The US Dollar and Treasury Yields sank after the Federal Reserve abandoned projections for a resumption in Interest Rates hikes this year. It also signaled a swift end to its balance-sheet contraction. The Fed’s stance was more cautious than most analysts had forecast, sending the 10 Year Treasury down to 2.53%. With a yet-more dovish Fed on the surface suggests support for equity markets, the Central Bank’s rapid about-face on monetary tightening left some observers concerned that policy makers see a darker outlook for the economy. The Fed said they will not raise rates this year and that there will only be one rate hike next year. Also weighing on equity trader sentiment was the latest tweet from President Trump on trade where he said that tariffs on Chinese goods will remain in place until the nation complies with a trade deal that has yet to be sealed. Meanwhile UK Prime Minister May said the UK will not leave the EU on March 29 and that she is not prepared to delay Brexit any further than June 29 while also saying that she does not want a second Referendum.
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@tradernoblecom for details
For anyone following my Platinum Service it made 151 points yesterday and is now ahead by 766 points for March, having made 1013 points in February, 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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Equities
After the FOMC Statement was released the initial reaction for US Indices was higher with the S&P trading to a high of 2843. However on reflection, no rate hikes in 2019 may not be good news for the economy/earnings. These gains were erased in the S&P which closed at 2824. The Dow was hit hard with Industrial stocks reacting negatively to Trump’s latest tweet to close 142 points lower or 0.55% at 25745 having reached a post FOMC high at 25929.
Bonds
The Bond markets liked the no rate scenario from the Fed with the 2 year and 10 year Treasuries closing 3 and 5 bps lower at 2.38% and 2.54% respectively. It is difficult for these yields to fall further given that the Fed Funds Rate is at 2.50%. In his press conference Fed Chair Powell said he expects the US economy to grow at a solid pace and was concerned about the slowdown of growth in Europe and China. He said that on balance Retail Sales shows slower pace along with business fixed investment. There is no doubt in my opinion that the last Rate Hike in December was a mistake.
Currencies
The aggressive change in the Fed’s stance on Interest Rates saw the US Dollar get hit for 1% with the EUR the main beneficiary of the weaker Dollar closing at 1.1425 in New York. The Euro has bottomed in my opinion and it will take a lot of bullish news for the Euro to break its recent March 7, Low at 1.1176. Sterling was the underperforming Currency closing lower at 1.3200 despite the Dollar weaker against all the other major G10 Countries.
Commodities
The weaker Dollar helped Gold and Silver to rally hard both closing over 1% higher.
This morning on the Economic Front we have UK Retail Sales at 9.30 am and this is followed at 12.00 pm by the latest Bank of England Rate decision. At 12.30 pm we have US Weekly Jobless Claims and the Philly Fed Manufacturing Survey. Finally at 3.00 pm we have Euro-Zone Consumer Confidence.
June S&P 500
It is a long time since both my 2818 buy and 2848 sell levels were hit yesterday as volatility increased dramatically. The VIX which closed at year to date lows just above 12 on Tuesday rose 15% to close at 13.91 last night. As I wanted to be flat ahead of the FOMC Statement I covered my 2818 long S&P position at 2823. Subsequently the S&P rallied to my 2848 sell level and as I had a large short position in the NASDAQ I covered my S&P position too early at 2845 and I am now flat. Hopefully you did better than me with your exit strategy yesterday. As you know one of the most important technical indicators that I use is the Daily Sentiment Index. When the markets were on their knees in late December the DSI was at just 4% bulls. This led to the incredible 520 Handle rally in the S&P over the past 12 weeks. Last Monday the DSI closed at 90% bulls so we have to be on alert for a significant move lower over the coming weeks. The S&P has strong support from 2795/2807 and today I will be a buyer on any dip to this area with a 2787 stop. Given the fact that the S&P has now sold off hard in the last hour of trading for two consecutive sessions I will now look to sell the market from 2835/2848 with a 2857 stop.
EUR/USD
It has taken a while but after the DSI reached just 10% bulls for the Euro at the 1.1176 low on March 7, we are finally seeing this key indicator kick in with the Euro closing at 1.1425 last night. I am still flat and today I will now raise my buy level to 1.1320/1.1360 with a 1.1285 stop. Meanwhile I will leave my 1.1530/1.1570 sell level unchanged with the same 1.1615 stop.
June Dollar Index
The Dollar got hit hard yesterday with the market just missing my 96.50 sell level before selling off and I am still flat. The Dollar has strong support from 94.60/95.10 and I will be a buyer on any dip to this area with a 94.15 stop.
June DAX
The DAX was the first market to hit my buy range yesterday at 11650. This move lower was helped by the awful results from BMW. As a result I emailed my Platinum Members to exit any long position at 11660 or higher and I am now flat. Surprisingly the DAX is holding in despite the strength of the Euro. The DAX has strong resistance from 11710/11780 and I will be a seller on any rally to this area with a 11845 stop. I no longer want to be a buyer of the market at this time.
June FTSE
The renewed weakness in Sterling helped the FTSE to close higher yesterday and I am still flat. I am not going to chase this market higher and I will leave my 7115/7160 buy level unchanged with the same 7085 stop. The FTSE has resistance from 7295/7345 and I will be a small seller on any rally to this area with a 7375 stop.
Dow Rolling Contract
My Dow plan worked well with the market trading lower to my initial 25750 buy level before rallying 100 points. As I wanted to bank some points while at the same time be flat ahead of the FOMC I covered this long position at my revised 25783 T/P level and I am now flat. The Dow closed weak yesterday and is opening lower this morning. The Dow has strong resistance from 25375/25535 and I will be a buyer on any dip to this area with a 25255 stop. Despite the weaker close I still do not want to be short the Dow at this time.
June NASDAQ
My NASDAQ plan worked well with the market trading the whole of my sell range yesterday for an average short position at 7433. Thankfully the market had a late sell-off to hit my 7405 revised T/P level and I am now flat. Yesterday the NASDAQ made a new year-to-date high while both the S&P and Dow did not thus confirming the ongoing bearish divergence between the main US Indices. Today I will again look to sell the market on any further rally to 7450/7490 with a 7535 stop.
June BUND
With so many positions hitting at the same time yesterday, the Bund which hit my 164.48 sell level before having a small sell-off into the close which hopefully gave you a chance to exit before the market rallied this morning. I did not want to waste my margin on the Bund and I emailed my Platinum Members to exit any short position at a breakeven of better and I am still flat. This morning the Bund is trading at 164.75 with the yield close to going negative which just incredible 10 years into an alleged economic recovery. The awful results from BMW yesterday imply a massive slowdown in the German economy. The Bund has resistance from 165.20/165.60 and I will be a seller on any rally to this area with a 166.05 stop.
Gold Rolling Contract
The weakening Dollar helped Gold to rally $20 yesterday and I am still flat. I do not trust this rally and I am not going to chase the Gold price higher from here. For now I will stay flat until I can get a better handle on what is going on.
Silver Rolling Contract
I am still flat and today I will now raise my buy level to 15.00/15.40 with a 14.65 stop and a 15.58 T/P level if executed.
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