Yesterday we had more comments from US Fed Members with Lacker and Dudley hitting the newswires following Wednesday’s more hawkish Fed Minutes. Although such talk is significant for reinforcing the case for a June/July rate hike, markets mostly consolidated Wednesday’s moves with the exception being equities which continued their post – US FOMC sell-off. There was little in the way of top tier economic data apart from the UK where Retail Sales came in very strong at +1.5%, while US Weekly Jobless Claims fell back to recent trends with Claims at +278K down from 294K and a virtually unchanged Philadelphia Fed Index at -1.8 from -1.6.
To mark my 1075th 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 130 points yesterday and is now ahead by 1080 points for May having made 2175 points in April. The previous two months saw the same gain of 2265 points in both February and March after a record 3365 point gain in January. Since I started this service last June it has made over 25,000 points.
The market is currently pricing in a 60% chance that the US Fed will hike rates by the July FOMC Meeting although if stock markets continue to weaken then this timeline may be extended. Fed officials are seemingly content with such pricing with Dudley stating yesterday he is ‘quite pleased to see that probability has in fact moved up’ and that ‘I think a tightening in the Summer, the June-July time frame, is a reasonable expectation’. One caveat to a June move is that the ‘Brexit’ Referendum occurs one week after the FOMC Meeting and Dudley described this event as ‘another variable in the mix’ and in my view probably makes July more likely.
In terms of market moves, European stocks were down 1.3% with larger falls in the FTSE being dominated by mining stocks which closed down a hefty 1.8%. The S&P fell by a similar magnitude at the open, but ground higher to end the session down 0.4% with following positive earnings reports from both Wal-Mart and Cisco.
Currencies were little changed on aggregate with the exception being the Canadian Dollar which fell alongside the dip in oil prices. However the oil price has now reversed those losses on the back of possible supply disruptions in Nigeria. This morning WTI is back above $49 having traded as low as $47.50 yesterday afternoon. The Euro closed unchanged at 1.1204 in New York.
Major Bond Yields were also mostly unchanged with some volatility after a wild trading session. The 10 Year closed at 1.85% while Bund Yields were also unchanged at 0.17%.
This morning we have no economic data of consequence from either the UK or the Euro-Zone while this afternoon we have Canadian Retail Sales at 1.30 pm and US Existing Home Sales at 3.00 pm.
June S&P 500
My S&P plan worked very well yesterday as the continuing theme that you can only be short these equity markets for a few hours no matter what or how weak the economic data is prevails. Yesterday the S&P hit my 2023 buy level with a 2021.50 low print before going on to have a 25 handle rally. As so many of my markets again hit yesterday I cut my long position at 2029 and I am still flat. Today is the May Options Expiration and is responsible for a lot of the two-way volatility experienced all week. I will leave my sell level unchanged at 2053/2058 with the same 2063 stop. I have to respect the fact that the S&P was again able to close over the now major support level at 2030 and today I will look to buy the market on any dip lower to 2029/2034 with a 2024 stop. Again if I am taken out of my long position either by being able to take a profit of I am stopped out I will be a very aggressive buyer in front of the 2011 200 Day Moving Average with a 2004 stop.
EUR/USD
I am still flat the Euro which is trying to hold the 1.1160 next support level. Today I will raise my buy level higher to 1.1130/1.1170 with a 1.1095 stop.
June Dollar Index
No change as I am still short from early yesterday morning at 95.30 with the same 95.70 stop. Thankfully after the Dollar rallied after I posted yesterday morning is back trading at 95.25 this morning.
June DAX
Unfortunately the DAX just missed my buy level with a 9770 low print after I posted before again rallying on the weaker Euro as yet again the 9800 has managed to hold the market. There is no doubt if we close below 2030 and particularly 2011 in the S&P then we will accelerate lower to at least the 1960/1970 next support level, while if the DAX closes below 9750 then we could well see an acceleration lower to the 9200/9300 next major support level. Today I will move my buy level higher to 9720/9780 as the 9736 low so far for May should be strong support with a 9670 stop. My only interest in selling the DAX is on a rally higher to 9970/10010 with a 10050 stop.
June FTSE
My FTSE plan worked well as just as I posted yesterday morning I was able to cover my long 6070 position at my 6090 T/P level before the marker subsequently traded lower to my revised buy level at 6035 as outlined to my Platinum Members. As I was long so many Indices at that time I cut this position at 6055 and I am now flat. Hopefully you did better with the FTSE trading much higher at 6120 this morning as the continued idea of buying the dip in the FTSE pays dividends. Today I will again look to buy the FTSE on any rally higher to 6060/6090 with a 6025 stop which is just below yesterday’s low print. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
With so many of my markets hitting at the same time I waited to buy the Dow which eventually hit my 17350 buy level before following the other markets higher and this again enabled me to cover this position too early at 17390 and I am now flat. Yesterday’s low print saw the Dow trade at the bottom of its Daily Bollinger Band and Williams Index and today I will again look to buy the market on any dip lower to 17370/17430 with a 17320 stop which is just below yesterday’s low print. With Options Expiration today I do not want to be short the market at this time.
June BUND
I am still flat the BUND which continues to hold its 100 Day Moving Average at 162.95. Today I will move my buy level slightly higher to 162.85/163.15 with a 162.60 tight stop. Despite the really low Yield I still do not want to be short the market at this time.
Gold Rolling Contract
My Gold plan worked well with Gold trading lower to my 1246 buy level before having a nice rally to 1259. As I was already stopped out of my Silver position I covered this position at 1250 and I am now flat. Today I will again look to buy Gold on any dip lower to 1238/1245 with a 1232 stop. The 1230 area should be good support for Gold and we should see a decent bounce off any test of this level.
Silver Rolling Contract
Unfortunately I was stopped out of my 17.00 long position at 16.50 and I am now flat. Today I will be a more aggressive buyer on any further dip lower to 15.80/16.20 with a 15.40 stop.
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