Yesterday’s fall in the Nikkei and strengthening of the Japanese Yen on the back of the Bank of Japan inaction and heightened concerns around the outcome of the UK EU Referendum set the tone to what turned out to be the most volatile trading session in four months. Equities, risk sensitive currencies and Sterling were sold while core Bond Yields and safe haven currencies were bought. Losses were then mitigated in the US session with the rebound in risk appetite coinciding with news that campaigning ahead of the UK EU Referendum was halted following the murder of a UK Labour MP. The recovery in equities and other risk assets occurred amid a gradual easing in bookmakers odds for the UK leaving the EU.
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 100 points yesterday and is now ahead by 805 points for June. The previous three months saw gains of 1532, 2175 and 2265 points respectively. Since I started this service over 12 months ago it has averaged a monthly gain of 2200 points.
US equities pared early losses aided by gains in Telecommunications and Utilities shares. The main US Indices ended the day with gains between 0.2% and 0.55% while all major European Equity Indices closed down between 0.27% and 1.0%.
The US Dollar is stronger across the board barring the JPY which has benefited from its preeminent safe haven attribute. Moves in the Yen are also reflecting a dose of market disappointment from the BoJ decision to stand pat once again. Although Sterling is practically unchanged against the US Dollar, it traded in a 200 point range yesterday as the Pound remains at the mercy of ‘Brexit’ polls and ‘Brexit’ odds by bookmakers.
Core Global Yields ened a little bit lower in Europe and marginally higher in the US. 10 Year Bunds closed at -0.025% while 10 Year Treasuries closed slightly higher at 1.58%.
In Commodities, oil prices have continued to decline with both WTI and Brent closing down 3.0%, while Copper and Gold both closed 1.8% and 1.0% lower. Given the current fragile risk sentiment, markets are paying very little attention to economic data releases at this time. That said we did have important US data releases yesterday which were mostly in line with expectations. US May CPI rose 0.2% and the core measure printed also at 0.2% which was in line with expectations. This was the fourth solid gain in core CPI over the past five months.
The US Philly Fed Index rose to 4.7 in June from -1.8 in May. However Orders, Shipments, Inventories and the Workweek all fell, so this is not the clear signal of better manufacturing conditions that the headline seems to suggest. US Jobless Claims rose to 277K from 264K last week while the NAHB Index in the Homebuilders’ Survey rose to 60 in early June from 58 in May.
This morning on the economic front we have Euro-Zone Current Account and Labour Costs y/y at 9.00 am and 10.00 am respectively. Finally at 1.30 pm we have US Housing Starts and Building Permits at 1.30 pm.
September S&P 500
My S&P plan worked very well yesterday as the 2040 major support level held as expected. Following a test of this level the S&P rallied 30 Handles as yet again this market shows that you can only be short for a few hours before we see aggressive buying again. After the S&P traded lower to my 2044 average buy level I unfortunately covered this position too early at 2051 and I am now flat. The main reason that I covered this position so fast was that 8 of my 9 markets got hit yesterday in what turned out to be one of my most busiest trading days of the year so far. As I have mentioned countless times over the past few years I hate to be short the market no matter how bearish the set up is in a Quarterly Expiration week as you tend to get these huge rallies out of no where such as we saw yesterday and these rallies can be violent and really costly to anyone who shorted the market. The Friday of these Quarterly Expiration trading day’s can be the most difficult to read especially as the Options Component does not expire to just before the close at 9.00 pm. Today I will look to buy the S&P on any dip lower to 2058/2064 with a 2052 stop. I do not want to be short the market today especially as the price action from yesterday was so positive.
EUR/USD
Yesterday was an extremely frustrating trading session for me in both the Euro and Dollar Index as both markets reversed course soon after I was stopped out of my positions. For the record the Euro traded lower to my 1.1215 average buy level before stopping me out of this trade at 1.1175 and I am now flat. Today I will again look to buy the market on any dip lower to 1.1190/1.1225 with a 1.1155 stop. I still do not want to be short the market at this time.
September Dollar Index
This market was even more frustrating as just after I went short at my 95.15 sell level I was stopped out of this trade near the high of the day at 95.35 especially with the Dollar trading at 94.50 this morning. Today I will again try to sell the Dollar on any rally higher to 94.85/95.25 with a 95.60 stop.
September DAX
My DAX plan worked well as the market traded lower to my 9470 buy level with a 9430 low print before having a 250 point rally off this low. Hopefully you made a lot more points than me as I had so much risk on board at the time I covered my long position way too early at 9490 and I am now flat. This was really careless of me especially when both the Daily Bollinger Band and Williams Index were telling you to buy this market aggressively but you have to respect your trading limits. Today I will look to buy the DAX on any dip lower to 9580/9635 with a 9540 tight stop. Yesterday’s reversal tells you not to be short the DAX at this time.
September FTSE
My FTSE plan worked well yesterday as after the FTSE traded lower to my 5845 average buy level the market reversed higher which enabled me to cover this position at my 5895 T/P level and I am now flat. This morning the FTSE is seeing follow through to the upside as in my opinion I believe despite all the bad news in the media that the UK will vote to stay in the EU next Thursday. Today I will again look to buy the FTSE on any dip lower to 5915/5945 with a 5885 stop. As the Williams Index gave a strong buy signal yesterday I do not want to be short the FTSE at this time.
Dow Rolling Contract
My long 17580 Dow position was unfortunately stopped out at my 17520 stop level. Subsequently the Dow made a new low at 17462 before rallying over 300 points which is very frustrating. The only good part of this rally was thankfully we had no sell levels yesterday and I am still flat. Today I will again look to buy the Dow on any move lower to 17620/17675 with a 17550 stop.
September BUND
Unfortunately the Bund just missed my 165.70 sell level with a 165.69 high print and I am still flat which is also frustrating when you see the Bund trading at 165.10 this morning. Today I will now lower my sell level to 165.45/165.75 with a 166.05 stop.
Gold Rolling Contract
Finally my patience paid off in Gold which traded lower to my 1277 buy level late yesterday evening before having a subsequent rally to 1286 overnight which enabled me to cover this position at my 1285 T/P level as outlined to my Platinum Members and I am now flat. Today I will again look to buy Gold on any dip lower to 1267/1274 with a 1261 stop.
Silver Rolling Contract
Silver traded lower to my average buy level at 17.45. I am still long with the same 16.95 stop.
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