The past 24 hours trading has been one of several parts, the USD DXY index this morning back below 95, equities lover, bonds stronger (except in Italy, Spain and Portugal), and commodities mixed to softer, oil down ahead of a likely OPEC deal this afternoon to cut output. Iran’s Oil Minister Zanganeh has reportedly come around to the view that some rise in combines OPEC-Russian output, a deal around 600-900Kbpd now on the cards. (Recall that the deal to cut output in late 2016 was 1.8mbpd.) While Brent crude declined $1.65/bbl to $73.08, WTI is marginally higher on the back of the latest EIA report showing a 5.9mb cut in US crude inventories. The decline in oil prices seemed to weigh on US energy stocks, equity sentiment also dented by the profit warning from Daimler on the impact of tariffs on its Alabama produced SUV imports into China, its shares down 4.32%, the second largest decline on the DAX. (India retaliated to US tariffs on steel and aluminium with reciprocal tariffs on US goods.)
To mark my 1600th 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 To demonstrate this value, a monthly subscription over the same period would cost 4440 euro in total This offer represents a 38% discount and is open to both new and existing members. If anyone is interested in this offer can you please email me on bryan@tradernoble.com for details
For anyone following my Platinum Service it made 138 points yesterday and is now ahead by 593 points for June, having made 1927 points in May, 1657 points in April, 1760 points in March, 2256 points in February, 879 points in January and 946 points in December. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
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Standing out on the FX front is Sterling aided by three dissenters to the no change expected from the Bank of England against expectations of two dissenters. The other dissenter was no one less than the Bank of England’s own Chief Economist Andy Haldane. That, the comment in the BoE statement that the softness in Q1 activity was likely temporary, together with an earlier prospective start to winding back QE (after the BoE rate reaches 1.5% (some time away given the current rate is 0.50%) against an earlier signal of 2.00%) all added support to the Pound. Sterling interest rate markets moved to lift the probability of a hike at the August BoE meeting from 45% to 65%. Last night we had the BoE Governor Carney’s Mansion House speech though his comments so far seem less Pound sensitive. USD/GBP sits at 1.3272 this morning, a rise of 1.0%, while EUR/GBP is lower at 0.8760.
With stocks on the back foot, bonds were generally bid, but not Italy’s with the Italian Senate confirmed two Eurosceptics to head up the Parliament’s Finance and Budget committees. Italian two year yields jumped 26.7bps to 0.861% and its 10s by 18.3 to 2.732%, running against the tide of mostly lower yields in Europe and the US, expect in the UK short end and some spillover from Italy into Spanish and Portuguese yields. The market is alert to the history that the two appointees have both made suggestions that Italy should leave the Euro. There is the assurance from new Finance Minister Tria that Italy will abide by EU rules and has no plans to leave the Euro. League leader and Deputy PM Salvini said yesterday that he aimed to lower the retirement age for pensions, setting up a potential confrontation with the EU later this year if the coalition chooses to go down that route.
The Euro was sold lower on the appointments news but has since rebounded to over 1.16 from the lower 1.15s as support for the USD has faded somewhat, trade tension music a little more comforting. For what it is worth, the Philly Fed survey printed on the lower side for June at 19.9 (29 expected; L: 34.4) though Weekly Jobless Claims remain low. Fed President Kashkari (non-voter this year) said that the US is not at maximum employment until wages pick up and that he does not see any signs of overheating. This morning on the Economic Front we have German and Euro-Zone Markit Manufacturing and Composite PMI at 8.30 am and 9.00 am respectively. This is followed at 1.30 pm by Canadian Retail Sales and CPI. Finally at 2.45 pm we have US Manufacturing/Composite PMI.
This afternoon we have the results of the OPEC-Russia Meeting and this is expected to endorse a rise in production.
September S&P 500
Once Italian Yields rose sharply shortly after I posted yesterday morning equity markets across the globe got hit hard and reversed earlier gains with the VIX rising 14.5% to close at 14.64 not helping sentiment. Yesterday after the S&P traded lower to my initial 2767 buy level with a 2762 low print the market rallied back to a rebound high of 2772 and this move higher enabled me to cover this position at my revised 2769 T/P level as emailed to my Platinum Members. Subsequently I set a second buy level of 2752/2760 for these Members and after the market traded the whole of my second buy range for an average long position at 2756 the market again rallied to 2762 before getting hit hard into the close. I used this second rally to cover my second long position at 2758 and I am now flat. The S&P continues to hold in better than the Dow and as long as the S&P does not break and close below 2738 then this market will continue to be a buy on dips. Today I will again look to buy the S&P on any dip lower to 2742/2750 with a 2735 tight stop. With the Dow closing down for the eighth consecutive trading session the odds of a rally today are increasing and for this reason I still do not want to be short the S&P at this time.
EUR/USD
My Euro plan worked well with the market trading lower to my 1.1520 buy level before rallying over 100 points and this move higher enabled me to cover this position at my revised 1.1543 T/P level and I am now flat. The Euro has now had a nice double bottom at the 1.1510 area which is bullish and today I will again look to buy the Euro on any dip lower to 1.1520/1.1570 with a 1.1480 stop. Again if I am taken long and subsequently stopped out of this position I will be a more aggressive buyer from 1.1400/1.1460 with a 1.1360 stop.
September Dollar Index
Unfortunately the Dollar just missed my 95.35 sell level with a 95.23 high print before falling as expected given the latest 89% Daily Sentiment Index reading. I am still flat and today I will now lower my sell level to 94.80/95.25 with a 95.55 stop.
September DAX
My DAX plan did not work well as after the market traded lower to my 12580 buy level the market just missed my revised 12595 T/P level with a rebound high of 12587 before we got hit hard into the close and stop me out at 12495 and I am now flat. The DAX has now fallen over 700 points since last Thursday’s post ECB Meeting high. This is a dangerous market but as long as we can hold key support at 12400 then despite the huge sell-off this week the DAX will still be a buy on dips. Today I will again look to buy the market from 12360/12430 with a 12310 stop.
September FTSE
As four of my Indices hit near the same time yesterday I waited for the Bank of England decision before buying the FTSE at the bottom of my buy range at 7510. I am still long and I will now lower my T/P level on this position to 7535 with a tight 7470 stop. If I am stopped out of this position I will be a more aggressive buyer from 7405/7445 with a 7370 stop. I still do not want to be short the market at this time.
Dow Rolling Contract
My Dow plan worked well but you had to be quick given the volatility to take any gains. As I was already long the S&P and DAX I waited to buy the Dow which I did at a price of 24570 before the market rebounded to my revised 24620 T/P level. Subsequently I emailed my Platinum Members to re-buy the Dow again at 24480 with a 24540 T/P level and thankfully both levels were filled before the market got hit hard again into the close. As mentioned in my S&P commentary above the Dow has now closed lower for a near record eight consecutive trading sessions which is the longest streak since March 2017. Yesterday the Dow broke and closed below its 50 Day Moving Average which comes in at 24657 and this level should act as resistance for any move higher. Meanwhile the S&P 50 Day Moving Average is well below the market at 2713. The 200 Day Moving Average for the Dow is at 24253 and any test of this level should lead to a strong rebound. As shown by the divergence between the Dow and S&P 50 Day Moving Averages that this is a fractured market making it difficult to trade. Today I will be a small seller on any rally higher to 24690/24810 with a 24880 tight stop. I will also be an aggressive buyer on any further dip lower to 24210/24360 with a 24145 tight stop.
September NASDAQ
Finally the NASDAQ reversed from its latest all-time high made on Wednesday. I am still flat and today I will now lower my sell level to 7325/7375 with a 7410 stop. I still do not want to be long the NASDAQ at this time.
September BUND
My Bund plan worked well with the market trading higher to my 162.20 sell level before selling off this morning to currently trade at 161.86 as I go to press. As so many of my calls got hit yesterday I did not want to hold a short Bund position overnight and I covered this trade at 162.10 and I am now flat. Today I will again look to sell the Bund from 162.25/162.65 with a 162.95 stop.
Gold Rolling Contract
Gold has had its expected small rally so far off the key 1260 major support level. As mentioned yesterday buyers had to step in here or else this could get ugly. I covered my 1262 long position at my revised 1265 T/P level and I am now flat. With DSI in single digits I will again look to buy Gold on any dip lower to 1255/1262 with a 1249 tight stop.
Silver Rolling Contract
This morning Silver has finally traded higher to my 16.40 T/P level on my latest 16.30 long position. Silver continues to outperform Gold as the market has held its May low of 16.03 while Gold has smashed through its May support level over the past 10 days. Today I will again look to buy Silver on any dip lower to 16.00/16.30 with a tight 15.75 stop.
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