The ECB came and went without any new ‘stimulatory’ measures announced and none was expected. ECB President Dragi’s opening statement at his press conference did initially reference that interest rates would remain ‘at present levels or lower for an extended period’ which caught the market’s attention but this statement was later qualified but not before the Euro dropped from near 1.14 shortly before he spoke to below 1.13. Dragi also mentioned that loan dynamics were higher, initially lifting the Euro again.
To mark my 1050th 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 session. This offer is open to 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 25 points yesterday and is now ahead by 1390 points for April having made 2265 points in each of the previous two months following a record 3365 point gain in January. Since I started this service last June it has made over 23,000 points.
What has also caught the news wires attention was German criticism that negative interest rates do not work. And while Dragi batted some of this criticism by saying that the experience of negative yields had been broadly positive – i.e. credit and financial conditions remain easy, he said that there was no evidence that negative rates had been passed on, an implicit acknowledgement the ECB may have reached its lower bound. Dragi weighed into the ‘Brexit’ debate a little saying that the uncertainty had already had some market impact.
As far as Sterling is concerned, UK Retail Sales had a big miss, with Sales in March down a further 1.3% after a 0.5% fall in February, which was also revised lower by 0.1%. This was followed inevitably by a degree of volatility in Sterling which is still trading among its highest levels in two weeks at 1.432 against the US Dollar and below 0.79 against the Euro, but still sensitive to more ‘Brexit’ poll risk/rally.
At the end of the day we saw a reversal in both the US Stocks and a downside Key Day Reversal in the Euro which sits at just above key support at 1.1280. Not helping equity markets was the 2.5% fall in oil while Silver also had a large downside reversal off its 17.70 high print.
This morning on the economic front we have German Manufacturing/Services PMI and Markit Euro-Zone Manufacturing/Services PMI at 8.30 am and 9.00 am respectively. This is followed at 10.00 am by Euro-Zone Q4 Government Deficit/Debt. Finally at 2.45 pm and the only US data release today, is US Manufacturing PMI which is due at 2.45 pm.
June S&P 500
The S&P which just missed my 2109 sell level with a 2104 high print followed the other main Indices lower with the market eventually hitting my average buy level at 2080.50. I am still long and I will leave my stop unchanged at 2073. I will also look to sell the S&P on any rally higher to 2090/2096 with a 2101 stop. Given how overvalued and over stretched this market is trading coupled with the fact we are trading at the top of the Bollinger Band I am only long in small size. This market is due a decent sell-off after the incredible 300 Handle rally since mid-February.
EUR/USD
My long 1.1295 Euro position worked well yesterday with the market initially rallying to 1.1330 ahead of the ECB announcement before spiking to a high at 1.14 just before Dragi spoke. I covered my position ahead of the ECB as promised at 1.1320 and I am still flat. I was not surprised that Dragi tried to talk the Euro lower as no country with the exception of Germany wants a strong currency. Today I will again look to buy the Euro on any dip lower to 1.1170/1.1210 with a 1.1140 stop. Despite yesterday’s downside Key Day Reversal I do not want to be short the Euro at this time.
June Dollar Index
No change as I am still a seller on any rally higher to 95.20/95.50 with the same 95.80 stop.
June DAX
As expected after the massive 1000 point rally in the DAX since its lows of last Monday morning the DAX has given back some of those gains following the ECB unchanged rate announcement and QE. The DAX has good support at the 10200/10270 area and I would expect the market to initially have difficulty in breaking this area. As a result I will be a buyer in this area with a 10150 tight stop. Despite the sell-off late yesterday the price action is telling me not to be short the DAX at this time.
June FTSE
The FTSE has backed off the key 6350/6400 strong resistance. This sell-off was enhanced by the awful UK Retail Sales data yesterday which came on top of the equally horrific Average Earnings data on Wednesday. I am still flat the market as thankfully we had no buy level yesterday. However given the actions of the Central Banks over the past two months it is so hard to be short the markets for any length of time. You only have to look at the manipulation in the Nikkei over the past week as an example. The next support for the FTSE comes in at 6250 and today I will be a buyer from 6230/6260 with a 6195 stop. Despite the negative price action my only interest in selling the FTSE is on a rally higher to 6360/6400 with a 6430 stop.
Dow Rolling Contract
The Dow had a bad trading session with the market closing 200 points off its intra-day high. I am still flat as the market fell shy of my sell level as thankfully we had no buy levels in the market. There is no doubt that April has been of the trickiest markets to trade since last July especially with all this Central Bank manipulation going on. The Dow has good support at 17830/17880 and today I will be a small buyer in this area with a 17770 stop.
June BUND
The comments from the Germans re negative interest rates certainly hit the Bund yesterday which closed below important support at 163.10. I am still flat the Bund and today I will lower my sell level to 162.80/163.10 with a tight 163.45 stop.
Gold Rolling Contract
My fears for been long Gold at these levels again proved to be correct as the market had a nasty reversal after the Dragi had finished his press conference. I am still flat Gold and today I will leave my buy level unchanged at 1223/1231 with the same 1216 stop.
Silver Rolling Contract
Silver had a nasty downside Key Day Reversal yesterday off its 17.70 high print. The sell-off just missed my 16.70 buy level with a 16.72 low print. I am still flat Silver and today I will leave my buy level unchanged at 16.40/16.70 with the same 15.95 stop.
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