To finish what has been a very boring April for the Financial Markets we had the latest Fed Meeting and FOMC Statement last evening. This event turned out to generate little fanfare. Concerns about international developments were dialled down from being a ‘risk’ in March to now merely being ‘taken into account’. Slower growth, specifically in household spending, was acknowledged and as will be evident later today when we get the US Q1 GDP Report, though labour markets were re-instated to first place in the Fed’s word-ordering. The March acknowledgement of higher inflation was dropped in favour of ‘inflation has continued to run below the Committee’s 2% longer run objective’.
To mark my 1050th issue of Tradernoble Daily Commentary I am offer 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 20 points yesterday and is now ahead by 1910 points for April, having made 2265 points in each of the previous two months after a record 3365 points in January. Since I started my Platinum Service last June it has made over 23,500 points.
As for market reactions, US Bond Yields and the US Dollar underwent knee jerk moves higher on the dialling down of international concerns, before being fully unwound and then some in the case of Bond Yields. There is no doubt in my opinion that every time we test 2% in the US 10 Year Treasury the Fed will suddenly talk rates lower as remember a 1% rise in US Interest Rates adds $120bn in interest payments for the Fed. This equivalent to running the Military and Health Service for the year. In Index terms the Dollar closed virtually flat pre –FOMC levels. Meanwhile Equity markets liked the ongoing relaxed attitude of the Fed Statement. After a momentary dip, the S&P rallied by 0.7% to 2100 before giving back about a third of those gains into the close despite Apple getting hit for $8 on weaker sales of iPhones and lower revenue.
Post-Fed I remain comfortable with my view that the Fed will not move rates until at least July, bearing in mind the UK EU Referendum that falls a week after the next FOMC Meeting in Mid –June.
After the US Markets closed last night the RBNZ announced a ‘no change’ decision at its latest meeting with the interest rate staying at 2.25%.
Just before the European markets open we have the Bank of Japan Monthly Meeting and I would expect them to increase its ‘QQE’ asset purchases from the current 80 trillion yen. They will also allow Japanese Banks to get paid to borrow from the BoJ similar to what the ECB announced in March. If stocks like this proposal then the yen should weaken.
This morning on the economic front we have German Unemployment at 8.55 am and this is followed at 0.00 am by Euro-Zone Business Climate Indicator. Later at 1.00 pm we have the very important German CPI. As mentioned above we have US Q1 GDP and the Weekly Jobless Claims at 1.30 pm. Finally we have the Bloomberg Consumer Comfort Index and the Kansas City Fed `Manufacturing Activity Index at 2.45 pm and 4.00 pm respectively.
June S&P 500
The manipulation of the stock market by the Central Banks continues as no matter what bad earnings or economic data is thrown at the market the market continues to be a buy the dip scenario. Even the awful earnings from Apple failed to derail the market. As I have mentioned countless times over the past 12 months there is no economic growth of consequence and this is leading to a flat to down average earnings which is depressing the salaries of most workers world wide. As I have said in the past two weeks House Sales are practically non- existent where I am in South West Florida with prices down at least 15% over the past six months. However despite all of the above the S&P continues to trade at 24 times last year’s earnings and is miles away from economic reality. It is so difficult to be short the market for more than a few hours as shown again by the price action since last Friday when it looked like the market was finally going to roll over. I am still flat the S&P and today I will raise my buy level to 2077/2083 with a 2070 stop which is just below Tuesday’s low print. My only interest in selling the market is still on a rally higher to 2105/2111 with a 2116 stop.
EUR/USD
As expected the Dollar continues to weaken on lower growth despite the US Bond Yields trading higher over the past two weeks. In my opinion nobody wants a strong currency and this will be shown yet again by more intervention from the BoJ at its monthly meeting. Today I will raise my buy level in the Euro to 1.1210/1.1260 with a 1.1170 stop. I still do not want to be short the Euro at this time.
June Dollar Index
I am still flat the Dollar and today I will lower my sell level slightly to 95.10/95.50 with a 95.80 stop.
June DAX
Unfortunately the DAX just missed my 10240 buy level with a 10252 low print before going on to have a 100 point rally and I am still flat. Today I will raise my buy level slightly to 10210/10270 with a 10160 stop. I still do not to be short the DAX especially if the market continues to build value above 10200 which is now major support.
June FTSE
My long 6240 FTSE position was finally cut at my 6260 T/P level ahead of the FOMC Statement last evening and I am now flat. The FTSE has major resistance at the 6400 area which is where the 200 Day Moving Average comes in. In such severely overbought conditions there is a good chance we will make no higher than this key area. Today I will again look to buy the market on any dip lower to 6220/6250 with a 6190 tight stop. Over the coming days if the FTSE continues to rally I will be a seller from 6390/6420 with a tight 6445 stop.
Dow Rolling Contract
The Dow tried all yesterday to sell-off on Apple but the market kept re-bounding with the Dow closing again over 18,000. Today I will look to go short on any spike higher to 18170/18230 with an 18270 stop. My only interest in buying the Dow is on a dip lower to 17880/17940 with a 17835 stop.
June BUND
The Bund which had been weak all day rallied late following the rally in US Treasuries following the FOMC Statement. I am still flat the Bund and today I will raise my sell level to 162.60/162.90 with a 163.20 stop. I will also be a small buyer on any dip lower to 161.00/161.40 with a 160.40 stop. The Bund has very good long term support from 160.50/160.70.
Gold Rolling Contract
Gold continues to trade in a volatile range between 1226 and 1255. I am still flat Gold and today I will raise my buy level slightly to 1225/1232 with a 1218 stop.
Silver Rolling Contract
No change as I am still a buyer on any dip lower to 16.50/16.90 with the same 16.10 stop.
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