Last Friday, small losses for both the Euro and the Yen pushed the narrow DXY Dollar Index up by 0.11% to 96.17 but still down 1.2% on the week, while the Broader BBDXY Index rose 0.23% to also close down over 1% on the week following the huge moves in all asset classes after the ECB’s aggressive move on Thursday. Meanwhile Sterling rose 0.73% against the US Dollar to close at 1.4382 as ‘Brexit’ concerns continue to fade, while the Australian Dollar continued its recent good run closing up 1.5% to 0.7565 and to its best level versus the US Dollar since July 2015. The NZD closed up 1.2% at 0.6749 meaning it had given back all par 30 pips of its post – RBNZ rate cut losses.
To mark my 1000th issue of Tradernoble Daily Commentary I am offering a special 20 year rate of Euro 2500 for my Platinum Daily Commentary 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 made 75 points on Friday and is now ahead by 1280 points for March having made 2265 points in February and a record 3365 points in January. Since I started this service last June it has made over 21,000 points.
This morning both the AUD and NZD are opening the new week lower, seemingly in response to the sub-par readings on both Chinese Industrial Production and Retail Sales reported last Saturday. February Industrial Production fell by 5.4% y/y, down from 6.1% in January and 5.6% expected. Retail Sales growth fell to 10.2% from 10.7% and against expectations for a rise to 11.0%. On the plus size, Fixed Asset Investment growth rose to 10.2% from 10.0% against 9.3% expected, with a reported renewed upturn in housing construction leading the way. This does hint that fiscal stimulus support growth since the start of the year is now starting to show up.
In stocks, the key European Indices jumped by some 3.5%, with banking sector stocks leading the charge higher and following Thursday’s ECB announcements, in particular that aims at protecting banking sector profitability as detailed at length in Friday’s Daily Commentary. The Eurostoxx50 added 3.47% and the German DAX 3.51% thus reversing most of the losses encountered following the Dragi press conference on Thursday. Meanwhile in the US the S&P 500 closed 1.64% higher at 2022 while the Dow and NASDAQ closed 1.28% and 1.85% higher respectively. The VIX finished 1.55 points lower at 16.5 for an 8.5% move and now well below the historic average of close to 20.
In US rates, the risk-on mood emanating from the Euro-Zone was reflected in higher Treasury Yields across the curve heading into Wednesday’s FOMC Meeting and where the perceived risk is that the Fed will offer little of no comfort that rates are going to be on hold for an infinite period beyond this week’s widely expected inaction. 2 Year Yields finished 3bps higher at 0.96% for a 10bp rise on the week, while 10 Year Yields closed 5bps higher at 1.98% as against the previous week’s close at 1.86%. In contrast German Bund Yields continued to fall post Thursday’s ECB announced QE expansion and move into deeper negative rates territory, 10’s -3.5bps to 0.27% but still 5bps higher on the week after Thursday’s massive downside Key Day Reversal.
Over the weekend the US moved their clocks forward by one hour so for the next two weeks all US Market Openings/Closing and economic data releases will happen one hour earlier than normal. Thus the stock market will now open today at 1.30 pm and with the Cash Market closing at 8.00 pm and the Futures Market at 8.15 pm. As it turns out we have no US economic data releases today with the only Euro-Zone of note is Industrial Production which is due at 10.00 am.
March S&P 500
The S&P continued its massive 220 Handle rally since its mid-February low print with a close over 2020 on Friday despite the S&P trading as low as 1968 on Friday following the huge reversal lower in the DAX following the Dragi press conference on Thursday. Very late on Friday the S&P was about to hit my sell range and I emailed my Platinum Members not to go short and as a result I am still flat. For those who did sell at 2020 we hit a low early this morning at 2015.50 before rallying back to 2020 on the incredible move higher in the DAX to back above 10000 this morning. As I have mentioned countless times over the past few years all ‘Open Gap’s in the S&P get filled at some stage and we are now trading near the middle of the 2012/2035 ‘Open Gap’ from the start of the year. Friday’s huge up-move has also left a ‘Gap’ from Thursday’s close at 1989 to Friday’s afternoon’s Chicago low print at 2004.50. However unless something dramatic happens I would not expect this gap to be filled ahead of Wednesday’s upcoming FOMC Meeting. Again as I keep repeating myself it is so hard to be short the markets when you have the ongoing manipulation of stock markets by Central Banks who will do everything in their power to keep the markets afloat no matter how overvalued and over extended they are trading. This will probably continue until we wake up one morning to find that the world has to deal with a major bank default due to bad loans or too much exposure to oil if it keeps falling. Today I will again look to sell the S&P on any further mover higher to 2029/2036 with a 2042 stop. If I am taken short and subsequently stopped out of this position I will be a more aggressive seller in front of 2052 with a 2065 stop. My only interest in buying the S&P is on a dip lower to 1998/2005 with a 1992 stop.
EUR/USD
Unfortunately after I posted on Friday the Euro traded lower to 1.1079 which just missed my 1.1065 buy level before rallying over 100 points and I am still flat. I am not going to chase the Euro higher and I will leave my buy level unchanged at 1.1025/1.1065 with the same 1.0990 stop.
June Dollar Index
No change as I am still a seller on any rally higher to 97.00/97.30 with a lower 97.60 stop.
March DAX
I was lucky with my DAX call on Friday as after the DAX traded higher to my 9810 sell level I emailed all my Platinum Members to exit this position at 9775. Subsequently after I emailed everyone the DAX traded as low as 9755 before rallying strongly into the close. Incredibly and despite the huge Key Day Reversal to the downside following the ECB rate cut on Thursday which saw the DAX trade below 9400, is now trading over 10000 this morning. As I mentioned in my IG interview over the ECB announcement the DAX has two major resistance at 10100 and 10200 from where we had two downside Key Day Reversals of 400 points each from the above levels in January. Therefore a break and close over 10200 that holds will be bullish and it would not surprise me to see this happen given the extent of the Central Bank intervention which is openly targeting the stock market. Today given the significance of these two resistance levels I will be a small seller on any further rally to 10120/10190 with a 10250 stop. Despite the hugely positive price action since late Thursday I do not want to be long the DAX at this time.
March FTSE
The FTSE has just hit my 6180 sell level with this morning’s move higher as the FTSE continues to underperform the other major Indices. I am still short and today I will lower my stop on this position to 6220. If I am stopped out of this position I will be a more aggressive seller in front of 6250 with a 6285 stop.
Dow Rolling Contract
Thankfully we have had no sell levels in the Dow over the past week especially since the US Dollar started to weaken. However the Dow has strong resistance from 17260/17320 and I will be a seller in this area with a 17380 stop. I will also look to buy the Dow on any move higher to 17000/17060 with a 16955 stop.
June BUND
No change as I am still a seller on any rally higher to 162.25/162.55 with a 162.80 stop. Following the huge downside Key Day Reversal on Thursday I do not want to be long the Bund at this time.
Gold Rolling Contract
Late on Friday Gold traded lower to my 1249 buy level and again last night when the US Markets re-opened with Gold hitting a 1247 low print before rallying overnight to a 1256.80 high print which has enabled me to cover this position early this morning at my revised 1253 T/P level and I am now flat. Today I will again look to buy Gold on any dip lower to 1235/1243 with a 1229 stop.
Silver Rolling Contract
No change as I am still a buyer of Silver on any dip lower to 14.95/15.30 with a 14.60 stop.
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