On what turned out to another quiet trading session ahead of the FOMC Meeting on Wednesday the biggest move on Friday was in USD/JPY which had its biggest one day move since the Bank of Japan announced its negative interest rate last February. The USD/JPY moved from under 1.10 to 1.12 and this weakening of the Yen saw another huge upward move in the Nikkei. The fact that the CFTC Commitments of Traders position released after the close on Friday for the week ending last Tuesday which showed Yen long positions at 72K which is the largest on record may have contributed to this huge move on USD/JPY as the long positions scramble for the exit door as quickly as possible.
To mark my 1050th 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 140 points on Friday and is now ahead by 1530 points for April, having made 2265 points in each of the previous two months after a record 3365 points in January. Since I started this service last June it has made over 23,000 points.
As I write this commentary markets having opened higher are now retreating as USD/JPY starts to trade lower towards 111.20 which in turn sees the Nikkei trading 300 points lower from its initial high print. Helping markets at the off was comments from the German Finance Minister schaeuble who was speaking following a meeting of European Finance Ministers in Amsterdam on Saturday. He said that an agreement on a Greek Package ‘appears possible’ as the 3.5% primary surplus is in sight. He also said helping Greece at this time was the fact that Greece had low interest rates with long maturities. On Sovereign Debt Limits he said risk reduction must come before risk sharing and that he backs the Dutch push on Sovereign Debt exposures.
US Stock markets closed flat on Friday after as mentioned above reversed earlier losses in the last hour of trading with the exception of the NASDAQ which closed 0.8% lower following much weaker than expected results from Microsoft. Bond Yields closed firmer with the 10 Year Treasury closing 3bps higher at 1.89%. Gold had a bad day closing 1.2% lower at $1230 following its downside reversal off the $1272 highs on Thursday.
Helping markets on the US re-open last night was some Chinese data reported over the weekend. The Manufacturing Index rose to 46.9 which was the highest in a year while the MNI’s Business Survey came in at 50.5 in April versus the 49.9 print in March.
This morning on the economic front we have the German IFO Business Climate/Current Assessment at 9.00 am. This is followed at 10.00 am by the UK CBI Trends Total Orders and Business Optimism. Finally we have US New Home Sales and the Kansas Fed Manufacturing Activity Index at 3.00 pm and 3.30 pm respectively.
June S&P 5000
My long 2080.50 average buy level in the S&P from last Thursday worked well on Friday as shortly before lunch the S&P rallied to my 2087 T/P level and I am now flat. With the FOMC Meeting on Wednesday and the fact that markets nearly always rally into this key event I emailed all my Platinum Members to cancel their sell order. I still believe the S&P is in the final throws of a major top but if we take out last May’s high at 2134 we could easily rally to 2200 first before the market finally rolls over to the downside. However this stock market is getting further and further away from economic reality with each passing day especially with a PE of 24 based on last year’s results. Given the fact that we have the FOMC Meeting on Wednesday I will look to buy the market on any dip lower to 2077/2082 with a 2072 stop which is just below last Friday’s low print. I do not want to be short the market at this time. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer in front of 2065 with a 2059 stop.
EUR/USD
No change as I am still a buyer on any dip lower to 1.1170/1.1200 with a 1.1135 stop. The Euro has good support at 1.1150 and initially I would expect the market having difficulty in breaking this level.
June Dollar Index
No change as I am still a small seller on any rally higher to 95.30/95.60 with a 96.00 stop.
June DAX
I am still flat the DAX and today ahead of the IFO Survey I will now raise my buy level to 10260/10320 with a tight 10220 stop. Given the ferocity of last week’s near 1000 point rally of the 9500 lows following the failure to reach an agreement at Doha, the price action is still telling me not to be short the DAX at this time.
June FTSE
My FTSE plan worked well on Friday with the market trading lower to my 6245 buy level before having a nice rally into the New York close which enabled me to cover this position at my 6270 T/P level and I am now flat. Early this morning the FTSE opened higher at 6290 and today I will again use any dip lower to 6220/6250 to buy the market with the same 6195 stop. My only interest in selling the FTSE is still on a rally higher to 6360/6400 with a 6430 stop.
Dow Rolling Contract
Unfortunately the Dow just missed my 17880 buy level with a 17909 low print before having a nice 120 point rally and I am still flat. Interestingly despite the US Stock markets closing flat on Friday the McClellan Oscillator improved as nobody wants to be short ahead of Yellen and the FOMC Meeting on Wednesday. Today I will raise my buy level to 17840/17900 with a 17790 stop.
June BUND
I am still flat the Bund and today I will raise my sell level slightly to 163.20/163.50 with a 163.75 tight stop. I still do not want to be long the Bund at this time.
Gold Rolling Contract
My fear that Gold may be rolling over short-term certainly proved to be the correct call on Friday as Gold had another $17 fall following its $25 reversal to the downside on Thursday. Late on Friday Gold hit my 1228 buy level and as I wanted to be flat over the weekend I emailed my Platinum Members to exit this position at 1233 and I am now flat. Today I will again look to buy Gold on any further dip lower to 1216/1223 with a 1209 stop.
Silver Rolling Contract
I am still flat Silver and today I will now raise my buy level slightly to 16.50/16.80 with a 16.10 stop. I still expect Silver to continue to outperform the Gold market at this time.
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