24 hours on, under my Central Bank umbrella is how the markets have interpreted Wednesday’s US FOMC Meeting. Although there were three dissenters, the Statement was seen on the dovish side with the dot points for the Fed Funds Rate lowered across the board. That has continued a rally in risk assets and bonds in an otherwise quiet data day. US Jobless Claims fell to 252K in its latest week, remaining at low levels and suggestive of continued payrolls growth, while Existing Home Sales came in weaker than expected.
Due to the number of members taking up my 2 year Euro 2500 rate for my Platinum Service in recent months, this will be the last month that I am offering this special price which will now rise to Euro 2750 from next Saturday October 1. If anyone is still interested in this deal which has been in situ since last January, can you please email me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it made 15 points yesterday and is now ahead by 547 points for September, having made 1782 points in August and 1682 points in July. Since I started my Platinum Service in June 2015 it has averaged a monthly gain of over 2200 points.
Equities led the way in a sea of green with the Euro Stoxx closing up a hefty 2.3% and the FTSE 1.1%. The risk on sentiment continued in the New York trading session with the S&P 500 and Dow closing 0.7% and 0.5% higher respectively, as yet again the bears get slammed.
In the FX space, there was slight US Dollar weakness given the dovish signals with most major currency pairs closing higher. The outperformance was the Norwegian Krone which appreciated 1.6% against the Dollar. That came after the Norges Bank Monetary Policy Meeting, where while a no change decision was expected, the Bank did say ”the key policy rate will most likely remain at today’s level in the period ahead” which stemmed expectations of further easing, a higher oil price also helped.
The Euro closed 0.2% higher while the Pound outperformed closing up 0.4% , although Sterling is back on the defensive as we open this morning. A speech by noted Bank of England hawk Forbes played down the need for further stimulus and that the Bank of England may have been ”overcounting the Brexit uncertainty effect”. Despite that hawkish tone, that should played against earlier statements by Governor Carney and the BoE who suggested further easing would be required. Also out from the BoE was a speech by Carney who called on governments to step up fiscal and structural policies.
Most Government Bond Yields fell with US Treasuries down 3 basis points to 1.6%, while a catch up to the FOMC, German Bunds fell 9.8 basis points to -0.10%. The heightened speculation of an OPEC supply agreement next week saw WTI oil rise another 1.8% to $46.17 a barrel.
This morning on the economic front we have German and Euro-Zone Manufacturing PMI and Services/Composite PMI at 8.30 am and 9.00 am respectively. Finally at 2.45 pm we have US Manufacturing PMI.
Meanwhile we have a Philly Fed Conference Panel this afternoon at 5.00 pm where the Fed’s Harker, Mester and Lockhart will participate.
December S&P 500
As mentioned yesterday the key pivot point to watch in the S&P was at 2157 which broken shortly after I posted yesterday morning leading to a quick rally to 2172.50. Subsequently the market traded to an afternoon low at 2164.50 which now leaves an ”Open Gap’ from Wednesday’s Chicago close at 2156. The S&P has minor resistance from 2170/2174, a break and close above will target the December high at 2183/2184, before all-time at 2190/2193. Today I will move my buy level higher to 2156/2162 with a 2151 stop which is just below yesterday morning’s low print. I still do not want to be short the S&P at this time. Also helping the markets was the huge move higher in the McClellan Oscillator which closed last night with a positive 122 print. This suggests that internally after a very weak July and August that stocks have got their mojo back.
EUR/USD
This morning the Euro traded lower to my 1.1195 buy level. Given the lack of volatility I will now lower my T/P level on this position to 1.1220. If I manage to cover this position for a T/P and the Euro subsequently sells off again, I will look to buy the Euro from 1.1160/1.1190 with a 1.1115 stop which is just below the pre-FOMC low at 1.1121. I still do not want to be short the Euro at this time.
December Dollar Index
I will now lower my sell level in the Dollar to 95.70/96.10 with a 96.40 stop.
December DAX
Just as I posted yesterday morning the DAX rallied strongly with the market eventually hitting my 10670 sell level with a 10700 high print. This morning I emailed my Platinum Members to cut this position at 10655 as I am not comfortable in being short any stock market at this time especially when you see how internally the US market is now very strong given the aggressive move higher in the McClellan Oscillator over the past 48 hours. For these reasons I will now move my buy level higher in the DAX to 10560/10610 with a 10510 stop. I do not now want to be short the DAX at this time as technically with yesterday’s move higher, it is only a matter of time before we trade back above 10820.
December FTSE
I am still flat the FTSE and today I will now raise my buy level to 6800/6830 with 6770 stop.
Dow Rolling Contract
At this time the path of least resistance for the Dow is on the topside as every bear has to scramble back their short positions. As I mentioned on one of my emails to my Platinum Members yesterday, we now are in our third bubble in the last 20 years. First we had the Dot Com Bubble which burst in 2000 followed by the Housing Bubble which burst in 2007. Now we are in what I call the Central Bank Bubble where both the ECB and BOJ are buying up every available bond. With the US Presidential Election on November 8, I believe that the Fed are doing everything in their power to prevent a stock market sell-off ahead of this now key election which according to the latest polls could go either way. Today I will now raise my buy level in the Dow to 18250/18310 with a 18195 stop.
December Bund
The Bund traded higher to my 165.20 sell level after I posted yesterday morning. I am still short and I will leave my stop unchanged at 165.75.
Gold Rolling Contract
No change as I am still a buyer on any dip lower to 1317/1325 with a 1309 stop.
Silver Rolling Contract
I am still flat Silver and I will now raise my buy level slightly to 19.40/19.75 with the same 18.95 stop.
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