The sale of big jet planes was responsible for the 4.8% jump in US October Durable Goods Orders reported yesterday and which together with a jump in the final reading of the University of Michigan’s November Consumer Sentiment Index is responsible for the latest uptick in US Bond Yields and refresh to the US Dollar uptrend following an early-week consolidation phase. Looking though the Boeing-related surge in headline Durable Goods Orders, encouragement was drawn from the better than expected ex-transport number of +1.0% against 0.2% expected and with a small upwards revision to September also reported.
To mark my 1200th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2750 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 can you please contact me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it lost 90 points yesterday on an incredible day in which 8 of my 9 calls got hit within a 90 minute period. My Platinum Service is now ahead by 1441 points in November having made 1582 points in October. The previous four months saw gains of 1142, 1782, 1682 and 2550 points respectively. Since I started this Platinum Service in June 2015 it has averaged a monthly gain of over 1900 points.
As for the Consumer Sentiment data, the significance is that the final readings of 93.8 will have been based on survey responses received after news of Donald Trumps’ election victory. So being up on the 91.6 preliminary reading, it signifies either that U.S. consumers collectively view Trump’s election as good news for them, or perhaps it just means that the removal of uncertainty about the election outcome has seen confidence pick-up. Either way it looks to be good news for personal consumption in the rest of Q4 and into early 2017.
FOMC Minutes from the November 1-2 meeting have also just been released but at first glance contain nothing that should surprise anyone. Indeed, they have left near-certain expectations for a December 14 rate rise firmly intact. In fact, the implied probability of December move has risen to 104% (the literal meaning of which is that market now ascribe a 4% change to the FOMC raising rates by 50bps rather not 25bps next month. That’s not going to happen).
Other U.S data saw New Home Sales disappoint expectations at -1.9%, the Markit US manufacturing PMI lift slightly to 53.9 from 53.4 and Weekly jJbless Claims rose to 251k from the exceptionally low 233k previously (much as expected).
In Europe, ‘Flash’ Eurozone PMI data came in a bit stronger than expected (54.1 for the Composite reading up from 53.3) while the UK Autumn Statement revealed a much bigger than expected jump in expected borrowing needs over the next 5 years of £122bn, £58bn of which are ‘Brexit’ related. So much for that £350mn extra per week that UKIP claimed could be funneled into the NHS. UK gilt yields have jumped on this news. The British pound is as touch firmer but this look more related to ongoing weakness in the Euro and which has seen an extension of EUR/GBP weakness. On the Euro, I would note that incoming opinion polls continue to point a defeat for Italian PM Renzi’s Constitutional Reform Agenda in the 4th December referendum.
Elsewhere it is the JPY that remain the whipping boy for US Dollar strength, as it should be with US yield rising while the BoJ continues to anchor JGB yields at zero or below out to 10 years. Also to note is a lurch higher in the renminbi last night, with the onshore USD/CNH rate pushing 6.95 and the onshore USD/CNY almost kissing 6.92. This is still consistent with USD strength while this morning’s PBoC fix was slightly weaker at 6.91.
The AUD/USD meanwhile hasn’t done too badly, just 0.24% lower at 0.7389 and so generally firmer on the crosses. In this regard, following a jump in Dalian iron ore futures yesterday, the China 62% fines average import price has risen 97 cents to $75.87, bucking the trend of (mostly) weaker commodity prices elsewhere as the Dollar continues its march higher. Gold is off another $25 while oil prices are a touch weaker with no new news on prospects or otherwise for an OPEC production agreement next week.
This morning on the economic front we already had the release of German Q3 GDP which came in as expected with a 0.2% rise. At 9.00 am we have German Business Climate and Current Assessment/Expectations, followed by the UK BBA Loans For House Purchase at 9.30 am. Finally with the US closed for the Thanksgiving Holiday we have the German GFK Consumer Confidence at 12.00 pm.
December S&P 500
For the most part of the past two years every time you bought the dip in the US stock market you made money and yesterday was no exception with the S&P again trading lower to my 2193 buy level before rallying back above 2200 which enabled me to cover this position at my revised 2198 T/P level and I am now flat. With the US Cash market closed today, the Globex Futures market will remain open until 4.30 pm and then re-open as usual at 11.00 pm for tomorrow’s trading session which is only for a half-day as the stock market will close at 6.00 pm. I have been watching the S&P Daily Sentiment Index very closely over the past few days which finally broke 50% to close last night with a 56% print. This is the highest reading since August 3 before the market sold off. Interestingly with yesterday’s small rally the McClellan Oscillator fell slightly from Tuesday’s close at +180 to last nights +157 print. If the S&P continues to rally we have strong resistance from 2212/2220. Today I will again look to buy the market on any dip lower to 2190/2195 with a 2185 tight stop. Given the seasonality I still do not want to be short the S&P at this time but if the market continues to grind higher I will look to sell next week.
EUR/USD
After I woke up yesterday morning to see that the Euro had missed my 1.0645 T/P level with a 1.0644 high print I had a feeling yesterday would not be my day and so it proved with the market stopping me out of this position at 1.0555 and I am now flat. I keep mentioning how weak the DSI is for the Euro which closed again at 6% last night. This extreme degree of pessimism towards the Euro implies that we are in the very late stages of this move from 1.13 post the election. The last support for the Euro is from the March 13, 2015 low at 1.0462 and today I will again look to buy the market on any dip lower to 1.0455/1.0505 with a 1.0415 stop. A break and close below 1.0450 tomorrow evening opens up the possibility of a move lower to 1.0150/1.0250 over the coming days. Given the level of extreme pessimism towards the Euro I still do not want to be short the market at this time.
December Dollar Index
Yesterday’s move higher in the Dollar hit my 101.80 sell level. This 14 year high in the Dollar has yet to be confirmed by the Euro, creating a large non-confirmation as it needs to break the 1.0462 level as mentioned above. The DSI for the Dollar has hit 94% reflecting a high level of optimism. The Dollar in my opinion is fast approaching a near term reprieve from the strong upward push of the past two weeks. Today I will lower my stop on this position to 102.30.
December DAX
My DAX plan also worked well with the market hitting my 10640 buy level before rallying above 10700, and this rally enabled me to cover my long position at my revised 10675 T/P level and I am still flat. Today I will again look to buy the market on any dip lower to 10545/10610 with a 10495 stop.
December FTSE
With so many of my positions hitting at the same time I waited to buy the FTSE until it hit my 6780 buy level. Subsequently the FTSE rallied 50 points which enabled me to cover this position at my revised 6810 T/P level and I am now flat. Today I will again look to buy the FTSE on any dip lower to 6735/6765 with a 6695 tight stop. Again given the positive seasonality in the US, I still do not want to be short the market at this time.
Dow Rolling Contract
I am still flat the Dow which continues to grind higher as one short position after another gets stopped out. Given the bullish sentiment towards the Dow plus how overbought we are trading the time is now approaching to go short the market. Today I will raise my sell level to 19170/19240 with a 19290 stop. I do not want to be long the Dow at this time preferring instead to buy the S&P on dips.
December BUND
My Bund plan did not work out as shortly after the Bund hit my average buy level at 161.00, I was stopped out of this position at my 160.45 stop which was very near the bottom of the day before the Bund turned around aggressively and is back trading at 161.30 this morning which is very frustrating. Today I will again look to buy the market on any dip lower to 160.60/160.90 with a 160.25 stop which is just below yesterday’s spike low print.
Gold Rolling Contract
In my near five years of writing Tradernoble I have never got hit in 8 calls within such a short space of time. As I was long so many positions I waited to buy Gold which I did at 1195 before a few seconds later getting stopped out of this trade at 1192 and I am now flat. With the exception of the Bund all my stops were correct. I am so surprised given the DSI reading for the Dollar and the metals to see what has happened over the past 24 hours. Gold has been declining for nearly five months and just like the Euro above, pessimism is commensurate with a decline that is in its late stages as shown by 8-day DSI reading of just 9.8% which is the lowest reading in 12 months. Gold has strong support at 1173 and today I will again look to buy the market on any further dip lower to 1165/1175 with a 1158 but only in small size.
Silver Rolling Contract
My long 16.95 Silver position did not work well as I was stopped out of this trade at 16.25. Subsequently Silver made a new low at 16.15 and I emailed my Platinum Members to buy Silver at 16.20. After a small rally I covered this position at 16.35 and I am now flat. Today I will again look to buy the market on any further dip lower to 15.70/16.10 with a 15.30 stop.
Following the success of the NFP Live Trading Day and Education Session in London on September 2, Paul Wallace and I are bringing this event to Dublin for the December NFP day on Friday December 2nd. If anyone is interested in attending this event the details are on the following link:
https://www.eventbrite.com/e/live-nfp-trading-day-dublin-tickets-28159689389
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