Yesterday saw wild fluctuations across all asset classes with markets wracked by uncertainty as to whether the UK Cabinet would endorse the 500-page Brexit Withdrawal Agreement stitched together the day before and whether UK Prime Minister Theresa May would imminently face a leadership channel. The uncertainty factor had earlier weighed on broader market risk sentiment; hence US stocks and bond yields have pulled back up somewhat on news of Cabinet agreement to the proposed deal. The latter still leaves parliamentary approval in considerable doubt. I still can’t say with any confidence whether this deal, no deal, or indeed a second referendum, is now the most probable outcome to this ongoing saga.
To mark my 1700th 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 165 points yesterday and is now ahead by 769 points for November, having made 2094 points in October,1276 points in September, 599 points in August, 1074 points in July, 994 points in June, 1927 points in May, 1657 points in April, 1760 points in March and 2256 points in February. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
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Currencies
Sterling lost a quick 1.5 cents when it became evident the UK Cabinet meeting was continuing beyond its expected time and with that a presumption that a sign-off on the Brexit Withdrawal Agreement was looking unlikely. All of those losses have since been recovered ‘’ and then some’’ after PM Theresa May (who looked to be facing an imminent leadership challenge) confirmed that the Cabinet has now agreed to support the Agreement. GBP/USD has been as low as 1.2880 and as high as 1.3060.
Earlier in the European session, EUR/USD was under mild downward pressure after German Q3 GDP printed -0.2% against -0.1% expected, albeit Euro-Zone preliminary GDP a few hours later came in at +0.2% as expected.
German economic weakness is seen to reflect a combination of auto sector re-tooling related to new EU emission standards but also some hit from trade tensions and in particular weaker Chinese demand for German exports. The former we can be confident will prove temporary, the latter we can’t yet be sure about and which is prompting speculation that the start of ECB interest rate policy normalisation could be shunted into 2020 from ‘’after the summer of 2019’’ as currently postulated by the ECB.
This debate will intensify in front of the December 13th last ECB meeting of the year and is a crucial factor for the fate of all things EUR (as well as Euro-Zone yields and with that US and global yields) either side of year-end.
Currency moves elsewhere have been relatively mild. The Swedish Krone slumped after CPI printed 1/10% below expectations casting doubt on a first Riksbank tightening as soon as the December 20th meeting.
The JPY is back displaying some (mild) safe-haven characteristics while the Australian Dollar (currently 0.7280) has been largely on the sidelines after failing to get fresh steer from yesterday ‘’as expected’’ Q3 wages data.
Equities
Concerns as to whether global growth is faltering are being discussed more openly, doubtless sparked in part by the negative Japanese and German Q3 GDP prints even if retooling and weather were doubtless beyond some of the reported weakness. Financials had been leading US stock indices lower – consistent with the notion of potentially slower growth and flatter yield curves as result. The main board US Indices were all down a little under 1% prior to the news of UK cabinet endorsement of the Withdrawal Agreement, but losses were since been pared by more than half into the New York close.
Bonds
US 10 year bonds fell to as low as 3.09% from an intra-day high of just above 3.16% amid the generally risk-averse tone and aforementioned growth concerns and the earlier slight easing in benchmark EZ yields. Gilt yields also fell after headline UK CPI came in just on the low side of expectations (0.1% against 0.2% expected) albeit core CPI at 1.9% was unchanged as expected. Treasuries have since pulled back up a couple of basis points (news of the UK Cabinet agreement to the Brexit Withdrawal agreement has helped here). There was no major impact from the US October CPI release, where headline and core printed as expected at 0.3% and 0.2% respectively. Expected rebounds in rents and used car prices were largely responsible for the gains in core CPI.
Commodities
Oil has enjoyed a very mild rebound (WTI and Brent closing higher by 0.6-0.7%) on new that OPEC and its partners are now contemplating a 1.3 mn. barrels per day production cut. Most other commodities are higher though iron ore and metallurgical coal are little change and steaming coal off 2%.
Economic news
GE: GDP (q/q%), Q3: -0.2 vs. -0.1 exp.
UK: CPI core (y/y%), Oct: 1.9 vs. 1.9 exp.
EC: Industrial production (m/m%), Sep: -0.3 vs. -0.4 exp.
EC: GDP (q/q%), Q3: 0.2 vs. 0.2 exp.
US: CPI ex food and energy (y/y%), Oct: 2.1 vs. 2.2 exp.
This morning on the Economic Front we have UK Retail Sales at 9.30 am and Euro-Zone Trade Balance at 10.00 am. This is followed at 1.30 pm by US Weekly Jobless Claims, Retail Sales and the Philly Fed Business Outlook. Finally the Fed’s Quarles and Kahkari are speaking later today at 3.00 pm and 8.00 pm respectively.
December S&P 500
My S&P plan worked well with the S&P trading lower to my 2705 buy level before rallying to my 2713 T/P level and I am now flat. No matter where you bought the S&P in my trading range yesterday would have worked well given in the two-way volatility. The S&P is trading in a neutral range between 2680 and 2730 and it will take a break and close of one of these levels to set up the next major move. Next week is seasonally one of the strongest weeks of the year with the Thanksgiving Holiday next Thursday. Another reason why I am so reluctant to go short is the fact that despite the aggressive sell-off in stocks this week the McClellan Oscillator is still in positive territory. Today I will be a small buyer on any dip lower to 2682/2695 with a 2674 stop. I still do not want to be short the market at this time.
EUR/USD
With sentiment at such an extreme level towards the Euro it is possible that Monday’s 1.1215 low print may well mark a turn in the Euro over the coming weeks. I certainly would not be pressing the downside in the Euro unless we broke and closed below 1.11. Today I will now raise my buy level to 1.1250/1.1290 with a 1.1210 stop. The DSI closed at 5% Euro bulls on Monday and 6% on Tuesday so there is no doubt that based on these readings a low is either in or very close for the Euro.
December Dollar Index
With the Daily Sentiment Index at 90/93% bulls over the past week there is also a fair chance that we have now seen at least a temporary top for the US Dollar. It is only a matter of time before we get a tweet from President Trump complaining about the strong Dollar as no country wants this scenario of having a strong currency (apart from Germany). Today I will now lower my sell level to 97.20/97.60 with a 98.05 stop.
December DAX
The DAX is holding in well despite the aggressive sell-off witnessed in the US Markets this week. I am still flat and today I will now raise my buy level to 11250/11320 with a 11185 stop.
December FTSE
Unfortunately the FTSE just missed my buy level before rallying on the Cabinet agreement and I am still flat. Today I will now raise my buy level to 6945/6990 with a 6915 tight stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
My Dow plan worked well with the market trading lower to my 25120 buy level before rallying to my 25205 T/P level and I am now flat. The Dow has really strong support from 24250/24550 and we may see a test of this support over the coming days. However as we enter the seasonally strong period for the Dow I am reluctant to chase this market lower. Today I will be a buyer on any dip lower to 24760/24900 with a 24685 stop. If I am taken long and subsequently stopped out of this position I will be an aggressive buyer from 24300/24580 with a 24180 wider stop. I still do not want to be short the Dow at this time.
December NASDAQ
The NASDAQ just missed my 6960 sell level with a 6929 high print and I am still flat. Today I will leave my buy level unchanged from 6650/6710 with a 6610 stop. I will now lower my sell level slightly to 6925/6980 with a lower 7035 stop.
December BUND
The boring price action for the Bund continues and I am still flat. My only interest in selling this market is still on a rally higher to 160.80/161.30 with the same 161.70 stop.
Gold Rolling Contract
Having traded heavy for most of yesterday suddenly late in the afternoon Gold spiked higher. This move higher saw Gold hit my exit level on my 1209 long position for a breakeven and I am now flat. With the DSI closing on Wednesday at just 7% bulls which is just above the 6% August low on the day that Gold made a low of 1160 that has held for the past three months, there is a fair chance that we may have seen the low in Gold this week at 1195. Today I will now look to buy the market again on any dip lower to 1193/1203 with a 1186 stop.
Silver Rolling Contract
Silver continues to struggle with the market making a new low for the year at 13.87 yesterday before having a small rally. I am still long at 14.20 and I will now raise my T/P level on this position to 14.35 with a now higher 13.75 stop. If any of the above levels are hit I will be back with a new update for my Platinum Members.
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