The big news after I posted early yesterday morning was the announcement by the Bank of Japan of no interest rate cut and no increased QE. As a result of this thundering silence out of the BoJ the USD/JPY fell 3% to 108 while the Nikkei also responded closing down 3.6%. In fact just before lunch when you factor in the after- hours trading for the Nikkei Futures Maket the Nikkei fell an incredible 1100 points from its pre-BoJ level. Such bad sentiment bled into Europe which otherwise was quiet in a European session lacking data with the only piece of news being an on – consensus print of German inflation of 0.1% y/y for April.
As London, Dublin and most of Europe are closed for the May Holiday there will be no Daily Commentary on Monday with normal service resuming on Tuesday morning.
For anyone following my Platinum Service it made 165 points yesterday and is now ahead by 2075 points for April, having made 2265 points in each of the previous two months after a record 3365 points in January. Since I started this service last June it has made over 23,500 points.
For US equities, it was a case of one bad apple in the bunch with investor Carl Ichan stating he sold his stake in Apple – in which he owned almost 1% of outstanding stock. Ichan said his decision to sell was more due to ‘China’s attitude’ toward the company, although it does follow Apple’s worse than expected earnings which were reported last Tuesday. That was enough to offset the better than expected earnings by other technology companies such as Facebook. Even vastly above – consensus earnings by Amazon which saw its shares surge after reporting net income of $1.07 a share which was well above the $0.57 consensus could not reverse the decline. The net result after a wild trading session was that US equities closed 1.0% lower.
Data wise US GDP came in below consensus at an annualised 0.5% rate, well below the 0.7% expected but similar to the 0.6% rate indicated by the Atlanta Fed’s GDP/NOW measure. There was little reaction in Bond markets initially, and while Yields did drop by 3bps this appears to have occurred after a strong 7 year bond auction. Also playing against the grain was the stronger than expected core PCE deflator which rose at a 2.1% rate – the fastest increase since Q1 2112. This could suggest some upward revision to today’s March Monthly PCE numbers.
The weaker US GDP numbers may have contributed to the weaker US Dollar, with most advanced currency pairs appreciating. The Euro closed 0.3% higher at 1.1354 in New York. Despite the consolidation in Crude Oil, the Canadian Dollar bucked the trend and was 0.4% lower.
Crude Oil consolidated its recent gains with WTI rising 0.8%. Rumours continue of possible future agreement by oil producers with Interfax reporting that Russia may take part in the next OPEC Meeting in June.
As I post this commentary the USD/JPY is trading at 107.30 which sees the Nikkei down 500 points from yesterday’s close for an incredible 1600 point down move in 24 hours.
This morning on the economic front we have UK Mortgage Approvals at 9.30 am and this is followed at 10.00 am by Euro-Zone Unemployment Rate, CPI and GDP. At 1.30 pm we have the US Employment Cost Index, Personal Income/Spending and the very important PCE Defaltor. Next we have the ISM Milwaukee at 2.00 pm and the Chicago Purchasing Manager’s Survey at 2.45 pm. Finally at 3.00 pm we have the University of Michigan Consumer Sentiment.
June S&P
As I am in Florida until next Tuesday my Daily Commentary was posted at 3.00 am this morning, which was well before the BoJ surprise inaction announcement and before the European markets opened where the Nikkei had just closed with a 3.6% decline. As a result all my equity Indices were through my buy level by the time you got to read my commentary with the exception of the Dow which was trading at 17900. When I woke up I emailed all my Platinum Members to buy the S&P at 2075 as I did not expect the market to leave such a huge downside ‘Open Gap’ when the US Markets opened. It took a while as the S&P stayed at my buy level as the market was not helped by the weaker than expected Q1 GDP. Subsequently the S&P roared to the upside with a 2094 print as yet again it proved in these Central Banks manipulated markets you can only be short for a few hours and this rally enabled me to cover this position at my revised 2082 T/P level and I am now flat. Tomorrow promises to have a volatile finish to April especially after the sell-off following comments from Carl Ichan that he sold his 1% stake in Apple shares which hit Apple and the US stock market hard with Apple closing over 3% lower at $95. The S&P traded to a 2065 low print which is the next support before having a small rally into the close. Today I will again look to buy the market on any dip lower to 2056/2062 with a 2051 stop. Given the fact that we are at month end tomorrow and the start of a new month on Monday I do not want to be short the S&P at this time.
EUR/USD
Unfortunately the Euro just missed my buy level before trading higher as expected. Today I will now move my buy level higher to 1.1290/1.1330 with a tight 1.1245 stop. The price action continues to tell me not to be short the Euro at this time.
June Dollar Index
Wow the Dollar got hammered yesterday with the 3% fall in USD/JPY doing most of the damage. The Dollar is now trading nearly 8% lower since the famous ECB Meeting last December which is not an inconsiderate amount. Today I will lower my sell level to 94.40/94.80 with a 95.25 stop.
June DAX
As mentioned above the DAX opened below my buy range and I am still flat although the market did try to hold the key support at 10100/10200 area. A break and close below here will be short-term bearish. Given the significance of this support I will again look to buy the DAX on any dip lower to 10080/10130 with a 10030 stop.
June FTSE
The FTSE also opened below my buy range before turning around and following the US markets higher before subsequently getting hit hard again on the Apple news. The FTSE has underperformed the other major Indices over the past six weeks as the market just cannot break the key 200 day Moving Average at 6400. Today my only interest in buying the FTSE is on a further dip lower to 6150/6180 with a 6120 tight stop. I still do not want to be short the market at this time especially with month end today and the fact that the market is closed on Monday.
Dow Rolling Contract
The Dow was trading near the bottom of my buy range when the European markets opened and I emailed my Platinum Members to buy the market at 17890. Subsequently the Dow rallied 170 points from here to a 18060 high print which enabled me to cover this position at my 17950 T/P level before falling over 250 points on the Ichan news. I am still flat the Dow which has good support at the 17680/17740 area and today I will be a buyer in this area with a 17630 stop.
June BUND
My Bund plan worked well as shortly after the European markets opened the Bund traded higher to my 162.65 sell level with a 162.79 high print before selling off after the US equity markets started to rally and this enabled me to cover this position at my 162.30 T/P level and I am now flat. Today I will again look to sell the Bund on any rally higher to 162.90/163.30 with a 163.60 stop. The 163.00/163.40 is strong resistance and should repel any initial rally.
Gold Rolling Contract
Unfortunately Gold just missed my 1232 buy level with a 1237 low print before the market went on to rally $30 on the inaction by the BoJ and as a result I am still flat. Today I will raise my buy level higher to 1245/1252 with a 1239 tight stop.
Silver Rolling Contract
Wow Silver which is my pick of the year trade continues to zoom ahead and is now ahead by 30% since its low print in January. I am still flat Silver and today I will now raise my buy level to 17.20/17.50 with a 16.75 stop which is just below last Monday’s low print.
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