After being moribund for much of the past 24 hours, markets have displayed a somewhat stronger pulse in the hour or so following publication of the January FOMC meeting Minutes, with a weakening of both the US Dollar and US Indices before reversing these losses in the last hour of trading. Meanwhile US Treasury yields ended the day 1-2bps higher across the curve. Many participants observed that if uncertainty abated, the Committee would need to reassess the characterization of monetary policy as “patient” and might then use different statement language.” This can be read as implying that the Fed still retains a tightening bias of sorts, in which respect Fed Vice Chair Rich Clarida said post the Minutes ‘’ I do not think the Fed made a U-Turn’’ (In January).
To mark my 1800th 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 was flat again as none of my calls were hit and is still ahead by 568 points for February, having made 1671 points in January, 2803 points in December, 1541 points in November and 2094 points in October. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
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Earlier in the text, the Fed notes that softness in both core and headline inflation provides reason for a ‘’patient’’ approach, in order to assess the impact of past rate rises, etc.. It also notes that some downside risks to the outlook had recently increased even though the economy at the time of the meeting was fairly characterised as showing a ‘’strong labour market’’ and inflation ‘’near target’’. On the Fed’s balance sheet, the Minutes note that ‘’almost all’’ FOMC members wanted to halt the run-off later this year.
Currencies
The generalised positive US Dollar reaction to the Minutes means that two of the Day’s best performing currencies, Sterling and AUD have seen their gains reduced, AUD/USD to 0.7169 as I wrote from 0.7183 and GBP/USD to 1.3058 from a high of 1.3109.
Strength in the Pound followed news of further defections – from three Tory MPs as well as another Labour lawmaker – into their newly formed centrist parliamentary grouping, moves which on my read (not universally shared, I should add) are seen to further diminish the risk both of a March 29th ‘’hard Brexit’’ and a successful no-confidence motion being brought by Labour leader Jeremy Corbyn and hence early elections. Incidentally, an opinion poll published overnight puts the Tories on 38%, Labour of 26% and the ‘’Independence’’ group (i.e. this week’s ‘splitters’) at 14%.
UK PM May and EU chief negotiator Juncker have just been out saying that the two reconfirmed their commitment to avoiding a hard border on the island of Ireland and that their talks covered the role alternative arrangements could play in replacing the backstop in the future. Earlier in the session, reports were that whatever change in wording – or adjunct to the Withdrawal Agreement – is crafted, the EU wants Theresa May to go back and get it ratified before the whole of the EU would be asked to sign off on it. Still no mean feat. If May’s deal does not get through Parliament soon, then the odds continue to favour her losing control of the process. Parliament is expected to take over in a likely scheduled vote from 27 February.
Meanwhile the Euro closed at 1.1345 against the US Dollar having spiked to an intra-day high of 1.1373.
Equities
US Stock closed marginally higher as the market bumps up again the key December resistance levels with the S&P closing just 0.18% higher and the NASDAQ flat. Earlier the DAX built on recent gains closing up 0.92%. Materials are the standout S&P sector, +1.91%.
Commodities
Gold, copper and steel-related counters all showing strong gains (2.5-3.0%). In this respect copper prices are up 1.4%, steel rebar futures +1.7% iron ore futures and gold up just 50 cents but meaning it has held Monday’s $14 gains (when US stocks were closed, hence catch-up yesterday).
This morning on the Economic Front we have German CPI and Markit PMI at 7.00 am and 8.30 am respectively. This is followed by Euro-Zone Markit PMI at 9.00 am and UK Public Sector Net Borrowing Requirement at 9.30 am. At 1.30 pm we US Durable Goods Orders, Philly Fed and the Weekly Jobless Claims at 1.30 pm. Finally we have US Markit Composite PMI and Existing Home Sales at 2.45 pm and 3.00 pm respectively.
Speaking wise today we have the UK’s Haldane at 12.00 pm followed by the Fed’s Bostic at 12.50 pm.
March S&P 500
The Daily Sentiment Index of S&P traders has now registered back-to-back days of 88% bulls, which is the highest level of optimism since a series of spikes above 90% surrounding the January 2018 high. This is another reason why I believe the S&P will have difficulty in breaking the key 2795/2820 strong resistance area from the December 3, 2018 rebound high before the S&P fell nearly 500 Handles. I am still flat the S&P and today as I have just gone short the Dow at my new sell range as outlined earlier to my Platinum Members, I will now raise my sell level to 2805/2818 with a 2832 higher stop. I will also raise my buy level to 2758/2770 with a 2749 stop.
EUR/USD
I am still flat the Euro and today I will again raise my buy level slightly to 1.1240/1.1290 with a 1.1195 stop. I still do not want to be short the Euro at this time.
March Dollar Index
I am still flat the Dollar which continues to sell-off from last week’s high. Today I will again lower my sell level to 96.80/97.20 with a 97.55 stop.
March DAX
Despite the stronger Euro the DAX managed to rally nearly 1% yesterday. I am still flat and today I will now raise my sell level to 11550/11650 with a 11720 stop. I will also be a small buyer on any dip lower to 11120/11200 with a 11040 stop.
March FTSE
There is no stopping the FTSE as the market again rallied to new highs for the year. Today I will raise my buy level to 7090/7130 with a 7055 stop.
Dow Rolling Contract
The Dow just missed my 26010 initial sell level before falling over 120 points on the release of the FOMC Minutes before regaining these losses into the New York close. Subsequently I emailed my Platinum Members to raise their sell level in the Dow which has just been triggered at a price of 26080. I will only add to this position on any further move higher to 26220 with a 26320.I still do not want to be long the Dow at this time. I will now raise my T/P level on this position to 26015.
March NASDAQ
The NASDAQ continues to underperform the other main US Indices. I am still flat and today I will leave my 6930/6980 buy level unchanged with the same 6885 stop.
March BUND
No Change as I am still a seller on any rally higher to 166.95/167.35 with a 167.75 stop.
Gold Rolling Contract
The DSI for Gold has now risen to 90% bulls. This is a worry for Gold bulls and today I will now look to sell the market on any further rally to 1355/1368 with a 1376 stop. I no longer want to be a buyer of Gold at this time.
Silver Rolling Contract
Silver has now risen over 17% off its early December low. I am still flat and today I will now lower my buy level slightly to 15.40/15.80 with a 15.05 stop.
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