Trade remains the central theme both in terms of news and data reports over the past 24 hours with the Australian Dollar right at the centre of attention, yesterday seeing violent moves in both directions. The AUD sits lower this morning than where it was this time yesterday. It was initially buoyed on the sticker shock from high January headline employment growth of 39K, more than double the 165K consensus. The AUD spiked higher, testing 0.72 after the number, but within the hour, an announcement from another analyst that they had changed their Interest Rate call to two cuts this year took the heat out of the AUD, the AUD smartly back to pre-employment data levels. Then, later in the afternoon, a Reuters ‘’exclusive’’ report hit the wires saying that China’s Dalian port had banned Australian coal imports, setting a 2019 quota. This followed reports earlier this week that Australian coal ships have been experiencing delays in being able to unload coal this month.
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For anyone following my Platinum Service it made 125 points yesterday and is now ahead by 693 points for February, having made 1671 points in January, 2803 points in December, 1541 points in November and 2094 points in October. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
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This had the market understandably thinking and reacting to the idea that this was literally a ‘’canary in the coal mine’’ moment as far as trade was concerned. Reuters reported a spokesman for Chinese Foreign Ministry that customs were inspecting and testing coal imports for safety and quality, ostensibly sending mixed messages. ‘’The goals are to better safeguard the legal rights and interests of Chinese importers and to protect the environment,’’ Geng said, adding that the move was ‘’completely normal’’. There was another report from a Commerce Ministry spokesman who knew nothing of it.
Economics
The two sets of key reports yesterday were the preliminary Euro-Zone PMIs for February (they are usually not revised much, if at all) and in the US the Philly Fed Survey for Feb, Jobless Claims, Durable Goods Orders, and the Leading Index.
The Euro-Zone PMIs were mixed. The German Manufacturing PMI was weaker still in February to 47.6, down from an already contractionary 49.7, Services better at 55.1 up from 53. France’s Manufacturing Index was up from 51.2 to 51.4, though the Zone’s Manufacturing Index was weighed down by the weakness from the German survey which reported weaker orders, highlighting Asia and China in particular, including in the troubled auto sector. The French Services sector remained in contractionary territory, though at 49.8, which was not as weak as January’s 47.8 print. Overall, the reports still fail to give a clean bill of health, overshadowed by trade concerns.
US data was mixed. There was a welcome pull-back in Weekly Jobless Claims in the payroll survey week to 216K from last week’s higher than expected 239K, but the Philly Fed survey was particularly weak at -4, down from +17, the weakest level since 2016. Core Durable Goods Orders in December (when equities were very brittle) again were uninspiring, down 0.7% after a 1.0% dip in November, signs of uneasy business confidence. The composite Leading was down 0.1% after being flat in December, that reading revised up from an initially reported -0.1%. That (and other indicators) are still not signaling recession.
Meanwhile Bank of Governor Poloz was speaking late yesterday, saying that the path toward higher interest rates is ‘’highly uncertain’’ due to lingering questions around housing and investment, even as he stuck to his message that borrowing costs eventually need to head higher. He said that ‘’the path back to that neutral range is highly uncertain. We will watch the data as they come in, and use judgement’’.
The less analysed Japanese Manufacturing PMI slipped into contractionary territory to 48.5 in February from 50.3, the lowest since 2016, likely feeling trade strains.
Equities
US Stocks fell in thiN trading with the S&P closing 0.35% lower while the NASDAQ rose slightly. The big loser was the Dow which closed 0.50% lower having traded above the December high of 26,000 earlier in the day.
Bonds
The 10 Year Bond rose slightly to close at 2.68% also in thin trading
Currencies
Nothing much to report here with both the Euro and Cable closing unchanged at 1.1337 and 1.3036 respectively
This morning on the Economic Front we have German GDP and the IFO Survey at 7.00 am and 9.00 am respectively. At 10.00 am we have Euro-Zone CPI, followed by the UK CBI Distributive Trades Survey at 11.00 am. We have no data of note from the US today. However the Fed’s Williams and Clarida are speaking at 3.15 pm and 5.00 pm respectively. In between these speeches ECB President Dragi is speaking at 3.30 pm.
March S&P 500
After a quiet week for my calls the market finally obliged yesterday with the S&P trading lower to my 2770 buy level before rallying to my revised 2775 T/P level and I am now flat. The S&P has strong resistance from 2795/2810 and today I will lower my sell level to this area with a 2818 tight stop. My only interest in buying the S&P is on a dip lower to 2754/2763 with a 2745 stop.
EUR/USD
I am still flat the Euro and today I will continue to be a buyer on any dip lower to 1.1240/1.1290 with the same 1.1195 stop.
March Dollar Index
This has certainly been a boring market over the past two weeks and I am still flat. Today I will leave my 96.80/97.20 sell level unchanged with the same 97.55 stop.
March DAX
The DAX held in well yesterday despite the 150 point fall in the Dow and I am still flat. Today I will leave my 11550/11650 sell level unchanged with the same 11720 stop. Meanwhile I will now raise my buy level to 11180/11250 with a 11115 stop.
March FTSE
As I wanted to protect the gains made in the Dow and S&P yesterday I emailed my Platinum Members to exit any long 7130 FTSE position for a small gain at 7135 and I am now flat. Today my only interest in buying the market is on a dip lower to 7050/7090 with a 7015 tight stop.
Dow Rolling Contract
Yet again the Daily Sentiment Index proves what a fantastic trade indicator it is with the Dow falling over 300 points from its overnight high. This move lower enabled me to cover my 26080 short position at my 26010 T/P level and I am now flat. Today I will again look to sell the Dow on any further rally to 26020/26200 with the same 26320 stop. I still do not want to be long the Dow at this time.
March NASDAQ
Unfortunately the NASDAQ just missed my 6980 buy level before having a late rally and I am still flat. Today I will leave my 6930/6980 buy level unchanged with the same 6885 stop.
March BUND
The BUND had a weak session yesterday and I am still flat. Today I will now lower my sell level to 166.65/167.05 with a lower 167.35 stop.
Gold Rolling Contract
A DSI reading of 90% bulls was too much for Gold with the market falling over $20 yesterday and I am still flat. Gold has strong support from 1300/1310 and I will be a buyer on any dip to this area with a 1292 stop. My only interest in selling Gold is still on a rally higher to 1350/1362 with a 1370 stop.
Silver Rolling Contract
Late in the New York session Silver traded lower to my 15.80 buy level. I am still long and I will now lower my T/P level to 15.95. I will also raise my stop slightly to 15.29.
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