Markets being what they are, last Thursday’s tragic news of the slaying of UK MP Jo Cox, campaigning on behalf of the ‘Remain’ side in front of Thursday’s EU Referendum, elicited a strong positive response in all things Sterling, as well as supporting risk sentiment more broadly. This was on the view that the tragedy could be a material influence in swaying opinion amongst UK voters back in favour of staying in the EU. European markets are opening up between 3.1% and 3.5% respectively as the Pound surges on the back of odds tumbling on Britain leaving the EU.
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 in this deal please email me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it made 100 points on Friday and is now ahead by 905 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.
This snap judgment by markets received some validation in a Comreg poll for the Sunday Mirror published on Saturday night, and which was being conducted at precisely the same time news of Jo Cox’s murder hit the news headlines. Before the news, 45% of those polled said they would be ‘delighted’ if the UK voted to leave the EU. This dropped to 38% of respondents polled after the news, while the ‘Remain’ camp got a nine point boost from those saying they would be ‘delighted’ if Britain stayed. The poll findings have already resonated this morning with the FTSE opening over 3.0% higher while the Pound has rallied the most in three months.
On Friday the US stock market closed lower led by weakness in Healthcare and Technology stocks while Bond Yields closed higher with the German Bund back in positive territory. The US Dollar weakness was led by further gains for Sterling. Betfair Referendum possibilities edged to 65%/35% in favour of ‘Remain’, from more like 60%/40% at midweek, while EUR/USD is trading much stronger at 1.1340 this morning which is 200 points higher than last Thursday afternoon’s low print.
In FX, GBP/USD is trading at 1.4590 which is 3.0% higher than last Friday’s close while the Yen has finally weakened after last week’s huge move higher on the back of the non-action at the Bank of Japan Policy Meeting. The S&P 500 finished 0.33% lower while the FTSE closed 1.2% higher before the weekend poll news.
Commodities drew some support from the softer Dollar with WTI Crude closing $1.80 higher at $47.98 and that rally has continued this morning with the market now trading at $49.20. Gold lost $3.60 on Friday but still closed $19 higher on the week.
As for economic data , China May property prices, published on Saturday, showed annual inflation across the 70 cities tracked by the NBS +6.9% in May up from 6.2% according to Reuters calculations. 50 of the 70 major cities reported price gains last month versus 46 in April. An NBS spokesman said that the average price growth of new homes in first-tier cities started to narrow, while it continued to widen in second and third tier cities.
On Friday, US May Housing Starts came in at -0.3% against -1.9% expected while April was revised down to +4.9% from +6.6%. Building Permits +0.7% below the 1.3% expected but April was revised up to 4.9% from 3.6%.
St Louis Fed President James Bullard on Friday issued a statement revealing himself to be responsible for the horizontal 0.625% dot point in last Wednesday’s FOMC announcement. He said it follows the adoption by the Bank’s economist of a new approach to analysing the US in which they no longer try to predict what the long-term outlook is, preferring to set policy on the assumption the economy will remain in its current state.
This morning on the economic front we have Euro-Zone Construction Output at 10.00 am. We have no UK or US economic data due today as we await Fed Chair Janet Yellen’s Testimony on Monetary Policy to the Senate Banking Panel tomorrow afternoon.
September S&P 500
The idea of never to be short the S&P over a Quarterly Expiration worked out in spectacular fashion for anyone who bought the S&P in my buy level zone on Friday and held this position over the weekend with the S&P trading 25 Handles higher than the close last Friday night. After I bought the S&P myself at 2060 I covered this position at 2061 as I had a good trading day on top of a very good week and I wanted to be flat ahead of the UK ‘Brexit’ polls over the weekend and I am still flat. This morning with the S&P potentially leaving one of the largest ‘Open Gap’s from last Friday’s 2059 close it is very difficult not to look for a level to go short as I just cannot see the US traders leaving such a large Gap without at least trying to close some of this large ‘Open Gap’. The S&P has strong resistance from 2092/2098 and I will be a small seller in this area with a 2104 stop. I will also look to buy the market on any dip lower to 2065/2072 with a 2059 stop.
EUR/USD
Finally the Euro is rallying as expected. Unfortunately the Euro just missed my 1.1225 buy level by a few points before rallying to a 1.1380 high print overnight. Thankfully we had no sell levels in the Euro and today I will move my buy level higher to 1.1270/1.1310 with a 1.1240 tight stop. Looking at the bigger picture, a break and close over 1.1620 will be very positive and opens up the possibility of a move higher to at least 1.18.
September Dollar Index
I am still flat the Dollar and today I will now lower my sell level to 94.25/94.55 with a 94.95 stop.
September DAX
My DAX plan worked well on Friday as yet again following the 1000 point move lower in the DAX over the previous week the market had hit oversold levels on both the Daily Bollinger Band and Williams Index which again told you when it was safe to buy the market. Shortly after I posted on Friday the DAX traded lower to my average 9600 buy level before having a nice rally which enabled me to cover this position at my 9640 T/P level and I am now flat. While it is frustrating to see the DAX trading at 9925 this morning thankfully we had no sell levels on Friday as yet again all short positions have been slammed as my continuing theme which has prevailed over the past two years that you can only be short these markets for a few hours before strong buying returns. Today I will again look to buy the DAX on any move lower to 9780/9840 with a 9740 tight stop. The price action is telling me not to be short the DAX at this time.
September FTSE
My FTSE plan worked really well on Friday as the market traded lower to my 5940 buy level before having a spectacular 200 point rally this morning on the back of the latest weekend polls. Unfortunately I covered my long position at my revised 5965 T/P level and I am now flat. I am so annoyed for T/P early as it has always been my view that the UK would stay in the EU and I have said this on the many IG TV interviews that I have done over the past two months. Today I will again look to buy the FTSE on any dip lower to 6030/6065 with a 5995 stop. Naturally I do not want to be short the FTSE at this time.
Dow Rolling Contract
On Friday I emailed my Platinum Members to lower my buy level to 17640 which thankfully was hit. Unfortunately as I had so many open positions at the same time I covered this long position at my revised 17665 T/P level and I am now flat. With the US Dollar beginning to weaken again I do not want to be short the Dow and today I will again look to buy the market on any dip lower to 17700/17760 with a 17650 stop.
September BUND
I am still flat the Bund which is finally selling off as its remarkable move into negative territory. Today if we continue this sell-off I will look to buy the market from 163.90/164.20 with a 163.60 stop. I do not want to be short the Bund at this time.
Gold Rolling Contract
No change as I am still a buyer on any dip lower to 1268/1275 with a 1261 stop.
Silver Rolling Contract
No change as I am still long from last week at 17.45 with the same 16.95 stop.
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