There is not a huge amount to say about last Friday’s market action which was characterised by a give-back of some of the post-FOMC stock market euphoria, fractionally lower Bond Yields and a slightly stronger US Dollar. The biggest news was that Saudi Arabia and Iran failed to reach any agreement after two days of talks in Vienna whereby Saudi might agree to cut production if Iran agreed to freeze its output at current levels. This week’s meeting of OPEC Ministers in Algeria now looks like it will be a non-event. As a result oil lost the best part of $2, although it is opening slightly higher this morning.
Due to the number of members taking up my 2 year Euro 2500 rate for my Platinum Service, this will be the last week that I am offering this special price which will rise to Euro 2750 on Saturday. If anyone is still interested in this deal which has been in situ since January, can you please email me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it made 80 points on Friday and is now ahead by 627 points for September, having made 1782 points in August and 1682 points in July. The previous three months saw gains of 2550, 1532 and 2175 points respectively. Since I started this Platinum Service in June 2015 it has averaged a monthly gain of over 2000 points.
Fed dissenter Eric Rosengren publicly justified his opposition to Wednesday’s FOMC decision to stand pat, in terms of maintaining the longevity of the recovery. The Markit US Manufacturing PMI was on the soft side at 51.4, down from 52.0 but less important than the ISM version which is not due until next week, while Canadian data on both Retail Sales and CPI was unexpectedly weak. As a result the Canadian Dollar suffered accordingly alongside lower oil prices.
In stocks the S&P500 ended Friday evening 0.57% lower at 2167 which was still a gain of 3.2% on the week, while the Dow and NASDAQ closed 0.7% and 0.6% lower respectively. The VIX rose by 0.27 to 12.29 but is down 3 points or 20% on the week. Earlier the Eurostoxx 50 lost 0.6% and the German DAX 0.4%.
In Interest rates we saw a mildly bullish US curve steepening with 2 years rising 1.6bps to 0.75% while 10 Year Treasuries closed flat at 1.6% for a 7.4bps move lower on the week. Meanwhile 10 Year Bunds gained 1.4bps to -0.082% and UK Gilts +2.3bps.
In FX, the US Dollar was generally a touch firmer as the Dollar Index closed 0..03% higher at 95.47 which was a fall of 0.7% on the week. In G10, the CAD was the biggest looser at -1.0% after August data showed back-to-back falls in both Retail Sales and CPI at -0.1% and -0.2% respectively. The NZD was close behind, seemingly still suffering from last Thursday’s RBNZ re-iteration of a very strong easing bias.
In Commodities, oil was down $1.80 for both WTI and Brent on the Saudi/Iran news.
This morning on the economic front we have German IFO Business Climate and Current Assessment/Expectations at 9.00 am. This is followed by UK BBA Loans for House Purchase at 9.30 am and the CBI Reported Sales at 11.00 am. Finally we have the US New Home Sales at 3.00 pm and the Dallas Fed Manufacturing Index at 3.30 pm.
Also at 3.00 pm the ECB President Dragi is speaking at the European Parliament in Brussels.
December S&P 500
Very late on Friday evening the S&P traded lower to my average buy level at 2158 before having a nice rally to 2163. As I did not want to hold a long position over the weekend I emailed my Platinum Members to exit this position at 2160 and I am still flat. The move lower on Friday filled the 2156/2166 ‘Open Gap’ from last Thursday with the next key support at the 2140/2146 area. I will be a buyer in this region with a 2135 tight stop. Despite the McClellan Oscillator falling to a positive 42 reading from last Thursday’s 122+ print I still do not want to be short the market at this time.
EUR/USD
My long 1.1195 Euro position from early Friday morning worked well on Friday with the Euro trading back above 1.1230 which enabled me to cover this position at my 1.1220 T/P level and I am now flat. With Dragi due to speak this afternoon I will still look to buy the Euro on any dip lower to 1.1160/1.1190. If I am filled at this price level I will have a 1.1115 stop which is just below the pre-FOMC low print at 1.1121. I still do not want to be short the Euro at this time.
December Dollar Index
The Dollar has traded in a very narrow range over the past four months since it made its low at 91.80 on May 3rd. The Dollar has an up-sloping trendline which starts at this May low and which now crosses 94.80 today. This trendline has had eight separate touch points during this four month period, making an eventual break of 94.80 possibly significant and one to keep an eye on going forward. Today I will leave my sell level unchanged at 95.75/96.05 with a 96.35 tight stop.
December DAX
The DAX traded lower to my 10600 buy level before having a small rally. As it is so difficult to get an edge in the DAX at this time I emailed my Platinum Members to exit this trade at 10620 and I am still flat. This market is very frustrating to trade as having got stopped out of a nice long position the previous Friday right at the 10245 low of the day on the Duetsche Bank news, only to see the market trade 450 points higher four trading day’s later. This morning the DAX is following the other main Indices lower with the next support at the 10360/10420 area. I will be small buyer on any test of this level with a tight 10325 stop. I still do not want to be short the DAX at this time.
December FTSE
I am still flat the FTSE and today I will now lower my buy level slightly to 6765/6795 with a 6745 stop. Given the renewed weakness of Sterling the FTSE should have good support at this level.
Dow Rolling Contract
As I was long the S&P, I waited to buy the Dow which I did at 18260. Just like the S&P above I did not want to be long the Dow especially ahead of a weekend and I emailed my Platinum Member to exit this position at 18280 before the market rallied to a 18320 high print. This morning the Dow is trading lower on nervousness ahead of the first Presidential TV debate this evening between Trump and Clinton. The consensus view is that if Trump wins the equity market will fall and trade higher on a Clinton win so the polls following the debate could be significant. With all the equity markets now getting hit hard as I write this commentary, my only interest in buying the Dow is on a further sell-off to 18055/18110 with a 17995 stop. The main reason that I have lowered my Dow buy level is I want to stagger my buy level for the Indices to try an insure that I do not have four ‘Open’ positions at the one time.
December BUND
Unfortunately the Bund just missed my 164.90 T/P level with a 164.96 low print and I am still short at 165.20. I will leave my stop unchanged at 165.75 and if I am stopped out of this trade I will be a more aggressive seller in front of 165.90 with a 166.30 tight stop.
Gold Rolling Contract.
No change as I am still a buyer on any dip lower to 1317/1325 with the same 1309 stop.
Silver Rolling Contract
Silver traded lower to my 19.75 buy level after I posted on Friday. The market has continued to sell-off and I have now bought more Silver here at 19.50 which puts me long at an average rate of 19.63. I will leave my stop unchanged at 18.95 on this position.
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