All eyes will be on the UK this morning as voting gets underway for the EU Referendum where despite the narrowing in the last polls before the vote I still expect Britain to stay in the EU when we get the first official exit poll shortly after 10.00 pm this evening. Unsurprisingly there is very little to report from trading yesterday as the markets basically went on hold ahead of today’s vote. The second Testimony by Fed Chair Janet Yellen to the House Financial Services Panel was by all accounts a far more feisty affair than her Testimony to the Senate on Tuesday.
To mark my 1100th 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 30 points yesterday and is now ahead by 1150 points for June. The previous three months saw gains of 1532, 2175 and 2265 points respectively. Since I started this Platinum Service over 12 months ago it has averaged a monthly gain of 2200 points.
Chairman of the House Financial services Committee Jeb Hensarling criticised the Fed’s payment of interest on excess reserves to banks in excess of the Fed Funds Rate, for the risk of losses being incurred on the Fed’s balance sheet, for regulation creating economic headwinds, as well as a lack of independence from the Obama administration noting a revolving door between the White House, Treasury and Fed. Expect to hear much more on this theme from a certain Mr Trump as the US presidential election campaign gets underway proper. On the economy, Mrs Yellen did not deviate from Tuesday’s message of cautious optimism with respect to a pick-up in growth.
US equities closed in NY showing minor losses, with the Dow finishing 0.3% lower. However the VIX has jumped by 2.7 points or some 15% to 21.2, symptomatic of a bit more last-minute insurance being taken out against the risk of ‘Brexit’. Treasury yields have given back a little of their earlier gains with 10s back below 1.7% (1.687%) though European yields close a touch higher.
In currencies, a little surprising given the move higher in the VIX to see the AUD at the top of the G10 leader board and sitting just back on 0.75 handle, closely followed by the NZD which posted another YTD high (0.7188). The CAD is the only currency weaker against the US dollar, and where lower oil prices are presumably to blame on the back of the much weaker EIA Oil Inventories. Hard commodity prices are mostly higher and in keeping with a softer US dollar.
Markets are opening higher again this morning helped by another 1.0% rise in the Nikkei. On the economic front we have German and Euro-Zone Services/Composite PMI at 8.30 am and 9.00 am respectively. This is followed at 1.30 pm by US Weekly Jobless Claims and the Chicago Fed National Activity Index. At 2.45 pm we have the US Markit Manufacturing PMI. Finally we have New Home Sales and the leading Index at 3.00 pm followed by the Kansas City Fed Manufacturing Activity Index at 4.00 pm.
Heading into polling day, latest referendum poll of polls continue to suggest the two sides running almost neck and neck. I would note though with undecided’s still in excess of 10%, the final result could well end up being much more decisive than this. In the 2014 Scottish referendum, most of the undecideds turned out in favour of the status quo. Even though it looks as though much of the risk of Brexit has been priced out markets (e.g. the British Pound is now stronger than it was the day before the referendum date was announced) there remains plenty of scope for volatility on either outcome, albeit (very) much more on a Leave than Remain outcome.
September S&P 500
I am still flat the S&P which continues to trade higher without so far filling the 2059/2071.25 ‘Open Gap’ from last Friday’s Chicago close and Monday’s day session low print. I am still flat with as mentioned above all risk in today’s Referendum now shifting to the ‘leave’ side. If the market tanks later I will still look to buy the S&P on any dip lower to 2059/2065 with a 2053 stop. My only interest in selling the market is on a rally higher to 2123/2129 with a 2135 wider stop. Given the expected volatility later I have to use wider stops as this is not a day for trading until we get the exit poll result shortly after 10.00 pm.
EUR/USD
It is very frustrating to see the Euro trade higher without me having any long position on board and I am still flat. Today I will raise my buy level slightly to 1.1200/1.1240 with a 1.1155 stop. I still do not want to be short the Euro at this time.
September Dollar Index
My short 94.20 Dollar position worked out with the Dollar trading at 93.60 this morning which enabled me to cover this position at my 93.90 T/P level and I am now flat. Today I will again look to sell the Dollar on any rally higher to 94.25/94.60 with a 94.95 stop. Remember a break and close below the early May low at 91.80 will be very bearish and could well hasten the Dollar sell-off that I have been expecting all year.
September DAX
The DAX continues this huge rally off the 9400 low print from last Thursday. I am still flat and today I will now raise my sell level slightly to 10230/10290 with a 10350 stop. Despite the positive price action in the DAX I do not want to be long the market at this time.
September FTSE
Unfortunately the FTSE just missed my buy level shortly after I posted yesterday morning with the market continuing to rally ahead of today’s long awaited Referendum. I am still flat the FTSE and even though I expect to see huge volatility in both Sterling and the FTSE after we get the Exit poll at 10.00 pm I am going to stay flat and let the market settle before making my next trade. If we see some extreme moves later I will email my Platinum Members with an update, otherwise I will stay flat as I want to hang on to the hard earned points made so far this month.
Dow Rolling Contract
No change as I am still a buyer in the Dow on any dip lower to 17690/17750 with a 17630 stop. Given the continued weakness in the Dollar I do not want to be short the market at this time.
September BUND
No change as I am still a buyer on any dip lower to 163.50/163.80 with a 163.25 tight stop. I will now raise my sell level in the market to 164.90/165.30 with a 165.75 stop which is just above the all-time contract high made last week.
Gold Rolling Contract
No change as I am still a buyer on any dip lower to 1248/1255 with a 1242 stop as I expect Gold to at least initially rally on any test of the key 1250 major support level.
Silver Rolling Contract
No change as I am still long at 17.45 from last week and I will still use any rally to 17.50 to exit this position ahead of this evening. If I manage to exit Silver, I will use any subsequent dip lower to 16.70/17.10 to buy the market again with a 16.30 stop.
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