Last Evening’s release of the FOMC April Minutes which got the attention of the newswires which saw a large reaction in Interest Rates, Currencies, Equities and Gold. Recall that the outcome of that meeting was relatively uncontentious. The Fed seemingly relaxed, noting that while economic activity appeared to have slowed, the labour market continued to improve further, the Committee leaving the Fed Funds rate steady and expecting the outlook would ‘warrant only gradual increases in the Fed Funds rate’.
To mark my 1075th 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 both 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 257 points yesterday and is now ahead by 951 points for May having made 2175 points in April. The previous two months saw the same gain of 2265 points in both February and March after a record 3365 point gain in January. Since I started this service last June it has made over 24,500 points.
Whether the Fed’s intentions were lost in translation to the Meeting Statement or clarified further as the Minutes were drafted, the phrase the market’s taken to heart has been comments in the Minutes that while Interest Rates were left steady in April they should be data dependent and leave ‘open the possibility of an increase in the Federal Funds Rate at the June FOMC meeting’, ‘a few participants’ judging it to appropriate to hike in April. However the only member who dissented was George.
The market has taken those comments to heart with a rise in the US Dollar, a jump in Treasury Yields along the curve, the edge taken off equities and a dip in the price of Gold. All pretty much according to the market reaction playbook. Even though the market understands that the upcoming June 14-15 FOMC Meeting comes a week before the June 23 ‘Brexit’ poll, the Fed is still seriously considering enacting some further ‘gradual’ removal of monetary accommodation.
The Bloomberg spot DXY Index jumped around 0.5% as the Minutes headlines hit the screens, with accompanying spill-over to other FX majors. The EUR/USD which was trading at 1.1290 ahead of the Minutes sits at 1.1220 this morning as the market closed below the key 1.1250 support level. US 10 Year Treasuries jumped a heft 8bps to sit at 1.85% while the July Fed Funds Rate rose 5bps with the market now pricing in a 50/50 chance of a hike at the July 27 Meeting after a 30% chance by June.
Among the non- US Dollar majors, Sterling stood out as the market squeezed following a London Evening Standard Poll showing that the ‘remain’ vote had climbed to 49%. The other noticeable move was the 1.5% fall in Gold which closed at $1258.
This morning on the economic front we have the Euro-Zone at 9.00 am and this is followed at 9.30 am by UK Retail Sales. At 12.30 pm we have the ECB Minutes of the April ECB Meeting and this will definitely garnish a market reaction. The US will release its Weekly Jobless Claims, The Philly Fed Outlook and the Chicago Fed National Activity Index all at 1.30 pm. Finally we have the Bloomberg Economic Expectations and the Leading Index at 2.45 pm and 3.00 pm respectively.
June S&P 500
After a couple of tough days in the S&P yesterday’s plan worked really well as both my sell level and buy levels got triggered in a volatile trading session. First the S&P hit my 2051 sell level before having a nice sell-off which enabled me to cover this position at my 2045 T/P level as outlined earlier to my Platinum Members. After the FOMC Minutes were released the S&P traded lower to my 2032 buy level before having a nice rally to 2044 which enabled me to cover this position at my 2039 T/P level and I am now flat. This morning the S&P is again testing the 2030 major support level which is just in front of the 2026.50 April low print and the big question is are we going to rally of this level or break and accelerate lower. The fact that we have tested this level so many times means that this support is waning and today my only interest in buying the market is on a further dip lower to 2021/2027 with a 2015 stop especially as if I am hit at this level ahead of the US open as we will then have a large ‘Open Gap’ to the downside. If I am taken long and subsequently stopped out or I manage to T/P on this long position I will still be a more aggressive buyer in front of 2005 with a 1995 stop. My only interest in selling the S&P today is on a rally back to 2053/2058 with a 2063 stop.
EUR/USD
I did not like the price action in the Euro yesterday and for that reason I emailed all my Platinum Members to exit their long 1.1270 position at 1.1282 as I wanted to be flat ahead of the FOMC Minutes. It does not suit my view that the Euro is trading at 1.12 but I have to respect the price action and today I will now look to sell the Euro on any rally higher to 1.1260/1.1290 with a 1.1320 tight stop. My only interest in buying the Euro is on a dip lower to 1.1095/1.1125 with a 1.1060 stop especially with the ECB Minutes to be released later this morning.
June Dollar Index
I am glad that I moved my sell level higher in the Dollar which got triggered overnight at 95.30. I am still short and I will now lower my stop on this position to 95.70.
June DAX
My DAX plan worked very well for those who went short with the market trading higher to my 9940/9990 sell range before getting slammed to trade just above 9800 this morning. As I had so many open positions yesterday where nearly all my trades got executed I unfortunately I emailed all my Platinum Members that I was cancelling my sell order in the DAX and I am still flat. Hopefully who ever went short the DAX made some nice points. As mentioned above the DAX is again testing the key 9800 major support level with the DAX not falling further so far on the back of the weaker Euro. Today I will look to buy the market on any further dip lower to 9690/9740 with a 9645 stop. I do not want to be short the DAX at this time.
June FTSE
In the last few minutes the FTSE finally hit my 6070 buy level. While the FTSE looks bid in comparison to the other markets I will use any rally higher to 6090 to exit this position which has just happened. Subsequently if the FTSE falls after I have covered my position I will then look to buy the market from 6020/6050 with a 5995 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
My Dow plan also worked well as shortly after the FOMC Minutes were released the Dow traded lower to my 17430 buy level before having a nice rally into the close which enabled me to cover this position at my 17490 T/P level and I am now flat. This morning the Dow is approaching the bottom of its Bollinger Band while the McClellan Oscillator closed weak at -155 which means if the Dow can fall much further from here it should lead to a short-term buying opportunity. For these reasons I will be a buyer on any dip lower to 17330/17390 with a 17285 stop. I do not want to be short the Dow at this time.
June BUND
My Bund plan finally worked out this morning with the BUND opening in the middle of my buy range at 163.15. I went long at this level and after a nice rally to 163.46 I was able to cover this position at my revised 163.40 T/P level and I am now flat. Today I will again look to buy the market on any dip lower to 162.70/163.00 with a 162.45 tight stop.
Gold Rolling Contract
Thankfully I lowered my Gold buy level as my fears that Gold is overdue a decent correction is starting to happen. After Gold hit my 1256 buy level I emailed my Platinum Members to exit this position at 1259 as we are still long Silver and had an excellent trading day which I wanted to protect. After I sent the email Gold traded higher to 1261 before trading lower overnight. Today I will again try to buy Gold on any dip lower to 1242/1249 with a 1235 stop.
Silver Rolling Contract
No change as I am still long Silver at 17.00. Today I will lower my stop slightly to 16.50 on this position.
Recent Comments