the foreseeable future in my opinion it is still only a matter of time before the Dollar weakens. This is certainly the case in relation to the Emerging Market Currencies especially in South America where their currencies have all made big gains against the US Dollar this week. Today I will move my buy level higher to 1.1010/1.1050 with a 1.0970 stop. I do not want to be short the Euro at this time.
September Dollar Index
My Dollar plan finally worked out with the Dollar trading higher to my 96.35 sell level with a 96.50 high print. Subsequently the Dollar traded lower to 95.80 which enabled me to cover this short position at my revised 96.00 T/P level and I am now flat. Today I will again look to sell the Dollar on any rally higher to 96.50/96.90 with a 97.25 stop.
September DAX
It took a while for the DAX to follow the other main Indices higher yesterday. Eventually the DAX hit my 9760 average sell level before having a nice sell-off this morning to below 9700. However as I wanted to be flat the DAX overnight I covered this short position at 9735 and I am now flat. The DAX still has a small ‘Open Gap’ at 9835 and today I will be a small seller on any rally higher to 9810/9850 with a 9895 stop. My only interest in buying the DAX is on a dip lower to 9540/9600 in small size with a 9495 wider stop.
September FTSE
It is very frustrating in that having called this rally higher in the FTSE mainly due to the competitive advantage that the UK holds on the back of the 12% fall in Sterling, that apart from the initial rally on Monday/Tuesday I have not been able to get a long position on board and I am still flat. This morning the FTSE is very oversold but selling this market is risky and I would prefer to look to buy the market on any dip to the April high. Thus I will look to buy the market from 6370/6415 with a 6325 stop.
Unfortunately BoE Governor Carney put an end to any hope of making money by buying Cable yesterday which fell 300 points once he mentioned that the Bank will have to ease policy over the coming weeks. This move lower saw me buy Cable at 1.3330 before literally one minute later getting stopped out at 1.3275 and I am now flat. Given how oversold Cable is trading and the fact that the currency will eventually get support from the stronger UK economy I will again look to buy GBP/USD on any further dip lower to 1.3180/1.3240 with a 1.3120 stop which is just below last Monday’s 31 year low print.
Dow Rolling Contract
The Dow has now retraced 900 points of its 1000 post ”Brexit” fall in three trading sessions. This is incredible and thankfully we have had no sell ranges in the Dow this week at all. As I mentioned yesterday in my opinion it is only a matter of time before the Dow makes a new all-time high before eventually we will see the end of this near 9 year bull market. Today I will again move my buy level higher to 17750/18810 with a 17695 stop.
September BUND
The Bund had one of its wildest trading sessions since the ECB Meeting in early March. After lunch the Bund traded higher to my 167.00 sell level with a 167.33 high print before trading falling nearly 200 points. This sell-off saw me cover my short position at my 166.60 T/P level and I am now flat. Incredibly the Bund is now back trading higher at 167.20 this morning having just rallied 140 points since the open at 7.00 am. Today I will again look to sell the Bund on any further rally to 167.50/167.90 with a 168.30 stop.
Gold Rolling Contract
Gold is trading higher on the back of Silver breaking its next key resistance level at $19. I am still flat and today I will now raise my buy level to 1310/1318 with a 1299 stop.
Silver Rolling Contract
My pick of the year Silver is really on fire this morning with the market now up over 40% off its January low print at 13.50. Silver has now broken key resistance at 19.00 and as I mentioned yesterday that Silver really does not have any major resistance to 21.50. Even though Silver is extremely overbought and trading outside the top of its Bollinger Band I have bought the market here at 19.10 with a tight 18.60 stop.
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