US Equity Markets were firm yesterday as markets are now in waiting for a some pretty big event risks to pass in the next few days: waiting to see if today’s US Employment Report is strong; waiting to see some agreement on a US tax bill; waiting to see if the US Government will need to shut down; waiting to see if UK PM Theresa Mail can pull together an agreement by Sunday on the Irish border question in time for next week’s EU Summit. Earlier this morning it was announced by the EU Commission that ‘’sufficient progress’’ had been made in the first phase of Brexit talks with PM May announcing that there will be no hard border in Ireland after Brexit.
To mark my 1475th 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 email me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it made lost 22 points yesterday but is still ahead by 549 points for December, having made 823 points in November and 657 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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European Equity Markets and the US Dollar are opening higher on this latest news while the FTSE continues to lag as Sterling rallies with EUR/GBP now trading at 0.87 well below its 0.8950 high earlier in the week.
As of right now, the Aussie dollar is threatening a test of the psychological 75 cents levels, having taken its second big hit of the week yesterday on very disappointing trade data, this following on the heels of the weak consumption data contained within Wednesday’s GDP numbers. Weakness in iron ore exports was the main culprit. Overnight we’ve seen a sharp fall in iron ore futures prices on the Dalian exchange (down around 4%) and this looks to have added a bit more insult to injury.
With Gold and Silver getting hit hard yesterday, indeed all the Dollar bloc commodity currencies (AUD, NZD, CAD) have weakened overnight despite it being a fairly risk-positive offshore session (US stocks broke a four day losing streak, the VIX is back down close to 10, and the Yen is almost as weak as the Aussie and the kiwi). USD/JPY gains have been aided by a 3bps rise in US 10 year Treasury yields, to 2.37%.
Sterling has actually been the most volatile currency in the last 24 hours, trading between $1.3320 and 1.3480 on first pessimism then optimism regarding prospects of an agreement to advance to Brexit transition and trade talks following next Thursday and Friday’s EU Summit. With the news overnight that the Irish Border issue has been sorted Cable rallied to a high of 1.3520 before easing a small bit.
Commodities in general are mostly weaker, including an $18 drop in gold to its lowest levels since late July, though oil is higher again and copper at least has not extended Wednesday’s sharp drop.
On the subject oil, or rather oil riches, I woke to the news that the 32 year-old Saudi Crown Prince Mohammad bin Salman was the true buyer of the da Vinci painting that sold for a record $450.3mn two weeks ago. Impressive but still less so that the latest surge in the Bitcoin price, which crossed the $16,500 threshold overnight compared to its 2017 starting price of around $800. A $24mn investment at the start of the year would have yielded you enough crypto-cash to have outbid the Crown Prince.
This morning on the Economic Front we have UK Industrial Production, Manufacturing Production, Construction Output and Trade Balance at 9.30 am. This followed at 1.00 pm by the UK NIESR GDP Estimate. All eyes will then switch to the US for the latest Non-Farm Payrolls at 1.30 pm, where there will be as much or more interest in the earnings data and unemployment rate as the headline non-farm payrolls numbers (latter seen at 195k). Average earnings in October were depressed but by way of payback from hurricane impacted September strength, and so is expected to print +0.3%m/m and 2.7% y/y up from 0.0% and 2.4% last time. The Unemployment rate is seen unchanged at 4.1% (the latter the lowest since December 2000). It will take some dramatically weak data to dislodge the market’s supreme confidence in the Fed delivering its third rate rise of the year next Wednesday.
Finally we have Wholesale Inventories and the University of Michigan Consumer Sentiment at 3.00 pm.
December S&P 500
With Non-Farm Payrolls at 1.30 pm I will stay flat the S&P as is my norm until we get the data released. Yesterday with the US markets climbing I emailed my Platinum Members to raise their sell level in the S&P and I am still flat. As I mentioned yesterday in relation to the extreme sentiment readings towards the US stock market on top of the unbelievable complacency as shown by the VIX back at the 10 level, if it was not the month of December which is traditionally one of the strongest months of the year I would be bearish. With this in mind I will now raise my buy level to 2618/2626 with a 2611 stop. Last Monday’s 2665.25 all-time high is a 6.5 year trendline which may take some time to break, while the market has very strong resistance at the 2680/2700 area mentioned over the past few weeks. It is quite possible that the market may finally see an end to this incredible 10 year bull market between 2650 and 2700 with early 2018 the likely time frame for this. Today my only interest in selling the market is on a further rally higher to 2656/2666 with a 2672 stop. If I am taken short and subsequently stopped out of this position I will be a more aggressive seller on any further rally to 2682/2700 with a 2715 wider stop.
EUR/USD
I was lucky as late in the afternoon the Euro traded higher to my 1.1815 T/P level on my latest long 1.1800 position and I am now flat. The Euro has strong support from 1.1680/1.1720 and today I will be a buyer in this area with a 1.1650 stop. I still do not want to be short the Euro as I still believe the market to be a buy on dips as it has been all year.
December Dollar Index
I am still flat the Dollar which has continued to rally off its 92.50 low print last week. The Dollar has strong resistance from 94.25/94.60 and today I will be a seller in this area with a 94.95 stop.
December DAX
The fact that Britain and the EU have reached an initial agreement on Brexit on top of the weaker Euro is helping the DAX to opening strongly this morning. Thankfully we had no sell levels as yet again anyone trying to sell the equity markets has to take their profits quickly before they evaporate. The DAX has strong resistance at the two week high at 13200 and above here at 13330 and today I will be a small seller on any further rally to 13280/13340 with a 13375 tight stop. I am not comfortable in chasing the DAX higher and today I will only raise my buy level slightly to 12900/12980 with a 12845 stop.
December FTSE
Frustratingly the FTSE just missed my 7295 buy level with a 7300 low print overnight before rallying and I am still flat. Today given the strength of Sterling I will now lower my buy level slightly to 7255/7285 with a 7225 stop.
Dow Rolling Contract
My Dow plan worked really well with the market trading lower to my 24075 buy level before rallying 190 points. Unfortunately as I had so many buy levels in my other Indices nearby I covered this long position at my revised 24095 T/P level and I am now flat. Hopefully you had a lot higher exit level than me. With the NFP data at 1.30 pm I will stay flat until we get the release and if the market sells off subsequently I will be a buyer from 24070/24140 with a 24025 stop. The Dow has strong resistance at 24400 and my only interest in selling the market is on a rally higher to 24380/24450 with a 24505 stop.
December NASDAQ
The NASDAQ did not stay weak for long with the market rallying all day yesterday to close over the key 6285/6315 area which should now act as strong support. Today I will be a buyer in this area with a 6255 stop.
March BUND
No change as I am still a seller on any rally higher to 163.85/164.15 with the same 164.35 stop.
Gold Rolling Contract
Unfortunately Gold just missed my 1242 buy level with a 1243 low print and I am still flat. As I am back long Silver I will now lower my Gold buy level slightly to 1229/1236 with a 1222 stop.
Silver Rolling Contract
Silver broke its 15.80/15.90 important trenline with a 15.62 low print which unfortunately stopped me out of my 16.10 long position. Yesterday’s low is still within the margin of error on this important trendline and if Silver can break back above 15.80 it will be bullish. The Daily Sentiment Index is close to single digits which has tended to mark a low price in the past. As a result of all this I have bought Silver again here at 15.75 and will add to this position on any further dip to 15.40 with a 15.05 stop. Silver has very strong support from 15.10/15.30 which is an important two year trendline.
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