What is particularly noteworthy about the losses seen on Thursday and Friday is that they came in the face of a US Dollar that was falling not rising and also in the midst of a rally in Emerging Market currencies. The JPM EM FX index of global EM FX has been falling since early September, coinciding with the fall in AUD/USD in particular from its Sep 8th peak, yet rallied quite hard toward the end of last week.
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 contact me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it made 64 points on Friday and is now ahead by 729 points for November, having made 657 points in October, 447 in September, 1560 in August, 1096 in July, 1023 in June, 1076 in May, 1335 in April, 1375 in March, 1481 in February and 1734 in January. Since I started my New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points.
As for the break with the US dollar trend, here I would note that Bond Yields at the 2-year part of the respective yield curves continue to rise in the US and fall in Australia. Again, since early September 2-year US yields have risen by almost 50bps and 2-year Australian yield fallen by about 20bps – a big shift in the spread that has now taken it with a single basis point of cross-over. It is already consistent with lower levels for the AUD.
As for markets elsewhere, Thursday’s US equity rally proved fleeting, stock indices all lower on Friday (S&P500 -0.26%) despite which the VIX gave back more of its midweek gains, down to 11.5 from 11.75. the US dollar was lower along with intermediate and longer term Treasury yields (10s -3.2bps to 2.344%) though as noted above, 2s continue to push higher, up another 1.3bps to a new cycle high of 1.723%. US Dollar slippage was led by a 0.85% fall in USD/JPY to Y112.1 but assisted too by EUR and GBP gains (+0.17% and +0.15% respectively).
On the week the DXY dollar index is -0.8% and broader BBDXY -0.7%. EUR/USD is the best performing major, +1.1%, and AUD and NZD the worse, -1.3% and -1.8% respectively. US curve flattening is exemplified by the 6.7bps rise in 2 year USTs and 5.5bps fall in 10s. 10 year Bund and Gilt yields were both -5bps on the week.
The weaker USD helped commodities, up across the board with Gold +$18.30 to $1,296.5, oil adding back $1.40 for both WTI and Brent to $56.55 and $62.72 respectively but down $0.19 and $0.80 on the week. Iron ore gained $1 to $62.61 but is unchanged on the week.
US data initially supported higher US Bond Yields but the impact proved fleeting. October Housing Starts jumped by +13.7%, well above the +5.9% expected. Strength was led by the hurricane-impacted southern states, but was strong even beyond this, albeit flattered by the volatile multi-starts sub-category.
Canada’s October CPI conformed to expectations, dropping to 1.4% from 1.6% while all three core measures averaged 1.6%, the same as in September. This should ensure the Bank of Canada stays on hold at its final meeting of the year on December 6th.
On Saturday, China October property prices were reported 0.3% m/m, up from 0.2% in Sep though the annual rates of price growth slipped to 5.4% from 6.3%.
This morning on the Economic Front we have UK CBI Trends/Total Orders at 11.30 am. The only US data of note is Leading Index at 3.00 pm.
Meanwhile we have a number of ECB speakers throughout the day including Dragi who is speaking in Brussels at 4.00 pm.
December S&P 500
Friday was an unusual trading session as the market sold off despite the McClellan Oscillator improving from Thursday’s -71 close to finish on Friday barely in negative territory with a -21 print. This broke a sequence of five straight days of negative breadth. As so many of my calls got hit on Friday I lowered my buy level in the S&P to 2571 which was filled overnight. I am still long and I will now raise my stop on this position to 2564. If I am stopped out of this position I will be a more aggressive buyer on any further dip lower to 2553/2559 with a 2547 stop. For those of you who did buy the S&P at my initial buy level of 2578 on Friday the market did rally back above 2582 where it stayed for many hours before selling off into the close. This rally should have given anyone who was long at this level plenty of time to take a profit. Given how close we are to strong support plus the fact that the MO improved on Friday I still do not want to be short the S&P at this time.
EUR/USD
The Euro re-opened last night near the middle of my buy range at 1.1750. I am still long at this price level and will only add to this position on any subsequent move lower to 1.1720 with the same 1.1685 stop. I will now lower my T/P level on this position to 1.1775. If this happens I will be back with a new update for my Platinum Members.
December Dollar Index
I am still flat the Dollar and today I will leave my sell level unchanged from 94.40/94.75 with a 95.05 stop.
December DAX
The volatility in the DAX has certainly picked up following last week’s sell signal after the market broke and closed below 13200. Late Friday the DAX traded lower to my 12970 buy level before rallying back above 13000. As I did not want to have a long position on board over the weekend I emailed my Platinum Members to exit any long position at my revised 12977 T/P level or higher and I am now flat. Thankfully I did that with the DAX trading nearly 100 points lower this morning. The DAX has good support at last week’s 12840 low print ahead of strong support at 12740. Today I will be a small buyer on any dip lower to 12780/12845 with a 12730 stop. Again despite the DAX being on a sell signal I am not comfortable in going short the market at this time.
December FTSE
My FTSE plan worked well as shortly after I posted on Friday morning the FTSE traded lower to my 7355 buy level before rallying to my 7385 T/P level and I am now flat. This morning the FTSE is opening weaker and today I will again look to buy the market on any dip lower to 7285/7320 with a 7255 stop.
Dow Rolling Contract
After Thursday’s huge move higher in the Dow the market gave back some of those gains on Friday with the market trading lower to my 23370 buy level before rallying back above 23410. As so many of my calls hit near the same time plus the fact that I wanted to hang on to last week’s gains I covered this long position at my revised 23384 T/P level and I am now flat. The key level that I am now watching is from 23180/23250 as a break and close below here is a confirmed sell signal. With Thanksgiving on Thursday it may be difficult for the US Markets to break lower this week as seasonally this week tends to be bullish. Today I will be a buyer in the above range with a 23130 tight stop.
December NASDAQ
Overnight the NASDAQ traded lower to my 6305 buy level. I will now only add to this trade on any move lower to 6260 with the same 6235 stop. Remember a break and close below 6250 is a sell signal.
December BUND
This morning the Bund opened at my revised 163.15 sell level before trading lower. Subsequently I emailed my Platinum Members to exit this position at 163.02 and I am now flat. Today I will again look to sell the Bund on any rally higher to 163.35/163.70 with a 164.00 stop.
Gold Rolling Contract
Gold had a good trading session on Friday as the market consolidated it’s break of 1280. The 1300 level is strong resistance and a break and close above here could well see an acceleration higher. Today I will now raise my buy level to 1275/1283 with a 1268 stop.
Silver Rolling Contract
Silver has traded sideways for most of the past three months offering no more than a 15/20 point gain on any long positions. In light of the move higher in Gold I will now raise my buy level to 16.90/17.15 with a 16.65 tight stop.
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