Wednesday brought a non-event in the Federal Open Market Committee meeting, which was followed by a large sell-off in the stock market, at least by recent standards. But we should not reverse engineer this move on the basis that the market in its infinite wisdom was somehow right to respond as though the central bank had just made stocks less valuable. Rather, the reaction was because the market had been wrong in advance of the meeting. At least implicitly, traders were braced for an enthusiastically dovish performance by Federal Reserve Chair Jerome Powell and his fellow policy makers. When they didn’t get it, they responded as if the Fed had moved the needle toward leaving rates where they are instead of preparing the market for a cut at some point. In short, the Fed made a technical change to the way it tries to keep the Federal Funds Rate on target, but otherwise made no change of any significance to its accompanying, and published no new projections or forecasts. In his press conference, Powell basically said that the FOMC was comfortable with its current stance and was not biased in either way. This was a determined effort to avoid making any news. Meanwhile, Treasury Secretary Steven Mnuchin and other U.S. officials have repeatedly said in recent days that the two sides are making progress with Vice Premier Liu He due to lead a 100-member delegation to Washington next week for what are seen as crucial talks. While people familiar with the discussions say difficult issues remain unresolved, both sides continue to signal they are focused on striking a deal.
To mark my 1825th 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@tradernoblecom for details
For anyone following my Platinum Service it made 130 points yesterday and is now ahead by 215 points for May, having made 955 points in April, 1027 points in March, 1013 points in February, 1671 points in January, 2803 points in December, 1541 points in November and 2094 points in October. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
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Equities
After a volatile trading session in light volume the S&P closed 0.2% lower at 2918. The VIX held firm closing at 14.42 as we wait for the Non-Farm Payrolls at 1.30 pm.
Currencies
The Euro continued to reverse the gains made earlier in the week closing 0.2% lower at $1.1170, while the British Pound closed unchanged at $1.3045 The Bloomberg Dollar Spot Index gained 0.2 percent.
Bonds
Treasury yields jumped amid a wave of bets in the derivatives market that the Federal Reserve will keep rates on hold longer than expected, before possibly cutting them. The next clue on the health of global economic growth comes this afternoon with the monthly U.S. Employment Report. Fed Chairman Jerome Powell’s comments on the “transient” nature of factors keeping inflation below the target prompted a reassessment on policy this week, with wagers on when a rate cut might happen shifting from December 2019 into 2020. The yield on 10-year Treasuries jumped four basis points to 2.54 percent.
Commodities
Commodities remained under pressure, with oil sliding and copper on course for its biggest weekly drop since August. The Bloomberg Commodity Index fell 0.9 percent, while West Texas Intermediate crude sank 3.2 percent to $61.54 a barrel. Meanwhile Gold was flat at $1,270.79 an ounce.
This morning on the Economic Front we have UK Markit Services PMI at 9.30 am and this is followed at 10.00 am by Euro-Zone CPI and PPI. At 1.30 pm we have US Non-Farm Payrolls which is expected to rise 185K. The Unemployment and Average Earnings components of this report will be watched closely and are expected to print 3.8% and 0.3% respectively. Also at 1.30 pm we have the Trade Balance and Wholesale Inventories, ahead of the PMI data at 2.45 pm. Finally, at 3.00 pm we have ISM Non-Manufacturing PMI.
June S&P 500
My S&P plan worked well with the market trading the whole of my 2902/2912 buy range for an average long position of 2907. Subsequently the S&P rallied over 15 handles and I used this rally to exit this long position at my revised 2912 T/P level and I am now flat. With NFP due today we may see a further increase in Volatility. So far the S&P is holding the key 2900 support level and today I will again be a buyer on any dip lower to 2895/2908 with a 2887 tight stop. Ahead of the weekend I do not want to be short the S&P.
EUR/USD
I am still flat the Euro which fell short of my 1.1230 sell level. Today I will leave my 1.1230/1.1270 sell range unchanged with the same 1.1305 stop. I still do not want to be long the Euro at this time.
June Dollar Index
No Change as I am still a small seller on any rally higher to 97.95/98.35 with a 98.70 stop.
June DAX
So far the DAX is holing the key 12200/12300 support area despite the weakness in the US Indices. Today I will leave my 12160/12220 buy range unchanged with a 12115 stop. A break and close below 12200 over the coming days will be bearish.
June FTSE
The FTSE reversed some of Wednesday’s losses yesterday and I am still flat as the market heads for a long-weekend as the UK is closed on Monday for the May-Day Holiday. I will now raise my buy level to 7200/7260 with a 7145 stop. I do not want to be short the FTSE at this time.
Dow Rolling Contract
My Dow plan also worked well with the market trading lower to my 26200 buy level before rallying to my revised 26280 T/P level and I am now flat. Today I will again look to buy the Dow on any dip lower to 26000/26160 with a 25915 tight stop. Just like the other Indices I do not want to be short the Dow over the weekend. If I am taken long the Dow and subsequently stopped out of this position I will be a more aggressive buyer on any further dip lower to 25750/25900 with a 25650 stop.
June NASDAQ
Frustratingly the NASDAQ just fell shy of my 7660 buy level by a few points before rallying overnight and I am still flat. Today I will leave my 7610/7660 buy range unchanged with the same 7570 stop.
June BUND
The Bund sold off yesterday after resuming trading yesterday after the market was closed on Wednesday. I am still reluctant to chase the Bund lower and today will only lower my sell range to 165.95/166.35 with a 166.65 tight stop.
Gold Rolling Contract
No Change as I am still a buyer on any dip lower to 1248/1256 with the same 1241 tight stop.
Silver Rolling Contract
Silver is so far holding the 14.50/14.60 support area. I am still long at 14.90 and today I will now lower my stop on this position to 14.30. I will also lower my exit level to 14.80 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
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