Yesterday was a trading session of two halves with a risk off during the European session spilling into the first part of the New York session, oil lower after a war of words with Iran’s Oil Minister complaining about high Saudi production, the US Dollar in the ascendancy and commodity currencies lower. Risk sentiment in the US market was not helped by the Markit version of the US Services PMI for the US which fell back from 53.2 to 49.8. It has yet to establish itself as a reliable monthly guide to the official Non- Manufacturing PMI, but it was enough to dampen the mood. Then later in the session, the US EIA released its Weekly Oil Report revealing a very modest decline in weekly US oil production but rising crude inventories.
To mark my 1000th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2500 for my Platinum Daily Commentary which includes 1/4 updated emails throughout the trading day. This offer is open to both existing and new members and if anyone is interested please email me on bryan@tradernoble.com for details.
For anybody following my Platinum Service it made a hard earned 120 points yesterday after my busiest trading day in many a month and is now ahead by 2065 points for February having made 3365 points in January. Since I started this service last June it has made over 20,000 points.
The market though was looking for some good news for once and took its cue from falling gasoline inventories with gasoline demand up 1.8%, a hint that the long looked for increase in consumer-led driving and spending might be afoot. The turnaround in oil and equity markets also stymied a further rally in the US Bond market, a rally that was also assisted to some extent by somewhat weaker than expected US New Home Sales for January, though they seem to be heavily affected by weather in the West after what were especially high sales in December. The turnaround mid-session
was the catalyst for an improvement in risk sentiment with US Energy stocks doing an about turn.
The US stock markets closed between 0.4% and 1.0% higher on what was one of the largest Key Day Reversals for both the Dow and S&P in a very long time with the Dow rallying almost 400 points off its low print while the S&P closed nearly 50 Handles higher off its 1887 low print.
The Australian Dollar is hovering around $0.72 this morning having traded below 0.7150 when sentiment was more brittle. Despite the volatility in the S&P yesterday the VIX closed little changed while LME Copper prices were also virtually unchanged on the day. The big mover this year continues to be Iron Ore which is now trading at $51.64 which is well higher than its sub $40 reading earlier last month and $38 reading in December.
Dallas Fed President Kaplan has been speaking again last night. Seemingly adding a measure of calm saying he is patient in waiting for more data, that he is aware of the strong Dollar but in his opinion this is not a major concern which contrasts with Fed Vice Chair Fischer who said on Tuesday that one of the main reasons why the US does not have 2% inflation was because of the strong Dollar. Kaplan also said he was not expecting a US recession this year and that there was no predetermined timetable for Fed action.
Taking a more out there view, an IMF Report, released ahead of the Shanghai G20 Finance Ministers Meeting tomorrow is calling for bold multilateral actions to boost growth and that the Fund is likely to downgrade its World growth forecasts in April when its next set is due.
European markets are again opening on the defensive following the 6% fall in the Shanghai stock market while the Nikkei closed 1.5% higher at 16,140.
This morning on the economic front we already had the release of German CPI and GFK Consumer Confidence with the CPI printing a negative 1% as expected while the GFK came in at 9.5 versus 9.3 expected. At 9.30 am we have UK GDP. This is followed at 10.00 am by Euro-Zone CPI. Next we have US Weekly Jobless Claims and Durable Goods Orders at 1.30 pm. Finally we have the US FHFA House Price Index and the Kansas Fed Manufacturing Index at 2.00 pm and 4.00 pm respectively.
March S&P 500
The S&P had another wild trading session yesterday as the market rebounded sharply form its mid-afternoon low at 1887. One very expensive lesson that I learnt a very long time is you have to respect a market that does not fall on weak economic data. Yesterday’s data was horrific yet the S&P rallied 50 Handles from its afternoon low. The price action again proved why I hate to be short the US stock market as you just do not know when or how quickly we can get a rally out of nowhere. Do not get me wrong I am very bearish the US economy and ultimately I believe the stock market has a long way to fall but you can spend a lot of time and capital in trying to capture this event. Yesterday after I posted the markets were already in free-fall with the S&P trading at my 1902 buy level before finally stopping me out of this position at 1896. Subsequently I went long again at 1890 and out at 1895 as I was nervous at that time. Subsequently the S&P traded lower before having a quick 15 Handle spike on the EIA news. I then emailed my platinum members to buy the S&P at 1901 before we were able to T/P on this position at 1912 and I am still flat. In my opinion my platinum service is invaluable and worth trying for a month as I sent 5 updated emails throughout yesterday’s trading session. As mentioned in my economic commentary above the S&P is back on the defensive this morning following the 6% unexpected fall in the Shanghai Index overnight. However I have to respect the Key Day Reversal in the market yesterday and today I will again look to buy the S&P on any further dip lower to 1913/1919 with a 1908 stop. If I am taken long and subsequently stopped out of this position I will use my ‘5 Handle Rule’ to go long again with a stop below whatever new low is printed. As I mentioned yesterday the S&P has two large ‘Open Gap’s above at 1994/2010 and 2012/2035 and I believe that we will fill these Gap’s before the market rolls over again.
EUR/USD
My Euro call worked perfectly yesterday with the Euro trading lower to my 1.0960 buy level before having a nice rally to 1.1045 which enabled me to cover this position at my 1.0995 T/P level and I am now flat. Today I will again look to buy the Euro on any dip lower to 1.0950/1.0980 with a 1.0925 stop as I do not want to be short the Euro ahead of tomorrow’s G20 Summit.
March Dollar Index
My Dollar plan also worked well with the Dollar trading higher to my 97.90 sell level before having a nice sell-off to 97.30 which enabled me to cover this position at my 97.60 T/P level and I am now flat. Today I will again look to sell the Dollar on any rally higher to 97.85/98.15 with a 98.40 stop.
March DAX
The only good thing about my DAX call yesterday was the fact the DAX was trading at the bottom of my buy range at 9210 by the time I posted. Unfortunately I was stopped out of this position near the low of the day at 9165 before the market had a nice 220 point rally off its mid-afternoon low and I am still flat. This morning the DAX is back on the defensive as it tries to hold the 9200 support level. Today I will again try the buy side on any further dip lower to 9090/9145 with a 9055 stop. I still do not want to be short the market at this time despite the negative price action especially ahead of the Finance Ministers Meeting tomorrow.
March FTSE
Just as I posted yesterday morning I was stopped out of my latest 5940 long position at 5895 and I am still flat as I did not trade the FTSE since. Just like the other main Indices the FTSE has been all over the map but given the fact that Sterling has now weakened nearly 15% since early December I would not be short the market and will continue to look for opportunities to buy the FTSE. Today I will be a buyer from 5860/5890 with a tight 5825 stop.
Dow Rolling Contract
Yesterday was one of my most frustrating trading days of the year as I had the correct view only to get stopped out again of a long position. As I was already long both the S&P and DAX I waited to by the Dow at the bottom of my buy range at 16270 before getting stopped near the low of the session at 16220 only to see the Dow rebound nearly 400 points off its 16165 low print and I am still flat. Just like the S&P above the Dow had a very strong upside Key Day Reversal which has to be respected and for this reason I will again look to buy the market on any dip lower to 16310/16370 with a 16245 stop.
March BUND
My BUND call worked well yesterday with the BUND trading higher to my 166.10 sell level before exiting this position at 165.90. Subsequently the BUND rallied again and I went short a second tome at 166.20 before covering this position again at 165.90 and I am now flat. Today I will again look to sell the BUND on any rally higher to 166.00/166.30 with a 166.55 stop. I still do not want to be long the BUND at this time.
Gold Rolling Contract
Gold had a wild trading session yesterday with the market rallying hard on the back of the weaker stock markets before having a $30 fall and thankfully I am still flat as I really still do not have an edge in this market. Today I will raise my buy level to 1210/1220 with a tight 1195 stop.
Silver Rolling Contract
I have been flat Silver apart from one trade since I exited most of my core position at 15.70 two weeks ago. This morning I have decided to buy Silver again at 15.20. I am still long and I will leave a 14.75 stop on this position.
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