Doubtless he will not appear in the 2016 honour roll of stars that left this mortal world in 2016, but yesterday brought the news of the passing of Hans Tietmeyer, a scion of German central banking who headed the Bundesbank up until the launch of the Euro in 1999. He was one of the architects of the Stability and Growth Pact which accompanied the launch of the single currency, intended to impact fiscal discipline on all its members. In 1992 he took German Interest Rates up to record levels in a fight against inflation, actions which presaged the British Pound’s ignominious exit from the ERM and for which he was wholly unapologetic. The English people have a lot to thank him for.
To mark my 1225th 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 made 55 points yesterday and is now ahead by 1276 points for December having made 1971 points in November and 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.
Yesterday we finally saw some movement in currencies, bonds and stocks with most of the moves in FX coming during the European trading session. Weakness in EUR/USD and Sterling also led to a rally in the Bloomberg BBDXY Dollar Index to temporarily a new record high before reversing course again overnight as both the Japanese Yen and Euro rallied. There does not appear to have been any news of note for these moves save perhaps for last Tuesday’s reports of the ECB letter to Monte dei Peschi saying the bank may need a capital increase of as much as Euro 8.8 billion. However relevant to the give-back of some of the Dollar’s gains in New York trade has been a significant fall-back in US Treasury Yields accompanied by a sizeable sell-off in US stock markets.
10 Year US Treasuries dropped from 2.56% to 2.50%. In stocks, hopes ( at least among the 24 hour business channels) for a 20,000 print in the Dow before year-end, have suffered a set-back. The Dow closed 105 points lower at 19,840 and the S&P off 0.80%. The sell-off in stocks sees USD/JPY trading at 116.40 this morning.
Again not sure what has been driving equity weakness, though I would note that the Real Estate Sector together with Utilities has led the weakness and this follows news that US Pending Sales of Existing Homes fell by 2.5% in November against expectations of a 0.5% gain, with higher Mortgage Rates being the main reason cited. Perhaps the post-Trump victory back up in longer dated Bond Yield and hence Fixed Mortgage Rates is already starting to make a mark?
In Commodities, both Gold and Silver have rallied strong trading at $1149 and $16.15 respectively this morning.
Meanwhile Trump has been tweeting merrily over the past few days, including a tirade against the relevance of the United Nations following the United States abstention that allowed a motion to pass condemning Israeli Settlements in defiance of intense pressure from Benjamin Netanyahu’s Israeli Government in alliance with Trump.
This morning on the Economic front we have Euro-Zone Money Supply at 9.00 am. This is followed at 1.30 pm by US Trade Balance, Wholesale Inventories and the Weekly Jobless Claims. Finally at 2.45 pm we have the Bloomberg Consumer Comfort Index.
March S&P 500
The S&P had a bad trading session yesterday which nearly resulted in a Downside Key Day Reversal. As we did not make a higher high than on Tuesday this KDR did not happen. However the McClellan Oscillator closed from positive 51 on Tuesday to negative 32 last night resulting in another Hindenburg Omen. This market is shaping up to be an interesting 2017 as it is just a few stocks that have led this charge higher over the past few weeks. Just on the close I bought the S&P at 2245 and I am still long with a 2239 stop. Given the seasonality I would expect the S&P to reverse some of yesterday’s loses but I am not prepared to risk too many points on this scenario. If I am stopped out of this trade I will be a more aggressive buyer on any further dip lower to 2229/2235 with a 2224 stop. Given the seasonality I still do not want to be short the S&P at this time.
EUR/USD
Finally the Euro hit my 1.0385 buy level before having a nice rally overnight to my 1.0440 T/P level and I am now flat. Today I will again look to buy the Euro on any dip lower to 1.0370/1.0410 with a 1.0335 tight stop. I still do not want to be short the Euro at this time especially given the extreme DSI readings at this time.
March Dollar Index
Unfortunately the Dollar just missed my 103.65 sell level with a 103.61 high print before having a 70 point sell-off and I am still flat. Today I will now lower my sell level to 103.40/103.70 with a 104.05 stop.
March DAX
The DAX continues to trade in a narrow range with no impact from the Italian Bank crisis so far. Today I will be a small buyer on any dip lower to 11290/11350 with a 11240 stop. The price action continues to tell me not to be short the DAX at this time.
March FTSE
The FTSE is holding up well and I put this fact down to the continued weakness in Sterling with EUR/GBP now back above 0.8520 and GBP/USD trading with a 1.22 Handle. Today I will look to buy the market on any dip lower to 6955/6985 with a 6925 stop.
Dow Rolling Contract
I must say I was very surprised that the Dow could not break the 20,000 round number resistance level over the Christmas but obviously the Downside Key Day Reversal following the Fed Rate hike still holds. Also the fact that we got another Hindenburg Omen yesterday is bearish going forward and again if you have a lot of your pension tied up in the equity market I would look to reduce your exposure as we approach the new Tax Year next week. Today I will now lower my Dow sell level to 19990/20050 with a 20110 stop.
March BUND
The BUND continues to rally strongly following the extreme negative sentiment towards the Bund over the previous few weeks. The Bund is now trading over 450 points higher off its mid-December low print. Today I will be a small seller on any further rally higher to 164.90/165.30 with a 165.60 stop.
Gold Rolling Contract
Gold just missed my buy level before rallying strongly over the past few days. I believe that Gold has already put in a low at its 1123 low print two weeks ago or may require one more low print before a sustainable rally takes place. Just look at the Bund to see how these sentiment readings do work and while it may take time and patience its stops you from selling these oversold markets such as the Euro, Gold and Silver. Today I will move my buy level higher in Gold to 1131/1140 with a 1121 wider stop.
Silver Rolling Contract
No change as I am still long Silver at an average rate of 16.08 with the same 15.35 stop as I look for the marker to rally strongly in the new year. As mentioned last week I have put some pension money to work in Silver at an average rate of 15.90.
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