Yesterday’s trading session was all about the July Fed Minutes and while often these summary notes provide a range of all the different views within the FOMC, taken together the message appears to be that as much as a September hike is a possibility, the Fed is unlikely to move until there is a consensus on the outlook for growth, hiring and inflation. While concerns from abroad have receded and the pickup in US job gains have helped eased two major uncertainties about the outlook, there are still some concerns about the growth outlook and inflation. As such there was a general consensus that it is prudent to wait for more data before making a decision to hike again.
To mark my 1150th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2500 for my Platinum Service which includes 1/4 updated emails throughout the trading day. This offer is open to new and existing members and if anyone is interested please email me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it made 80 points yesterday and is now ahead by 731 points for August having made 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 2100 points.
The Fed meets again on September 20 for two days and since its last meeting economic data has been mixed. Jobs data in July was strong, but July Retail Sales disappointed suggesting consumption may not be a strong contributor to growth in Q3 and inflation for the month was also soft. Recent data would therefore suggest a hike is not imminent.
Prior to the release of the Minutes most markets were treading water, the USD traded with a positive tone, core global yields were mostly sideway, though equities were a bit heavy. In Europe, the Eurostoxx 600 and the FTSE 100 indices drifted lower for most of the session and ended the day -0.83% and -0.5% respectively. Following the release of the Fed Minutes, US equities recovered to close the day marginally in positive territory, UST yields have drifted a little bit lower and the USD is weaker across the board.
Looking at currencies in more detail, the DKK and EUR sit at the top of the leader board up 0.1 and 0.08% against the USD and GBP is unchanged supported by some resilience in the labour market. Overnight the ILO UK measure of unemployment was unchanged at 4.9%, its lowest level since 2004/05 and data showed a fall in Jobless Claims, rather than a rise the market expected. Ahead of the release of the Fed minutes, the NZD and AUD were under pressure and while both have enjoyed an uplift post the Minutes, the pickup was not enough to lift them back into positive territory against the USD. Both are at the bottom of the leader board down 0.40% and 0.53% respectively.
Looking at other news, the Fed’s Bullard was on the wires where he reiterated his view of one more rate hike for this cycle leaving the Fed Funds rate at 0.625% through to the end of 2018.
This morning on the economic front we have Euro-Zone Current Account at 9.00 am and this is followed at 9.30 am by UK Retail Sales. At 10.00 am we have Euro-Zone CPI, Followed at 12.30 pm by the Minutes of the last ECB Meeting. At 1.30 pm we have US Weekly Jobless Claims and the Philly Fed Business Outlook. Finally at 3.00 pm we have the Leading Index.
Fed speakers today include Dudley in New York at 3.00 pm while the San Francisco President Williams will speak at a conference in Anchorage just before the New York close at 9.00 pm.
September S&P 500
My S&P plan worked very well yesterday with the market trading lower to my average buy level at 2169.50 before having a nice rally. As I wanted to be flat ahead of the FOMC Minutes I emailed my Platinum Members to cut this position at 2174 and I am now flat. The S&P had a nice reversal off its afternoon low at 2165.50 before rallying strongly on the FOMC Minutes into the close. As I have consistently said all year the Fed to me have lost all credibility and that Chair Yellen is afraid to hike rates in this environment. As a result it makes it very difficult to be short the stock market. Today I will again look to buy the S&P on any dip lower to 2171/2177 with a 2165 stop. Given the extent of yesterday’s reversal I do not want to be short the S&P at this time as to me it is only a matter of time before we break the key 2200 resistance level.
EUR/USD
Unfortunately the Euro just missed my 1.1235 buy level with a 1.1241 low print before again trading higher over the key 1.1300 next resistance level. As I mentioned above the Fed are not in the rate hiking mood despite what Dudley said on Tuesday. Today I will now raise my buy level to 1.1225/1.1260 with a 1.1185 stop. Naturally I do not want to be short the Euro at this time.
September Dollar Index
I am still flat the Dollar and today I will now lower my sell level to 95.50/95.90 with a 96.25 stop. Remember a break and close below the early May low at 92.00 will see an acceleration lower in the US Dollar.
September DAX
Following the release of the German ZEW Survey yesterday morning the DAX got slammed with the market hitting my average buy level at 10560. As I wanted to be flat ahead of the release of the FOMC Minutes while at the same time continuing with my theme of banking points when available I emailed my Platinum Members to cut this position too early at 10575 and I am now flat. Today I will again look to buy the DAX on any dip lower to 10480/10540 with a 10435 tight stop. Despite the negative price action I still do not want to be short the DAX at this time.
September FTSE
I am glad I lowered my buy level in the FTSE yesterday as the market finally hit my 6845 buy level before having a nice rally which enabled me to cover this position again too early at 6865 and I am still flat. Today I will again look to buy the market on any dip lower to 6830/6860 with a 6595 tight stop. Despite the FTSE been overbought I do not want to be short the market at this time as in my opinion it is only a matter of time before we test the 2000 high at 7000.
Dow Rolling Contract
My Dow plan worked well with the market hitting my 18480 buy level with an 18468 low print before having a nice reversal and 120 point rally into the close. Unfortunately as I was already long the DAX, S&P and the FTSE I emailed my Platinum Members to reduce my buy level for the Dow as I already had so much risk on board. If you did not do this then you made some nice points yesterday. I am still flat the Dow and given the reversal yesterday off the 18468 low which is now a key support for the bullish case, because if we can hold this support then the Dow can trade higher to its next resistance level at 18800/18860. For these reasons I will now look to buy the Dow on any dip lower to 18470/18530 with an 18425 tight stop. As long as we can hold yesterday’s low print I do not want to be short the Dow at this time.
September BUND
The Bund tested but failed to break the key 166.40/166.70 support level before rallying into the close and I am still flat. Today I will now raise my buy level to 166.50/166.85 with a 166.25 tight stop. I still do not want to be short the Bund at this time.
Gold Rolling Contract
I am still flat Gold which continues its narrow trading range that has prevailed over the past few weeks. Remember the 1310 is key support for the bullish case. As I am still long Silver I will leave my buy level unchanged at 1315/1323 with a 1307 tight stop.
Silver Rolling Contract
Silver continues to hold its key support at 19.20. As long as we can hold this level then in my opinion it is only a matter of time before we break higher. I am still long at 19.85 with the same 19.40 stop which was tested but not broken yesterday.
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