Risk markets have had their worse 48 hours trading in four months. The latest UK Independent Poll shows the ‘leave’ voters now at 55% and this has helped the Cable which is the GBP/USD rate to trade back below 1.42 at 1.4180 while EUR/GBP is back trading over 0.7950 as the markets adjust to the possibility of ‘Brexit’. This nervousness has hit all markets with Asian stocks falling the most in four months led by the Nikkei which closed down over 3.5% this morning at 16,000 while USD/JPY closed below 1.06. The German DAX which was trading over 10,200 when I marked prices last Friday morning is now trading over 5% lower at 9690 as traders run for the safety of the Bond Market, Yen and US Dollar.
To mark my 1100th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2500 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 please email me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it lost 190 points on Friday but is still ahead by 272 points for June. The previous three months saw gains of 1532, 2175, and 2265 points respectively. Since I started this service over 12 months ago it has averaged a monthly gain of 2200 points.
Further sapping confidence over recent days has been a steady drip of economic data that has highlighted an underpowered world economy despite years of heavy stimulus delivered by Central Banks. This wee we have the FOMC Meeting on Wednesday followed by the Bank of Japan and Bank of England on Thursday and these meetings will be held against a backdrop of caution heightened by the global impact of ‘Brexit’.
Net selling by foreign investors of Japanese Cash Equities from January through May was roughly 4.5 trillion yen according to the latest exchange data which compares to a net purchase of 2.83 trillion yen in the same period last year. Not helping markets this morning was the latest Chinese fixed-asset investment growth which has cooled to 9.6% in January-May from the same period last year, and this data was well below market expectations, while the statistics bureau said downward pressure still exists in the economy.
In currency markets the mood was risk aversion with the Japanese Yen rising to a five-week high against the US Dollar. The yen traded to a low of 1.0575 overnight which is its lowest level since May 3
Crude Oil Futures extended losses after falling over 3% on Friday, pressured by the stronger Dollar and data showing the US oil drilling rig count rising for the second consecutive week. US Crude Futures are currently trading at $48.50 and which is well below the near $52 recorded last week, while Gold closed at three-week highs.
Meanwhile the Yield on the JGB with maturities out to 15 years were well into negative territory and it is no wonder that the Primary Dealer BTMFJ is considering rescinding its JGB Primary Dealership.
Today we have no economic data of note due from either the Euro-Zone or the US. At 3.00 pm we have the Canadian Bloomberg Nanos Confidence.
June S&P 500
My S&P plan did not work out on Friday as shortly after lunch the S&P traded lower to my 2098 buy level before stopping me out of this position for a small loss at 2092 and I am now flat. Overnight the S&P has traded lower to 2086.25 before trying to rebound as I write this commentary. As I mentioned to my Platinum Members on Friday with the FOMC on Wednesday and the June Quarterly Expiration on Friday I am reluctant to go short the market despite the worsening economic situation. For these reasons I will again look to buy the S&P on any further dip lower to 2079/2085 with a 2074 stop. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer in front of 2068 with a 2063 tight stop. Given the week that is in it I do not want to be short the S&P at this time.
EUR/USD
Unfortunately I was eventually stopped out of my long 1.1335 Euro position late on Friday at 1.1275 and I am now flat. I am still convinced that the Euro will trade higher from here as the US in my opinion do not want a strong Dollar and if the FOMC are any way dovish on Wednesday then I would expect the Dollar to resume its decline. Today I will again look to buy the Euro on any dip lower to 1.1200/1.1240 with a 1.1170 tight stop.
September Dollar Index
I have now rolled to the September Contract and overnight the Dollar traded higher to my 94.80 sell level. I am still short and today I will leave my stop unchanged at 95.25.
June DAX
Friday was another great example of how important it is to have stops in the market as shortly after I posted on Friday the DAX traded lower to my 9910 buy level before very quickly stopping me out of this position at 9855 and I am now flat. Thankfully I had a tight stop especially when you see the DAX trading at 9690 this morning. As I have said countless times I only trade the DAX in small size as this market is the nearest trading instrument that you get to be in a casino as the volatility is insane and moves for no reason. Remember only last week we were trading over 10300. This morning the DAX is trading at the bottom of its Daily Bollinger Band and Williams Index and for these reasons I will again be a small buyer on any further dip lower to 9620/9680 with a 9565 stop. Given how oversold the DAX is trading I do not want to be short the market at this time.
June FTSE
After I posted on Friday the FTSE was the first market to hit my buy level at 6150 before very quickly stopping me out of this position for a small loss at 6120 and I am now flat. I still believe the UK will stay in the EU when they vote next week and this is why I am a buyer on dips rather than selling the market. Today I will again look to buy the FTSE on any dip lower to 6040/6070 with a 6010 stop.
Dow Rolling Contract
I am still flat the Dow as thankfully I had no buy levels set out in Friday’s commentary. However given the fact that this week is Expiration and the FOMC I will now look to buy the Dow on any dip lower to 17720/17775 with a 17675 tight stop. I do not want to be short the Dow at this time.
September BUND
No change as I am still a buyer on any dip lower to 163.80/164.20 with a 163.50 stop. I will also look to sell the market on any rally higher to 165.70/166.00 with the same 166.40 stop.
Gold Rolling Contract
I am still flat Gold which continues to attract safe haven funds. Today I will raise my buy level to 1257/1264 with a 1249 stop.
Silver Rolling Contract
Overnight Silver traded lower to my 17.10 buy level before having a small rally which enabled me to cover this position at my new T/P level at 17.25 as emailed to my Platinum Members and I am now flat. Today I will again look to buy Silver on any dip lower to 16.80/17.10 with a 16.45 stop.
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