US stock markets which were heavy in quiet trading all day yesterday rallied in the last hour to close flat on the day before trading higher overnight. As expected the US Dollar is finally weakening as indicated by the Daily Sentiment Index reading which had touched 96% bulls over the past two weeks while Gold also firmed and is now back trading above $1160. Meanwhile the US Treasuries continued their recent rally with 10 Year Bonds closing lower at 2.47%. The OIS market now has just 57.7 bps of Fed tightening priced in for 2017, down from 62bps soon after the December FOMC Meeting.
To mark my 1225th 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 50 points yesterday and is now ahead by 1326 points for December having made 1971 points in November and 1582 points 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 1900 points.
The BBDXY Dollar Index is now trading 0.5% higher from where I marked prices 24 hours ago, largely the result of small gains in the Euro which had touched a high of 1.0580 overnight before trading at 1.0515 as I write this commentary. The biggest currency move yesterday was the South African Rand which rallied 1.80% on no apparent news.
The Obama Administration last night announced the expulsion of 35 Russian Diplomats in Washington and San Francisco, related to the email hacking of Democratic Party emails during the Presidential Election run-up.
US economic data saw a bigger than expected advance in the November Trade Deficit at $65.3bn versus $61.6bn expected and $61.9bn in October. This data is a Q4 GDP negative, while Wholesale Inventories rose by a larger than expected 0.9% against the consensus forecast of just a 0.2% increase. The Atlanta Fed has not as yet updated its Q4 GDPNow forecast since December 22 at 2.5%. Meanwhile Weekly Initial Jobless Claims came in at 265K as expected and down from 275K last week which is still low and consistent with ongoing strength in US Payrolls and a declining trend in Unemployment.
Today on the economic front the only data of note due is the Chicago Purchasing Manager Index at 2.45 pm. Most of Europe is closed for a half day ahead of the New Years Day Holiday on Monday.
March S&P 500
Thankfully after I posted yesterday morning the S&P was trading below my initial 2245 buy level before rallying and this move higher enabled me to cover this position at my 2250 T/P level and I am now flat. Traditionally the last trading day of the year and the first trading day of the New Year are very strong as the strong seasonality kicks in and is definitely a day not to go short despite the series of confirmed Hindenburg Omen’s on the clock. My own view is that both the S&P and Dow will run in to a wall of resistance in January after initially hitting the 2300 and Dow 20,000 key resistance levels first. Today I will again look to buy the S&P on any dip lower to 2237/2243 with a 2232 stop. Remember I will be a very strong buyer in the S&P on any dip lower to 2212/2219 with a 2206 stop.
EUR/USD
It takes time but you can now see how important the Daily Sentiment Index is as a technical signal for most of the US Markets with the Euro hitting a high of 1.0580 overnight. I am still flat the Euro which again just missed my 1.0410 buy level with a 1.0430 low print before having this 150 point rally. There is no doubt the much higher than expected Trade Deficit is not helping the US Dollar at this time. Today I will move my buy level higher to 1.0440/1.0480 with a 1.0395 wider stop. I still do not want to be short the Euro at this time.
March Dollar Index
Incredibly the Dollar which was trading at 103.20 when I posted my Commentary yesterday morning traded to a 102.01 low print overnight before rallying again on the weaker Yen and Euro. I am still flat the Dollar and today I will now lower my sell level to 102.90/103.30 with a 103.75 stop which is just above the contract high at 103.65.
March DAX
I have never known a quieter period for the DAX as the market continues to trade in a narrow range each day. Incredibly when the S&P and Dow sold off on Wednesday the DAX still did not move. I am not going to chase this market higher especially with so few traders at their desks in Europe and today I will leave my buy level unchanged at 11290/11350 with the same 11240 stop. Despite the overbought condition of the DAX, I still do not want to be short the market at this time.
March FTSE
The FTSE traded to new all-time highs yesterday helped by the continuing weakening in Sterling. I am still flat the FTSE and today I will move my buy level slightly higher to 6970/7005 with a 6940 stop.
Dow Rolling Contract
The Dow is struggling to rally as the market is still reeling from the Downside Key Day Reversal following the FOMC Meeting two weeks ago and the series of Hindenburg Omen’s recorded over the past six weeks. Incredibly with the Dow only trading less than 140 points from all-time highs the McClellan Oscillator is still trading in negative territory. I still believe that the 20,000 resistance level will be broken before we finally try to have a meaningful sell-off in the market. Today I will raise my sell level slightly to 20040/20100 with a 20150 stop. Otherwise I will stay flat the market and see how we open on Tuesday for the first trading day of 2017.
March BUND
No change as I am still a seller on any rally higher to 164.90/165.30 with the same 165.60 stop.
Gold Rolling Contract
Unfortunately Gold again just missed my 1140 buy level yesterday before trading to a overnight high at 1163 and I am still flat. This move higher again proves how important that the Daily Sentiment Index reading is and if you look at the past few years of trading for Gold a lot of the up-moves have started during the Christmas Holidays. Today I will move my buy level higher to 1142/1151 with a tight 1135 stop.
Silver Rolling Contract
No change as I am still long Silver at an average rate of 16.08 from last week with thankfully the market back trading with a 16 Handle this morning. Silver is underperforming Gold at this time but I would expect the Silver market to play catch-up over the coming days.
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