Equity and risk markets reversed Thursday’s losses on Friday with the major US Indexes all closing the best part of 1% higher after Agence France Press (AFP) reported that Deutsche Bank and the US Department of Justice were close to agreeing a $US5.4bn settlement of the latter’s mortgage mis-selling claim. Initially the DoJ were looking for $14bn. Deutsche Bank’s shares rose on this news to close with a 6.3% gain which was close to an 18% rise off its early session low. The deal has yet to be confirmed.
To mark my 1200th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2750 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 you can contact me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it made 33 points on Friday to close September with a 1142 point gain 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 1900 points.
The AFP report produced an ”all change” across all asset classes with stocks rallying hard, the US Dollar, Swiss Franc and Yen losing their safe-haven bid and US Treasuries heading back higher. Polls suggesting that Clinton is doing better would not have done any harm either to the emergence of a risk-on-mood, including from a FOX poll putting Clinton 5 points ahead of Trump.
The US data was not a big driver of Friday’s market moves. The Personal Income and Spending data contained no major surprises, as within the August Personal Income and Spending Report the Fed targeted PCE deflators were right in line with expectations, though the Atlanta Fed did revise down their contemporaneous Q3 GDPNow estimate to 2.4% from 2.8%. This downward revision came on the back of softer than expected Consumer Spending and separately reported downward revision to stocks.
Over the weekend, the China Official Manufacturing PMI was rock steady at 50.4 with the Non-Manufacturing PMI up slightly from 53.5 to 53.7, both adding a measure to the continued growth story and risk-on-mood continuing. Meanwhile earlier this morning we had the release of the Bank of Japan Tankan Report which came in slightly weaker at 6 versus 7 expected.
In FX, the US Dollar closed last week fairly flat in index terms, the DXY -0.08% at 95.46 and the broader BBDXY -0.06%. On the stronger polls for Clinton the USD/MXN fell by 1% to 19.38.
In G10, the NOK was the biggest gainer at 0.8% while the Swiss Franc was the worst performer loosing 0.55%, reversing some of its recent Deutsche Bank strength. Meanwhile the Canadian Dollar lagged despite a somewhat better than expected July month GDP data, up 0.5%.
It is in Sterling where most of the movement is happening this morning with GBP/USD falling to 1.2880 from 1.30 on Friday evening after the UK PM Theresa May announced yesterday that Article 50 will be invoked by March 2017. This move sees EUR/GBP again test the 0.8700 key resistance level.
This morning on the economic front we have German, Euro-Zone and UK Manufacturing PMI at 8.55 am, 9.00 am and 9.30 am respectively. This is followed by US Manufacturing PMI at 2.45 pm. Finally at 3.00 pm we have Construction Spending and the very important ISM Manufacturing.
December S&P 500
After all the up and down volatility that we had in September, the S&P managed to close where it started the month. The move higher off the 2135 low print on Friday to 2168 again proves how difficult it is to be short these equity markets in these Central Bank manipulated markets. Thankfully we had no short levels on Friday and as I mentioned last week I believe the Fed will do all they can to prevent a major shake-out ahead of the Presidential Election on November 8. The key resistance level for the S&P is still from 2170/2175 and a break and close over this level will see the market test its all-time highs at 2192 before eventually taking out the key 2200/2200 major resistance level. We now know that the 2125/2132 area is major support with the 100 Day Moving Average at 2127. For me to turn bearish I will want to see a close below 2120 that sticks. Today I will move my buy level higher to 2147/2153 with a 2142 stop. If I am taken long and either I manage to T/P on any long position or I am stopped out of this trade I will be an aggressive buyer on any dip lower to 2127/2133 with a 2119 wider stop.
EUR/USD
I was very unlucky on Friday as frustratingly the Euro just missed my 1.1150 buy level with a 1.1153 low print before having a nice 100 point rally and I am still flat. September, despite all the equity volatility was the lowest volatility for the EUR/USD in many years. Today I will move my buy level higher to 1.1155/1.1185 with a 1.1130 tight stop. I still do not want to be short the Euro at this time.
December Dollar Index
Today I will lower my sell level slightly in the Dollar to 95.95/96.25 with a 96.55 stop.
December DAX
The volatility in the DAX is just insane with the market now trading more on Deutsche Bank news rather than fundamentals. September was a very tough month for trading the DAX for me as three times I got stopped out of long positions due to negative news on Deutsche near the lows of the day and in each case the market subsequently rallied strongly. I am still flat the DAX and today as I have to respect the price action on Friday when the market rallied over 350 points off its lows, I will be a small buyer on any dip to 10320/10380 with a 10265 stop. I still do not want to be short the DAX at this time.
December FTSE
Unfortunately the FTSE just missed my 6740 buy level after I posted on Friday and I am still flat. Thankfully with the FTSE trading 140 points higher this morning I had no sell levels on Friday. Given the continued weakness in Sterling I will now raise my buy level to 6830/6865 with a 6795 stop.
Dow Rolling Contract
I am still flat the Dow as the market rallied strongly after I posted on Friday. Today I will now move my buy level higher to 18130/18200 with a 18070 stop. Given the fact that the McClellan Oscillator again closed in positive territory on Friday plus the fact that we are at the start of a new month I do not want to be short the Dow today. Trading could also be quiet given the fact that it is a Jewish Holiday with many traders not at their desks in New York.
December BUND
The Bund also just missed my sell level on Friday and I am still flat. Today I will a buyer on any dip lower to 165.00/165.30 with a 164.70 stop. I will also lower my sell level to 166.20/166.50 with a 166.80 stop.
Gold Rolling Contract
Late on Friday Gold traded lower to my 1313 buy level before rallying overnight to a high so far at 1319.50. As I wanted to be t over the weekend I emailed my Platinum Member to exit this position for a small gain at 1315 and I am still flat. Today my only interest in buying Gold is on a dip lower to 1298/1306 with a 1291 stop.
Silver Rolling Contract
Silver rallied strongly after I posted on Friday to a 19.70 high print which enabled me to cover my latest 19.12 long position at my 19.25 T/P level and I am still flat. Silver is struggling to break back above $20 and is back on the defensive this morning. Today I will again look to buy Silver on any dip lower to 18.50/18.90 with a 17.95 stop which is just below the key 18.00/18.30 major support level. Remember a break and close below 18.00 could well see Silver accelerate to the downside.
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