US stock market Indices went out on a strong footing Friday, recovering from intra-day weakness in the last ‘’hour of power’’ to close near the highs, despite a 20%+ drop in the shares of Kraft-Heinz, the latter after announcing downgraded earnings estimates, write-downs and an SEC accounting investigation. The S&P 500 ended 0.66% higher at its best level since mid-November, 11.4% up YTD and now 19% back from its December 24th lows. Rising Sino-US trade optimism was one of the factors driving positive risk sentiment Friday and sees the VIX back down onto a 13 handle and to its lowest level since October 5th (i.e. very close to the start of the Q4 equity mark rout). This, incidentally, has had the effect of pushing up my short term fair value estimate of AUD/USD by almost half a cent, currently at 0.7250.
To mark my 1800th 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 To demonstrate this value, a monthly subscription over the same period would cost 4440 euro in total This offer represents a 38% discount and is open to both new and existing members. If anyone is interested in this offer can you please email me on bryan@tradernoble.com for details
For anyone following my Platinum Service it made 123 points on Friday and is now ahead by 816 points for February, having made 1671 points in January, 2803 points in December, 1541 points in November and 2094 points in October. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
I have a YouTube Channel which contains recent interviews I have given. This can be viewed by clicking HERE Please subscribe to this for new interview notification
US President Trump said Friday there was ‘’a very good chance’’ the US would strike a deal with China to end their trade dispute and that he was inclined to extend his March 1 tariff deadline and meet soon with Chinese president Xi Jinping. Chinese Vice premier Lui He in Washington for the talks and attending Trump’s press conference, agreed there has been ‘’great progress’’ and that from China, ‘’we believe that (it) is very likely that it will happen and we hope that ultimately we will have a deal. And the Chinese side is ready to make our utmost effort’’. Trump indicated he probably would meet with Xi in March in Florida to decide on the most important terms of a trade deal.
US Treasury Secretary Steve Mnuchin had earlier said the two sides had reached an agreement on currency, though reports Saturday night were that the US and China had not yet agreed on the critical issue of enforcement in a proposed currency deal that would ensure Beijing lives up to its promise to not depreciate the yuan, Bloomberg said citing ‘’four people familiar with the matter’’.
Bonds
Strength in US stocks markets on Friday was associated with lower not higher US bond yields, 10-year Treasuries lower by 4bps and 2s by 3.5bps. Relevant here is the developing Fed-speak, initiated a while back by NY Fed president John Williams, that too-low inflation risks being the Fed (and other central banks) bug-bear in coming years.
Fed Vice Chairman Richard Clarida, on Friday in Chicago said that facing a long term environment of low interest rates and low inflation, it is a good time for the Fed to undertake a review of how it goes about pursuing its twin goals of maximum employment and price stability. The Fed’s framework review begins with an event in Dallas this afternoon and will include a research conference in Chicago in June, the conclusions of which will be published in the first half of 2020, Clarida said.
Speaking at the same event, NY Fed President John Williams said that persistently soft inflation readings could damage the Fed’s ability to convince the general public it will hit its 2% goal and keep the economy on a solid path. Central banks in other major economies are likely to face similar problems, Williams warned. ‘’Indeed, we have seen some worrying signs of a deterioration of measures of longer-run inflation expectations in recent years’’, he said. Also weighing in, SF Fed President Mary Daly agreed it was equally important to be aware of the risks of lower inflation, alongside the central bank’s more traditional task of fighting fast-rising prices.
Latest Fed speak can only serve to re-enforce the sense that the bar to the Fed resuming rate hike(s) later this year or next is quite high, notwithstanding the implicit tightening bias that showed through in last week’s Minutes of the January FOMC meeting.
Currencies
In FX, it was the CAD, NZD and AUD that were the best three performing G10 currencies, amid a slightly softer USD backdrop (DXY-0.1%), the latter engendered by positive risk sentiment. The NZD ended Friday night as the best performing G10 currency. Seemingly helping AUD alongside positive risk sentiment and the aforementioned drop in the VIX, China foreign ministry spokesman Geng Shuang said in a news conference Friday that ‘’I would like to clarify here that these reports (that China had banned Australian coal imports) are false’’ . He added that ‘’Based on my information the ports in China are all receiving declarations for imported coal, including that from Australia’’. Geng did though admit that China customs were ‘’stepping up efforts to analyse and monitor the quality and safety of imported coal’’. (Bloomberg reporting).
On Brexit, plenty of weekend developments and which see GBP starting the week about 0.1% up on where it went out of Friday. UK PM May has said she won’t now bring a vote on the ‘’meaningful say’’ on her Withdrawal Agreement to parliament before May 12th; but this does not look like preventing the ‘’Cooper Mark 2’’ Amendment that would provide for an extension of Article 50, being voted on this week. There is also the suggestion of another Labour Amendment that if passed would force a 2nd Referendum. Meanwhile EU officials are suggestion that some governments want a 21-month extension of Article 50 (so into 2021) if there is no Brexit Agreement by March 29th. Everything still points to no hard Brexit on March 29th.
This morning on the Economic Front we have Bank of England Governor Carney’s speech at 10.00 am. This is followed at 1.30 pm by the Chicago Fed National Activity Index. Finally, we have Wholesale Inventories at 3.00 pm and the Dallas Fed Manufacturing Business Index at 3.30 pm.
March S&P 500
After the Dow traded higher to my sell level on Friday I emailed my Platinum Members to raise any S&P sell level to a price of 2802 which was filled on the re-open of the Futures Market last night before selling off to my 2796 T/P level overnight and I am now flat. With the VIX trading to a close at 13.51 on Friday, I am now on the lookout for a more meaningful sell-off in the S&P especially as the market is now approaching my 2800/2820 strong resistance area. Today I will again look to sell the S&P on any further rally to 2809/2823 with a wider 2835 stop. I will also raise my buy level to 2765/2778 with a 2757 stop.
EUR/USD
I am still flat the Euro and today I will again raise my buy level slightly to 1.1270/1.1310 with a higher 1.1225 stop. The Euro has strong resistance from 1.1370/1.1400. However I still do not want to be short the Euro at this time especially as it is becoming more and more evident that the Fed will refrain from raising Interest Rates for the foreseeable future.
March Dollar Index
The Dollar just missed my 96.80 sell level before selling off and I am still flat. Today I will lower my sell level slightly to 96.65/97.05 with a 97.35 stop.
March DAX
I am still flat the DAX which is opening higher this morning. Today I will again raise my sell level to 11620/11720 with a higher 11785 tight stop. I will also raise my buy level to 11280/11360 with a 11220 stop.
March FTSE
I am still flat the FTSE which also just missed my buy level on Friday. Today I will raise my buy level to 7095/7135 with a 7060 stop.
Dow Rolling Contract
My Dow plan worked well on Friday with the market trading higher to my 26035 sell level before selling off 100 points. This move lower enabled me to cover my short position at my revised 25982 T/P level and I am now flat. This morning the Dow is trading above 26100 as optimism rises to dangerous levels. The Dow still has an ‘’Open Gap’’ from November 8, at 26189 which may be filled when the US Markets open this afternoon. Today I will again look to sell the Dow on any further rally to 26190/26320 with a 26385 tight stop. My only interest in buying the Dow is on a dip lower to 25650/25750 with a 25580 stop.
March NASDAQ
I am still flat the NASDAQ as the market again missed my buy level on Friday. The NASDAQ has strong resistance from 7200/7260 and today I will be a seller on any move higher to this area with a 7305 tight stop.
March BUND
The Bund just missed my 166.65 sell level with a 166.64 high print before having a small sell-off and I am still flat. Today I will now raise my sell level to 166.85.167.25 with a higher 167.55 stop. I still do not want to be long the Bund at this time.
Gold Rolling Contract
The sell-off in Gold on Thursday did not last long with the marker closing on Friday at 1330. I am still flat and today I will now raise my buy level to 1305/1313 with a 1297 stop. With the DSI still indicating an overbought market I will leave my 1350/1362 sell range unchanged with the same 1370 stop.
Silver Rolling Contract
Silver finally rallied to my revised 15.90 T/P level on my latest 15.80 long position and I am now flat. Today I will again look to buy the market on any dip lower to 15.40/15.80 with a 15.05 tight stop. Remember a break and close over 16.20 is a bullish breakout signalling much higher prices.
Recent Comments