For all the talk of an emerging bear market in equities of late, and for whatever reason, European and US equities have reversed in size which started shortly after I posted early yesterday morning, led by tech stocks. After testing three month highs, the VIX index is back down to 11.73 (- 1.73) and US Treasury yields are up 3-5 bps along the curve, yields a little higher in late session trade. Meanwhile in FX, it has been a day of contained ranges, the DXY little moved as has been the AUD. Risk appetite has been supported in the NY afternoon session by the passage in the US House of its Tax Reform legislation package. That brings Tax Reform a step closer, though the Senate needs to pass legislation too and then be reconciled with House legislation.
To mark my 1475th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2750 for my Platinum Service which includes 1 to 4 updated emails throughout the trading day. This offer is open to both new and existing members and if anyone is interested in this offer please contact me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it was flat yesterday after none of my calls got hit yesterday as thankfully we had no sell levels in the Equity Indices and is still ahead by 665 points for November, having made 657 in October, 447 in September, 1560 in August, 1096 in July, 1023 in June, 1076 in May, 1335 in April, 1375 in March, 1481 in February and 1734 in January. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points.
A more risk-supportive mood, with equities up and the VIX lower, and even some gains in Emerging Market FX have failed to inspire any rebound in the AUD. It is languishing just below 0.76. Yesterday’s labour market report was mixed-to softer (employment growth weaker and even the drop in unemployment came from lower participation) followed up on disappointing wages. The market continues to price in no near term RBA rate hike. Fed market pricing though does look to be building with the result that by mid to late next year, there is an expected implied RBA cash-Fed funds crossover priced in to the market, a growing headwind for the Aussie.
UK Retail Sales in October were fractionally better than expected, (including fuel +0.3% against +0.2% consensus), seeing a relief rally in Sterling that had been softer into the report. The Euro has been steady as the so-called Jamaica coalition meets and endeavours to put together an agreed policy platform to see the Greens support the CDU/CSU party and of course Merkel remain Chancellor. It has yet to be done, one sticking point being immigration policies with the AfD party waiting in the wings.
US data has been second tier, Jobless Claims rose 10K, apparently not distorted this time by delayed Peurto Rico filings. Industrial Production rebounded by more than expected after the hurricane effects, up 0.9%, the Fed estimated such rebound effects accounting for 0.6% of the rise. Meanwhile the NAHB Housing index in November jumped to 70 from 68, an indication of still strong underlying housing demand and a solid employment market. There is more housing data this afternoon.451145
There has been another barrage of central bank speakers since I posted yesterday morning, but from a market’s perspective, nothing that’s rattled the cage in terms of new perspectives. Monetary policy hawk Fed President Loretta Mester spoke that she was starting to see signs of rising inflation, speaking of encouraging productivity signs and thus wages rising too. Robert Kaplan though was less assured on the outlook saying he has an open mind on the need to hike rates at upcoming meetings.
The market is (rightly) convinced the Fed will hike in December but the outlook for 2018 and dot plots at that meeting is what the market will be focussed on. This week’s US CPI tips the scales toward retaining existing Fed forecasts. Across the Atlantic, the ECB’s Mersch was doing his bit to hose down any notion of extending QE.
This morning on the Economic Front we have ECB President speaking in Frankfurt at 8.30 am. At 9.00 am we have Euro-Zone Current Account and this is followed at 10.00 am by Construction Output. This is followed at 1.30 pm by US Existing Housing Starts and Canadian CPI. Finally at 4.00 pm we have Kansas City Fed Manufacturing Activity Index at 4.00 pm.
December S&P 500
Yet again anyone shorting the US stock market has got killed as one short position after another was forced to close shortly after the US Market opened with the S&P now trading 30 Handles higher than the low made on Wednesday afternoon. Thankfully we had no sell levels across any of the Stock Indices that I cover and we are still flat. My ultimate target is still to see the S&P rally to 2620/2640 which is a major trendline resistance area. As mentioned yesterday as long as the S&P can hold the 2550 support level I will continue to be a buyer on dips. Today I will now raise my buy level to 2572/2578 with a 2567 stop.
EUR/USD
I am still flat the Euro which just missed my 1.1755 buy level with a 1.1757 low print. Today I will raise my buy level slightly to 1.1720/1.1770 with a higher 1.1685 stop. I still do not want to be short the Euro at this time.
December Dollar Index
No change as I am still a seller on any rally higher to 94.35/94.70 with a 95.00 stop.
December DAX
As long as the DAX continues to trade below 13200 it is still on a sell signal. However given the strength of the US Indices I am reluctant to sell this market, despite the negative price action. Today I will raise my buy level to 12900/12970 with a 12850 stop.
December FTSE
I am still flat the FTSE and today I will raise my buy level to 7330/7360 with a 7310 stop. Just like the DAX, even though the FTSE is also on a sell signal I still do not want to be short the market at this time.
Dow Rolling Contract
The House passing the Tax Reform Bill saw the Dow rally 0.81% or 187 points yesterday proving yet again how difficult it is to be short the market until we break some key levels. I am still flat and in light of yesterday’s huge move higher I will now raise my buy level to 23310/23370 with a 23260 stop.
December NASDAQ
The NASDAQ was the one US Index that I could not see selling off at this time and I am annoyed with myself that I did not hang on to my 6245 long position from Wednesday afternoon and I am still flat. Today I will now raise my buy level to 6270/6305 with a 6235 stop.
December BUND
I am still flat the Bund which never came close to my sell range during yesterday’s session. Today I will now lower my sell level to 162.95/163.35 with a 163.60 stop as we wait to see what Dragi has to say this morning.
Gold Rolling Contract
No change as I am still a buyer on any dip lower to 1255/1263 with the same 1248 stop.
Silver Rolling Contract
I am still flat and today I will now raise my buy level to 16.65/16.95 with a 16.35 stop. If I am taken long I will have a T/P level at 17.15.
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