It was a story of slight USD weakness yesterday (DXY -0.3%) with little in the way of other significant market moves. Equities were higher (S&P500 +0.1%), Bond Yields were unchanged (US 10-yr Treasuries flat), while the Iron Ore price continues to come under pressure (-2.0%). Despite Wednesday’s positive US tax reform proposals, there was little new development on the plan in yesterday’s trading session. House Speaker Ryan did say he can’t see tax reform being done this year.
To mark my 1425th 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. This offer is open to both new and existing members and if anyone is interested in this offer can you please contact me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it finished flat yesterday as none of my calls got hit and is still ahead by 382 points for September, having made 1560 points in August, 1096 in July, 1023 in June, 1076 in May, 1375 in April, 1335 in March, 1481 in February and 1734 in January. Since I started this new Platinum Service in June 2015 it has averaged a monthly gain of over 1700 points.
US economic data was mostly positive with GDP revised higher by a tenth to 3.1% on the back of a better inventories contribution and the Advanced Trade Balance was better than expected at -$62.9bn against an expected -$65.1bn. Jobless Claims did rise to 272k from 260k, but this was expected given recent hurricanes and claims were elevated in Florida and Georgia.
The lack of progress in tax reform proposals may have weighed slightly on the US Dollar, with the DXY down 0.3% since I posted yesterday morning. Nevertheless, the key theme of a recovery in the US Dollar and higher US Bond Yields remains. On that note, 10yr yields were unchanged at 2.31%, though did reach 2.36% (4bp range).
As for other FX moves, it was fairly quiet. In line with USD weakness, the Euro rose (+0.3% to 1.1786), along with the Yen (+0.5%), while the Kiwi (+0.5%) was largely unaffected by Wednesday’s RBNZ decision which made only minor tweaks to the post meeting statement. The Aussie underperformed, up just 0.1% to 0.7857. Weighing on the Aussie has been the iron ore price, though to date iron ore hasn’t been the decisive factor in the recent decline to sub 80 – that culprit has been US Dollar strength. The benchmark 62% Iron Ore price fell 2.0% yesterday to $62.89 and is down around 21% since August. Speculation continues that China’s Northern Cities will be reducing steel production to ward off pollution levels in winter, particularly those using lower grade iron ore. In line with that the 58% benchmark iron ore price is down by more (-24.7% since August).
European data was mixed. Euro-area Confidence surged to a decade high to 113 – the strongest since July 2007 (112 expected), while CPI figures for Germany and Spain disappointed by a tenth; German Headline inflation was 1.8% (1.9% expected) and Spanish Headline inflation was 1.9% (2.0% expected). The figures suggest little in the way of inflationary pressures and is likely to keep the ECB cautious on the inflation front.
Finally, the Bank of England conference came and went without any market moving headlines. The overall theme was central bank independence and the ability of central banks to maintain that independence.
This morning on the Economic Front we have German Unemployment at 8.55 am and this is followed at 9.30 am by UK GDP, Index of Services and Current Account Balance. At 10.00 am we have Euro-Zone CPI. Next at 1.30 pm we have US Personal Income/Spending and the PCE Deflator while at the same time we have Canadian GDP. Finally we have the Chicago Purchasing Manager’s Survey and the University of Michigan Consumer Sentiment at 2.45 pm and 3.00 pm respectively.
Meanwhile, Central bank talk also continues at the Bank of England conference, though little is expected in the way of market moving observations. Later at 4.00 pm the Fed’s Harker speaks at a Fintech Event on Consumers and Banking.
December S&P 500
The slow crawl higher for the S&P continued yesterday with the market just missing my 2496 buy level with a 2499 low print before rallying to a 2509 high. The VIX fell 3.25% to close below 10 again at 9.55. Last week the 0.5% range in the S&P was the smallest weekly range in 45 years. This inaction is not just confirmed to stocks, as the span in US Treasury Yields in 2017 has traversed between 2.01% and 2.63%, a 62 basis point range that is the tightest in 52 years, since 1965. Remember paralysis is never permanent in markets and inaction always precedes a vigorous move. I for one will glad that today is the last trading session for September. Today I will now raise my buy level slightly to 2494/2500 with a 2489 stop. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer on any dip lower to 2476/2482 with a 2471 stop. I will still be an aggressive seller on any rally higher to 2520/2527 with the same 2533 stop.
EUR/USD
Just as I posted yesterday the Euro rallied before hitting my buy level at 1.1725. This rally was expected as flagged by the fact the Euro was trading at the bottom of its Daily Bollinger Band and Williams Index. Today I will now raise my buy level slightly to 1.1700/1.1740 with a 1.1655 stop. Remember a break and close below 1.1660 is bearish opening up the possibility of a move lower to 1.1200/1.1400 before a more sustainable bottom is put in.
December Dollar Index
I am still flat the Dollar and given how overbought the market is trading I will now lower my buy level to 92.35/92.70 with a 91.95 stop.
December DAX
I am still flat the DAX which is again trading higher this morning in an overbought condition. With Month and Quarter end today I will now raise my sell level to 12810/12860 with a 12905 stop. I will also raise my buy level to 12600/12650 with a 12560 stop.
December FTSE
The sideways action for the FTSE continued yesterday with the market trading in a narrow 35 point range. As I mentioned yesterday I cannot remember the time that the FTSE is trading every day with a narrow range. Sterling is the key for short term moves in the FTSE with the market rallying when Sterling falls and selling off after Sterling strengthens. This morning Sterling is slightly weaker and I will now raise my buy level in the FTSE to 7215/7245 with a 7180 stop. I do not trust this market and I am reluctant to chase the FTSE higher.
Dow Rolling Contract
Yet again the McClellan Oscillator closed unchanged for the fifth consecutive trading session. This is highly unusual and an unchanged MO tends to lead to a large move over the coming days which hopefully will be lower. I am still short in tiny side and as today is Month and Quarter end I will now raise my second sell level to 22450/22510 with a 22560 stop. As we approach October which is traditionally the weakest month of the year I will be an aggressive buyer of the Dow on any dip lower to 21830/21910 with a 21770 stop.
December BUND
There is no doubt that September has been a frustrating trading month for the Bund as yet again having being stopped out of a position the market has turned around and traded higher. I am still flat and today I will now be a seller on any rally higher to 161.40/161.80 with a tight 162.05 stop. My only interest in buying the market is still on a dip lower to 159.30/159.75 with a 159.00 stop.
Gold Rolling Contract
No change as I am still a buyer on any dip lower to 1262/1270 with a 1256 stop.
Silver Rolling Contract
I am still long Silver at 17.00 and will continue to look to add to this position on any move lower to 16.60 with the same 16.35 stop. I will leave my T/P level unchanged at 17.10 and will lower this to 16.95 if my second buy level at 16.60 is filled. If any of these scenarios happen I will be back with a new update for my Platinum Members.
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