It seem that every week the market is waiting for an important event to happen which will finally get prices to move in most asset classes. Yesterday the whole focus was on the Health Bill in Congress and less than an hour before US Markets closed it was announced that the Republicans have not been able to reach a deal in order to pass the Health bill to repeal Obamacare with the latest headlines noting that voting has been postponed and Paul Ryan, the House Speaker, has cancelled his press conference. Prior to this headlines markets were essentially in a holding pattern, but now we are seeing US equity indices under a little bit of pressure, falling around 0.2% in the last hour moving marginally into negative territory. Bond reaction has been pretty muted, after selling a few bps early in the session, 10y UST are essentially unchanged relative to yesterday morning and are currently trading at 2.41%.
To mark my 1300th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2750 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 can you please contact me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it made 18 points yesterday and is now ahead by 744 points for March having made 1481 points in February, 1734 in January, 1351 in December, 1971 in November and 1582 in October. The previous four months saw gains of 1142, 1782, 1682 and 2550 points respectively. Since I started this Platinum Service in June 2015 it has averaged a monthly gain of over 1800 points.
As for currencies, the Dollar Index (DXY) has traded in a very tight range ( 20 pips) with latest headlines doing little to move the Index. Looking at G10 currencies, the AUD is at the bottom of the leader board down 0.65% over the past 24 hours with most of the move coming after I posted yesterday morning. The currency fell about 40 pips to 0.7626 and it has stayed around that level for most of the night. The move was not triggered by any specific news and unlike yesterday, commodities had a reasonable day with iron ore up 1.6%, aluminium 0.5% and copper 0.3%.
The British pound on the other hand has been the top performer, boosted by better than expected Retail Sales. In February UK Retail Sales jumped 1.3%mom ex auto and 1.4% inc. fuel. But I would also note, the UK consumer is spending more than he/she earns in aggregate and savings are low by historical standards. Therefore it is difficult to see how this is sustainable or why today’s number won’t be reversed in March. For now however Sterling is enjoying its time in the spotlight with short covering probably also a supporting factor. BoE Broadbent was also on the wires conceding that it is quite possible that UK interest rates could go up; however his comment was conditional on Brexit not been as bad as expected.
US data was a little bit mixed and seemingly all due to the weather. Jobless claims rose 15K to a seven week high of 258K, well above the 240k expected by consensus with the storm that hit the north east during the survey week blamed for the rise in the number. Meanwhile the better than expected rise in New Home Sales (592k vs 564k exp.) was attributed to warm winter conditions.
Lastly, in a WSJ interview Fed Williams said that that three or “maybe even more” rate hikes this year make sense, depending on how the Bank is doing on its employment and inflation objective.
This morning on the economic front we have German and Euro-Zone Manufacturing and Services/Composite PMI at 8.30 am and 9.00 am respectively. This is followed at 9.30 am by UK BBA Loans For House Purchase. At 12.30 pm we have US Durable Goods Orders and Canadian CPI. Finally at 1.45 pm we have US Manufacturing PMI.
The Fed’s Kaplan (hawk) speaks this morning in a moderated Q&A session and then this afternon Fed Member Evans speaks at a community developments event, so no surprises expected there. Later this evening, however, Fed Bullard (dove) and Dudley (neutral) will speak on the economic outlook.
June S&P 500
My S&P plan worked well with the market trading to a 2355.50 high print before getting hit hard on the announcement that the Health Bill vote had been cancelled which saw the S&P trade to a low at 2338.25 before recovering overnight. Unfortunately after the S&P hit my 2354 sell level I covered this position at 2353 literally a couple of minutes before we saw the first Red Candle of the trading session. While my timing was off, I make no apologies in going flat into a major announcement as this strategy has served us very well in the five years that I have been writing my Daily Commentary. Hopefully many of you were able to make some nice points on this move down. Interesting the S&P topped at the same level the market initially rebounded off it 2343 low print on Tuesday afternoon and this 2356 area should be strong resistance. Today I will again look to sell the S&P on any rally higher to 2355/2361 with a 2366 stop. I will leave my buy level unchanged at 2326/2332 with a 2321 stop. Again if I am stopped out of any long position I will be an aggressive buyer on any dip lower to 2297/2305 with the same 2291 stop.
EUR/USD
This is the quietest week for the Euro in many years with little or no movement as the market trades sideways to correct its overbought condition. Today I will continue to look to buy the market on any dip lower to 1.0690/1.0730 with a 1.0660 stop. The 1.0850 is strong resistance and today I will leave my sell level unchanged at 1.0850/1.0890 with the same 1.0920 tight stop.
June Dollar Index
Unfortunately the Dollar again missed my buy level before rallying small and I am still flat. I am now going to chase the Dollar higher especially as I still believe that the Dollar has a lot more room to fall further over the coming weeks and therefore I will leave my buy level unchanged from 99.05/99.35 with a 98.70 stop.
June DAX
Thankfully we have had no sell levels in the DAX which continues to rally. The DAX made a high at 12080 after opening this morning before selling off in the last 20 minutes and given the positive price action I will now raise my buy level to 11850/11910 with a 11795 stop. I still do not want to be short the DAX despite Tuesday’s Downside Key Day Reversal.
June FTSE
Just like the Euro above the FTSE continues to trade in a narrow range even though Sterling has improved strongly over the past week. Today I will raise my buy level slightly to 7195/7225 with a 7165 stop.
Dow Rolling Contract
The Dow continues to bounce from Tuesday’s 20578 low print as we wait for the Health Bill vote which hopefully will take place later this afternoon. I am still flat the market and today I will raise my buy level slightly to 20540/20600 with a 20490 tight stop. Despite Tuesday’s massive Downside Key Day Reversal I do not want to be short the Dow at this time especially as I have a sell level in the S&P above.
June BUND
In the last few minutes the Bund has hit my buy level at 159.80 having traded in a sideways range for most of yesterday. I will now raise my stop on this position to 159.45 and if I am stopped out of this position I will be a more aggressive buyer on any further dip lower to 158.80/159.20 with a 158.45 stop. I will now lower my T/P level on this position to 159.95 on this position as I try to get the day off to a positive start after what has been a very quiet week. If I am taken long a second time I will have a T/P level at 159.55.
Gold Rolling Contract
As expected Gold is finding the 1250/1260 resistance level extremely difficult to break. I am still flat Gold and today if the market continues to sell-off I will be a small buyer from 1219/1226 with a 1213 stop.
Silver Rolling Contract
Silver rallied to a 17.71 high print yesterday afternoon before spending the rest of the session trading sideways to lower. As I wanted to bank some points for yesterday’s trading session plus the fact that Gold was trading heavy I emailed my Platinum Members to exit this position at 17.63 and I am now flat. Today I will again look to buy Silver on any dip lower to 17.15/17.45 with a 16.90 stop.
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