News of the (now failed) attempted military coup attempt in Turkey started filtering though about half an hour before the US stock market close, too late to have much impact on Cash Indices which closed fairly flat but early enough to see the S&P500 futures lose 0.4% after the NYSE close. Earlier it was hard to discern much by way of market impact to the Nice terrorist atrocity, sickening as it is. Treasury yields retraced much of their post-US data-led gains on the Turkey news (2s actually closing lower on the day) while the US Dollar received a safe haven boost having earlier been supported by stronger than expected US data and higher Bond Yields. Once again the Yen displayed its credentials as the pre-eminent safe-haven currency, USD/JPY tumbling back down through Y105 to close 0.45% stronger on the day at Y104.88. The Turkish Lire lost over 4% in late NY trade with EM currencies hit more broadly albeit to a lesser extent (e.g. ZAR -2.5%, MXN -1.4%, RUB -1.2% while Asia EM FX had pretty much closed beforehand).
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 made 45 points on Friday and is now ahead by 1005 points for July having made 2550 points in June. The previous three months saw gains of 1532, 2175 and 2265 points respectively. Since I started this service in June 2015 it has averaged a monthly gain of over 2200 points.
The S&P 500 finished -0.1% at 2164.7, the Dow +0.05% and NASDAQ -0.1%. Earlier the Eurostoxx 50 finished -0.15% with the Dax just -0.01%. The VIX only moved from 12.4 to 12.7 in the last half hour of trade.
In Bonds US 10s had rallied from 1.53% to 1.6% in the wake of the US data, only to retrace to 1.55% in the immediate aftermath of the coup news. They closed at 1.552%, 1.6bps higher on the day. 2s were around 0.665% into the data, jumped to 0.71% after and then tumbled back to 0.6674% by the close, 0.5bps down on 24 hours earlier.
In G10 FX, the JPY (+0.45%) fared best and the NOK worse (-1.43%) but GBP, NZD and SEK all lost over 1%, Sterling in part on a speech from Bank of England chief economist Andrew Haldane in which he said, ‘’Given the scale of insurance required, a package of mutually-complementary monetary policy easing measures is likely to be necessary. This monetary response, if it is to buttress expectations and confidence, needs I think to be delivered promptly as well as muscularly. By promptly I mean next month.’’
EUR/USD weakness (-0.76% to 1.1035) trumped JPY strength to drive the DXY up 0.63% to 96.68 with the broader BBDXY up a smaller 0.39%. ADXY finished 0.27% lower. AUD/USD was down 0.71% to 0.7578, USD/NZD -1.15% to 0.7116 and GBP/USD -1.13% to 1.3192.
Commodities saw gold down $4.80 at $1,332.20, WTI crude +30 cents to $45.95 and Brent +70 cents to $48.11. The LMEX index ended 0.47% lower and iron ore unchanged at $58.42 (62% fines China import price).
As for the US data, US June Retail Sales rose by a strong +0.6% (0.1%E, 0.2%P revised from +0.5%). Ex-autos, sales were +0.7% (0.4%E, 0.4%P). US June Industrial Production +0.6% (0.3%E, -0.3%P revised from -0.4%). Manufacturing +0.4% (0.3%E, -0.3%P revised from -0.4% with all the strength attributed to autos). Mining turned up slightly last month, while utilities output was boosted by hot weather boosting demand for air conditioning above seasonal norms.
US June CPI headline came in below expectations at 0.2% (0.3%E, 0.2%P), but the as-expected core reading of 0.2% saw y/y growth rising to 2.3% (2.2%E, 2.2%P).
The Empire (NY State) Manufacturing Index fell to 0.55 (5.0E, 6.01P) while the University of Michigan preliminary consumer sentiment index fell to 89.5 (93.5E, 93.5P), with blame laid at the floor of the earlier Brexit vote. But the closely watched 5-10 year inflation expectations reading rose to 2.8% from 2.6% (1yr unchanged at 2.6%).
This morning on the economic front we have no economic data due from the UK or the Euro-Zone while at 1.00 pm the EU Finance Ministers will begin a two day meeting in Brussels. At 3.00 pm we have the US Labour Market Conditions Index Change.
Finally this afternoon the Fed’s George will speak on the economy.
September S&P 500
My S&P plan worked well with the market trading lower to my 2050 buy level before having a nice rally to over 2056 which enabled me to cover this position at my revised 2053.50 T/P level as I wanted to be flat over the weekend. I also stated in my email to my Platinum Members that I would be more comfortable in buy the market between 2130 and 2140 as this is just above the old 2015 highs at 2134. Thus for all the above reasons I will use any dip today to 2135/2141 to buy the market with a 2129 stop. I am going to refrain from selling the S&P today unless we trade higher to 2170/2176 where I will be a small seller with a 2182 stop. A break and close below 2120 will again be at least short-term bearish.
EUR/USD
The Euro traded lower to my 1.1055 initial buy level before having a small rally to 1.1070. Again just like the S&P I wanted to be flat the market over the weekend and I emailed my Platinum Members to exit this position at 1.1065. Subsequently on the coup news from Turkey the Euro sold off to a 1.1025 low print before rallying on the ‘open’ last night. I am still flat and today I will again look to buy the Euro on any dip lower to 1.0980/1.1010 with a 1.0945 tight stop. My only interest in selling the Euro is still on a rally higher to 1.1160/1.1200 with a 1.1240 stop.
September Dollar Index
Late on Friday evening the Dollar traded higher to my 96.75 sell level on the Turkish coup news. I am still short and I will leave my stop unchanged on this position at 97.20.
September DAX
The weak Euro is helping the DAX from falling and I am still flat as none of my parameters were hit on Friday. Given the weakness of the Euro I am going to refrain from selling the DAX today especially as the DAX has underperformed the other major Indices. As a result I will now raise my buy level slightly to 9910/9970 with a 9865 stop.
September FTSE
The weaker Sterling on the back of the comments from Bank of England Chief Economist Haldane as mentioned in my economic commentary above has certainly helped to put a floor in the FTSE. Today I will now look to buy the market on any dip lower to 6540/6575 with a 6515 stop. I will also be a small seller on any rally higher to 6700/6740 with a 6740 stop.
Dow Rolling Contract
The Dow closed higher on Friday for the sixth consecutive trading day despite the S&P closing lower. The Dow has now rallied over 1500 points post ‘’Brexit’’ and is up 12 of the last 14 trading sessions. This market is now very over-bought on both a Daily and Weekly basis helped no doubt by the increasingly dangerous Monetary Policies which all the main Central Banks are pursuing. However as Keynes famously said ‘’markets can remain illogical longer that I can remain solvent’’ and is a huge lesson for anyone trying to short the market for more than a short period. I am still flat the Dow and today I will again look to sell the market on any rally higher to 18640/10710 with an 18770 stop. Given how overbought this market is trading I do not want to be long the Dow at this time. Remember the Dow will have huge support at its 2015 high of 18351 and will take a lot of bearish news to break and close below this level.
September BUND
I am still flat the Bund which comfortably below its 166.50 initial support level on Friday. Today I will lower my sell level to 166.70/167.10 with a 167.30 tight stop. I still do not want to be long the Bund at this time.
Gold Rolling Contract
Gold again lust missed my buy level on Friday before rallying strongly in the last hour of trading on the back of the news out of Turkey. I am still flat and given the extent of the Daily Sentiment Index towards the precious metal at this time I am going to go ahead and lower my buy level today to 1302/1313 with a 1295 stop. I would expect any test initially of the key 1300 major support level to see a decent rally first before we see lower prices and an eventual break of 1300.
Silver Rolling Contract
No change as I am still only a buyer of Silver on any mover lower to 19.10/19.60 with the same 18.65 stop.
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