I should have titled yesterday’s Daily Commentary ‘Rebel Rebel’ in yet another homage to David Bowie. Rebel One being BTMFJ who were reported to be on the verge of rescinding their JGB Primary Dealership and Rebel Two being Commerzbank, reported to be considering storing cash in vaults rather than pay the ECB for the privilege of deposition excess cash with them. I have gone with these news items as my lead again this morning as to me they are so important given the damage that negative interest rates is doing to the banks.
To mark my 110tth 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 50 points yesterday and is now ahead by 462 points for June. The previous three months saw gains of 1532, 3175 and 2265 points respectively. Since I started this Platinum Service over 12 months ago it has averaged a gain of 2200 points per month.
Well it seems the Commerzbank news was credited for the large sell-off in the DAX yesterday and also the sell-off in the Euro after four consecutive higher closes. The Euro sold off across the board and which saw the Euro Stoxx 50, DAX and FTSE all close down 1.02%, 1.25% and 1.1% respectively despite the US closing basically unchanged. With now only less than two weeks to go to the UK EU Referendum, ‘Brexit’ concerns are also very much to the fore. The fresh falls in Euro-Zone Bond Yields are driven by the ongoing ECB Bond buying programme, as also receiving some of the blame for the moves in all things EUR. 10 Year Bund Yields dropped to a new record low of 2bp yesterday while 10 Year UK Gilts hit a new record low of 1.22%.
The weakness in European stocks for once did not go completely ignored by the US markets, with the Dow and S&P closing down 0.17% and 0.11% respectively. US Treasuries are also showing the effects of negative risk sentiment and lower European Yields with the 10 Year Note ending 3bps lower at 1.68% which is the lowest close so far in 2016. The only US data point of note was the Weekly Jobless Claims, which remained low at 264K after 268K last week. The trend in Claims remains consistent with ongoing falls in the Unemployment Rate though it is the apparent reduction in hiring – rather than the rise in firing – that was responsible for the sharp fall in Employment growth in May.
In Currencies, EUR/USD lost almost a big figure to close at 1.1320. This has aided a partial reversal of the post- Payrolls US Dollar weakness with broad US Dollar Indices up about 0.4% and with the NZD finishing the New York session as the only currency to show gains against the Dollar in the past 24 hours.
A slightly firmer Dollar has gone hand in hand with a reversal of some of this week’s commodity price strength.
This morning we already had the release of German CPI which came in as expected at +0.3%. Next at 9.30 am we have UK Construction Output and the Bank of England’s Inflation forecasts for the next 12 months. This is followed at 3.00 pm by the US University of Michigan Consumer Sentiment. Finally at 7.00 pm we have the US Monthly Budget Statement.
June S&P 500
My S&P plan worked very well for those who bought the market at my 2007/2008 buy level as we had a nice subsequent 10 Handle rally from here into the close before having a late fade. Unfortunately as I was already long the Euro, FTSE and DAX I reduced my buy level to 2105 and I did not get filled and as a result I am still flat. Today I will raise my sell level to 2126/2133 with a 2138 stop which is just above the all-time contract high at 2138. I will be reasonably aggressive with my sell side if we hit this area. As we have both the FOMC on Wednesday and the June Quarterly Expiration next Friday I will again look to buy the market on any dip lower to 2097/2103 with a 2092 stop as I certainly do not want to be short going into next week unless we trade up to my above sell zone.
EUR/USD
The Euro traded lower to my 1.1335 buy level. I am still long and I will leave my stop the same at 1.1275 which is just below the key support at 1.1280. I still do not want to be short the Euro at this time.
June Dollar Index
I am still flat the Dollar and given the fact that I am already long the Euro I will raise my sell level to 94.60/94.90 with a 95.25 stop. I will leave my buy level unchanged at 92.10/92.50 with the same 91.70 stop.
June DAX
My DAX plan worked well as shortly after I posted the DAX traded lower to my 10080 average buy level on the back of the Commerzbank news. Subsequently I emailed my Platinum Members to exit this position at my revised 10115 T/P and thankfully the market obliged after the US Markets opened and I am now flat. Today I will again look to buy the DAX on any dip lower to 9900/9950 with a 9855 tight stop but again only in small size.
June FTSE
The FTSE plan also worked well as the market traded lower to my 6240 buy level. As I was getting hit on so many positions at the one time I emailed my Platinum Members to exit this position at my revised 6255 T/P level and I am now flat. Today I will again look to buy the market on any dip lower to 6145/6175 with a 6120 tight stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
No change as I am still a seller on any rally higher to 18080/18130 with the same 18180 stop. Given the overvalued condition of this market I do not want to be long the Dow at this time.
September Bund
Given all my travels over the past week and been completely jet lagged when I re wrote yesterday’s commentary I completely missed that we had rolled to the September Contract which rolled at a discount of 98 points to the June Contract. Thankfully none of my sell/buy ranges got hit so no harm was done and I am still flat. Today I will now raise my buy level to 163.90/164.30 with a tight 163.65 stop. My only interest in selling the Bund today is on a rally higher to 165.70/166.00 with a 1.6640 wider stop.
Gold Rolling Contract
No change as I am still a buyer on any move lower to 1237/1244 with the same 1229 stop.
Silver Rolling Contract
Frustratingly Silver just missed my 16.90 buy level with a 16.91 low print and I am still flat. Today I will now raise my buy level to 16.80/17.10 with a 16.35 stop.
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