We have seen a sequence of better trade reports over the past 24 hours that for now has flushed out some Australian Dollar short positions and USD longs. Setting the scene yesterday were words from Trump that the US-Canada trade talks are ‘’coming along very well’’ and that the Canadians are willing to include dairy in the trade negotiations. Dairy is a politically sensitive issue for Canadian Prime Minister Trudeau and also for Trump who is looking for mid-West support from the likes of Wisconsin dairy farmers. Mexican Economy Minister Guajardo was also on the wires saying that a US-Canada trade deal was a high chance. Then it was news that the UK and the EU were preparing for a special summit to sign a Brexit deal in November, timing expected to be announced ‘’within days’’. There were reports that the EU is redrafting a new Irish border proposal, one that is more digestible to the UK.
To mark my 1675th 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@tradernoblecom for details
For anyone following my Platinum Service it made 100 points yesterday and is now ahead by 580 points for September, having made 599 points in August, 1074 points in July, 994 points in June, 1927 points in May, 1657 points in April, 1760 points in March, 2256 points in February, and 879 points in January. 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
Yesterday, delivering more trade optimism momentum were reports that US Treasury Secretary Mnuchin was to lead trade talks with his Chinese counterpart Le Hui, supposedly an outreach to Beijing to get talks back on track ‘’in coming weeks’’. Whether this has the support of the man at the top is not known and we remember that the last such Mnuchin talks produced little. It has lifted prospects that the $200b tariff rise is being put off.
Oil and commodities
Oil prices surged again as Florence approaches. WTI lifted 1.5% to $70.30 (up over $1), while Brent was also higher, by 0.83%, testing $80 and sitting just below that level this morning. While the pull back in the USD would explain some, the weekly US DoE oil report confirmed not just another draw down in crude inventories, but one that was three times market expectations, down 5.3mb after a 4.3mb draw the previous week, the market expecting a 1.58mb draw. Near term and longer dated futures contracts rose.
Gold rose 0.8%, while the LME had a better day too, the LMEX composite index up 1.99%, copper up 2.36% and nickel up 3.19%. Bulk prices were also mostly higher.
Economics, the Fed, and Bonds
The US August headline and core PPI fell 0.1%, missing market expectations of a 0.2% increase, the miss from lower trade services prices from lower wholesale and retailer margins, those margins accounting for nearly a quarter of the core. Whether this is transient or not, it will have made analysts wonder about this afternoon’s CPI and plays to the still non-threatening threads in the Fed’s Beige Book released late yesterday.
It reported a somewhat mixed growth report across the 12 Fed districts, that labour shortages were widely reported, but that wage growth was mostly characterised as modest or moderate, though a number of Districts cited steep wage hikes for construction workers. Some Districts indicated that businesses were increasingly using benefits such as vacation time, flexible schedules, and bonuses to attract and retain workers, as well as putting more resources into training.
Fed Presidents Bullard and Governor Brainard were both speaking, Bullard again urging caution on further raising rates, but Brainard saying the Fed may have to raise rates to above 3% , seemingly on growth optimism. It was a hawkish comment from her. She did note that leverage lending was rising but that there was little sign of an inflation breakout.
In the end, the US Treasury curve flattened, the front end yields supported by Brainard’s comments but the PPI proving some support to the longer end on the day as did the solid Treasury auction, and despite the kick up in oil.
This morning on the Economic Front we already had the release of German CPI which came in as expected with a +0.1% print. At 12.00 pm we have the Bank of England Rate Announcement. This is followed at 12.45 pm by the ECB Rate Announcement and Drai press conference at 1.30 pm. The ECB will confirm the QE tapering that will start next month. They will also unveil refreshed forecasts, wire reports they will leave their inflation forecasts unchanged but shave the growth outlook on lower external demand (trade impact). Also at 1.30 pm we have the latest US Weekly Jobless Claims and CPI.
Finally Fed Member Bostic is speaking at 6.15 pm on the Economy and Monetary Policy.
September S&P 500
My S&P plan again worked well with the market trading lower to my 2881 buy level before rallying to a subsequent high at 2895. Again as the NASDAQ also hit my buy range at the same time I used this rally to exit my long position at my revised 2884 T/P level. After the S&P made an intra-day high at 2895 I emailed my Platinum Members to re-buy the S&P on any dip lower to 2883 with a 2888 T/P level. Subsequently both trades were filled and I am now flat. The 50 Day Moving Average has now moved higher to 2838 and this is now the key support level to watch. As long as this level holds I will continue to be a buyer on dips. Today my buy level will be from 2867/2875 with a wider 2859 stop. I still do not want to be short the market at this time, especially after Tuesday’s Upside Key Day Reversal.
EUR/USD
I expect volatility to increase following the ECB announcement and Drai press conference. I am still flat the Euro and I will stay that way until the conclusion of the Dragi press conference. He has tended to talk the Euro down all year at these events. Today my only interest in buying the Euro is on a dip lower to 1.1460/1.1505 with a 1.1425 stop. Meanwhile I will also raise my sell level to 1.1750/1.1790 with a 1.1830 stop. I am sorry to be nervous but some of these press conferences have led to a 250/300 point movement in the Euro so far this year.
September Dollar Index
I am still flat the Dollar and today I am going to stay flat especially with the ECB Meeting and US CPI. I do not see an opportunity in the market at this time and I would prefer to see what these two key releases are before making a new recommendation tomorrow.
September DAX
The DAX continues to hold above the key 11750/11850 support level in what is still a severely oversold market. Despite the positive price action over the past 48 hours I am reluctant to chase the DAX higher and today I will leave my buy level unchanged from 11800/11870 with the same 11735 wider stop. Remember a break and close below 11725 is a strong sell signal.
September FTSE
Frustratingly the FTSE just missed my 7245 buy level with a 7250 low print before having a strong rally and I am still flat. The FTSE is severely oversold after last week’s aggressive sell-off. Today I will now raise my buy level to 7230/7270 with a 7195 stop.
Dow Rolling Contract
The Dow had a wild trading session yesterday with the market reversing off earlier lows on the US/China proposed talks with the Dow spiking to an intra-day high of 26148. Subsequently the Dow fell nearly 200 points off this high before rallying into the close. I am still flat as the Dow continues to hold above the ley 25650/25820 support level. Today I will be a small buyer on any dip to this area with a 25575 stop. I still do not want to be short the Dow at this time.
September NASDAQ
Following Tuesday’s Upside Key Day Reversal the NASDAQ initially got hit hard shortly after the US Markets opened with the NASDAQ trading the whole of my buy range for an average long position at 7465 with a 7423 low print. Subsequently the NASDAQ rallied back to the 7490 area and I used this rally to exit my long position at my revised 7475 T/P level and I am now flat. Today I will again look to buy the market on any dip lower to 7400/7440 with a 7365 stop. The 7380 is a key pivot point as a break and close below here is a short-term sell signal.
December BUND
The Bund again missed my buy level before rallying and I am still flat. Ahead of the ECB and Dragi press conference I will leave my buy level unchanged from 158.70/159.10 with a 158.35 lower stop.
Gold Rolling Contract
I am still flat Gold and today I will now raise my buy level slightly to 1180/1188 with a 1173 stop.
Silver Rolling Contract
Having had this long 14.15 long position for a number of days I used yesterday afternoon’s rally to exit this position at my revised 14.25 T/P level and I am now flat. Silver continues to underperform Gold with the market making a low on Tuesday at 13.91 which is just above the December 15, 2015 low of 13.62. The low for Gold on that day was 1042 which shows the extent of the divergence between the two metals. Managed Funds continue to hold a record net short position. As a result I firmly believe that it is only a matter of time before we see a large rally in Silver, especially if we can hold the key 13.60/13.90 support area. Today I will be a buyer on any dip lower to 13.70.14.10 with a 13.35 tight stop.
Recent Comments