Yesterday was another trading day of measured markets with both European and US Equities closing higher. US Treasury Yields also closed higher while the US Dollar is finally this morning starting to weaken as indicated in yesterday’s commentary given the fact that the EUR/USD was trading at the bottom of both its Daily Bollinger Band and Williams Index. There has been a little more evident appetite for Sterling, while the Canadian Dollar was also a little stronger, helped by higher oil prices and the Bank of Canada leaving interest rates on hold, as expected.
To mark my 1075th 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 214 points yesterday and is now ahead by 1190 points for May having made 2175 points in April. The previous two months saw the same gain of 2265 points for both February and March after a record 3365 point gain in January. Since I started this service it has made over 25,000 points.
WTI and Brent closed yesterday on their intra-day highs at $49.69 and $49.86 respectively which added support to US energy stocks and a risk-on-mood. The US EIA reporting a larger than expected weekly investment drawdown of 4.23m bbl versus a a market expecting a 2m fall helped to fuel prices higher.
The AUD sits back below 0.72 this morning with the VIX back down to 14 while the LME base metals closed mixed. Iron ore again closed lower by 2% to sit at $50.41 and well off the $64 high at the start of the month.
The Bank of Canada left interest rates unchanged as expected at 0.5%, with the BoC saying it expects the Alberta fires to cut 1.25% from Q2 GDP before a Q3 rebound. They also noted disappointing Business Investment and Intentions, uneven structural adjustment, with ‘roughly balanced’ inflation risks.
There has also been two Fed speakers, Fed President Harker saying that he still expects two, maybe three rate rises this year. President Kaskari spoke of a moderate growth outlook with inflation climbing back to target. The US Treasury Yield curve closed 2bps higher for the trading session on what was a very quiet economic data day. The Trade Deficit came in lower than expected and this mechanically adds a little to the US growth story in the second Quarter.
The Euro was unmoved in response to a stronger than expected German IFO Survey for May and the European Finance Ministers Meeting that has cut a deal to secure yet more funds for Greece. However overnight the EUR/USD traded as high as 1.1190 before selling off slightly and currently sits at 1.1165.
This morning on the economic front we have UK GDP, BBA Loans for House Purchase and Index of Services at 9.30 am. This is followed at 1.30 pm by the ever volatile US Durable Goods Orders and Weekly Jobless Claims. At 2.45 pm we have the Bloomberg Consumer Comfort Index. Finally we have Pending Home Sales and the Kansas City Fed Manufacturing Index at 3.00 pm and 4.00 pm respectively.
Fed speaking wise we have Bullard this morning from Singapore and later this afternoon Powell speaks about the economy at 5.00 pm.
June S&P 500
On a day when nearly every contract that I write about got hit which helped to more than make up for my losses on Tuesday the S&P which hit my 2091 sell level before finally trading lower overnight to a 2082.50 low print which in turn enabled me to cover this short position at my 2085 revised T/P level and I am now flat. The rally off the 2021 low print last Thursday sees the S&P trading just above the top of its Daily Bollinger Band and Williams Index as we approach resistance at the 2092/2097 area ahead of the 2105 high print for 2016 so far. Given what the chart looks like I would not be buying the S&P here and I will again look to sell the market on any rally higher to 2095/2100 with a 2106 stop. If I am taken short and subsequently stopped out of this position I will then look to go short again from 2110/2115 with a 2120 stop. Yesterday’s move higher has left a ‘Gap’ down to the 2076 level and today I will be a small buyer on any dip lower to 2072/2077 with a 2067 stop.
EUR/USD
My long 1.1140 Euro position finally worked out as the market had a nice rally which as mentioned above traded as high as 1.1190 which enabled me to cover this position at my 1.1165 T/P level and I am now flat. With the Euro trading at the bottom of its Bollinger Band I will again look to buy the market on any dip lower to 1.1110/1.1140 with a 1.1070 stop. Given how oversold the Euro is trading I do not want to be short the Euro at this time.
June Dollar Index
Finally the Dollar sold off overnight and this sell-off enabled me to cover my short 95.30 position at 95.10 and I am now flat. I have had this position for over a week and just shows how narrow the market is trading especially with so few traders at their desks ahead of a US and UK Bank Holiday on Monday. Today I will again look to sell the Dollar on any rally higher to 95.60/96.00 with a 96.30 stop.
June DAX
I am still flat the DAX which is continuing to adjust to its 450 point rally off its low print on Tuesday morning. This huge move higher also sees the DAX trading at the top of its Daily BB and Williams Index and for this reason I will look to go short in small size on any further rally to 10300/10350 with a 10380 stop. I will leave my buy level unchanged at 10040/10090 with a 9995 stop as given how overbought the DAX is trading I do not want to chase the market higher from here.
June FTSE
Unfortunately the FTSE just missed my 6215 buy level after I posted yesterday morning and again overnight with the market trading as low as 6230 before again rallying and I am still flat. Today I will raise my buy level slightly to 6200/6230 with a tight 6180 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
No change as I am still a seller on any rally higher to 17960/18020 with a 18080 wider stop to allow for the volatility. To give you an idea of how powerful this rally has been the McClellan Oscillator has risen from a negative -190 reading last week to close with a positive reading of +32 last night. I will also raise my buy level slightly to 17690/17750 with a 17630 stop.
June BUND
My long 163.15 Bund position taken yesterday morning worked well with the market trading as high as 164.00 before selling off. This rally enabled me to cover my long position too early at 163.40 and I am now flat. There is no doubt the 162.80/163.20 is now major support for the Bund, a break and close below this area would probably be the first sign that we will have put in some sort of important top. Today I will again look to buy the Bund on any dip lower to 163.00/163.30 with a 162.70 stop. I still do not want to be short the Bund at this time.
Gold Rolling Contract
My Gold plan worked well with Gold trading as low as 1217 after I posted yesterday and this enabled me to buy Gold at 1219. Subsequently Gold has had a strong rally to 1234 overnight and this rally has enabled me to cover my position at my revised 1224.50 T/P level and I am now flat. Today given how oversold Gold is trading with yet another market testing the bottom of its BB, I will be a small buyer from 1216/1223 with a 1209 stop.
Silver Rolling Contract
Given the fact that I had so many open positions yesterday I covered my long 16.15 Silver position at 16.34 and I am now flat. Today I will again look to buy Silver on any dip lower to 15.90/16.30 with a 15.55 stop.
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