Yesterday we had Fed Chair Janet Yellen give her Testimony to the House Panel on Banking Supervisions. Yet again Ms Yellen managed to talk a lot without saying anything. On Policy she did nothing but reiterate that a majority of the FOMC anticipated raising interest rates before the end of the year, a line lifted straight out of last week’s post meeting missives. Ms Yellen did say that changing the 2% inflation target is ”not something the Fed is actively considering, not at this time”. We also had the usual platitudes about their being no fixed timetable for rate increases. Markets did not move on her Testimony but did on oil.
Due to the number of members taking up my 2 year Euro 2500 rate for my Platinum Service this will be the last couple of days that I am offering this special price which will now rise to Euro 2750 on Saturday. If anyone is still interested in this deal which has been in situ since January, can you please email me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it lost 68 points yesterday on what was my unluckiest trading session of the year so far. The Platinum Service is still ahead by 910 points for September having made 1782 points in August and 1682 points in July. The previous three months saw gains of 2550, 1532 and 2175 points respectively. Since I started this Platinum Service in June 2015 it has averaged a monthly gain of over 2000 points.
The bigger – and market moving – news yesterday was that the OPEC Ministers Meeting in Algiers have reportedly come to some sort of agreement, which is expected to be cemented in November, for overall OPEC production to be capped at 32.25 million barrels per day. That compares with current production estimates of between 32.5 and 33 million barrels. If Iran is to proceed to ramp up its production to near four million barrels from around 3.4 million currently, that would presumably imply outright cuts elsewhere. Seeing is believing on these things of course, but the oil market has lost no time lifting the price of crude over 5% with Brent and WTI rising $2.65 and $2.33 to $48.64 and $47 respectively.
The S&P closed 0.53% higher led by 4%+ gains for the energy sector while US Bond Yields closed fractionally higher across the curve. In currencies, the oil news has unsurprisingly seen the Canadian Dollar and NOK leap to the top of the FX Leader Board with a 0.8% and 1% rise respectively. Meanwhile the NZD in contrast is at the bottom, continuing to weaken on no new news other than strengthened conviction in November of a RBNZ easing of monetary policy.
Economic data of any interest yesterday was confined to US Durable Goods Orders. The 0.6% headline was better than the -1.5% consensus but July was revised down to 3.6% from 4.4%. Overall the data is seen imparting slight downside risk to Q3 GDP estimate, with the Atlanta Fed shaving its GDPNow estimate down to 2.8% from 2.9%. In core terms Capex Orders rose by 0.6% which was well above the -0.1% consensus, though again July was revised down.
This morning on the economic front we have German Unemployment at 8.55 am and this is followed at 9.30 am by UK Net Consumer Credit and Mortgage Approvals. At 1.00 pm we have German CPI. Then at 1.30 pm we have US Weekly Jobless Claims, Trade Balance, Wholesale Inventories and GDP. Finally at 3.00 pm we have Pending Home Sales.
On the speaking front we have the Fed’s Harker speaking in Dublin at 10.00 am, followed by Lockhart speaking in Florida at 1.50 pm. Finally the Fed’s Powell will speak in St Louis at 3.00 pm.
December S&P 500
As expected the S&P rallied strongly off the 2140 now key support on rising oil prices plus the fact that we have Month and Quarter End tomorrow. Unfortunately the S&P missed my 2141 buy level with a 2143.50 low print before having a 23 handle rally. Thankfully we were not short the market which has now got through September relatively unscathed despite the up and down volatility over the past four weeks. The S&P has key resistance from 2170/2175 and a break and close over this area will see the market test its all-time highs at 2190 followed by the next resistance level at 2200/2220. I know I have had the same view for the best part of the last 18 months but it is so difficult to be short the equity markets when the Central Banks are in my opinion manipulating the markets. This could not be clearer than the fact that the Swiss National Bank has $120bn invested in the US Stock market plus allegedly is the largest shareholder in Face Book. Given the extent of yesterday’s move higher which has to be respected I will now move my buy level higher to 2153/2159 with a 2148 stop. If I am taken long and subsequently stopped out I will be a more aggressive buyer from 2137/2143 with a wider 2126 stop which is just below the important 100 Day Moving Average.
EUR/USD
The Euro continues to trade sideways which it has done for the best part of 18 months. I have never known such low volatility in what is the main trading currency of the major Banks and Hedge Funds. Today I will raise my buy level slightly to 1.1175/1.1205 with a 1.1145 stop.
December Dollar Index
I am still flat the Dollar and today I will now lower my sell level slightly to 95.90/96.20 with a 96.50 stop.
December DAX
Unfortunately the sell-off in the DAX yesterday afternoon stopped shy of my 10380 buy level with a 10406 low print before rallying back to 10550. This rally over the past 24 hours is even more galling having got stopped out (of what was in hindsight the correct view) at 10265 on Tuesday. Today I will move my buy level slightly higher to 10390/10440 with a 10340 stop.
December FTSE
The FTSE just missed my 6790 buy level with a 6796 low print before also having a nice 100 point rally and I am still flat. Today I will move my buy level higher to 6815/6845 with a 6780 stop. The FTSE is the one market I will not be short ahead of the Month and Quarter End tomorrow.
Dow Rolling Contract
Similarly on what was an extremely frustrating trading session for me the Dow missed my 18170 buy level with a 18177 low print before going on to have a 200 point rally. I know some of you buy in front of my buy levels on a quiet day and hopefully for those that did, worked out very nicely. Helping the markets going forward was the big move in internals of the stock market as shown by the McClellan Oscillator which closed last night with a positive reading 56 from a negative -16 on Tuesday. This is the third consecutive trading session in which the MO has firmed. The Dow has near term resistance at the September 22 high of 18449 and a break and close over this level should see the market test its all-time high from July. Today I will move my buy level higher to 18220/18275 with a 18160 stop which is juts below yesterday’s low print.
December BUND
The Bund is overbought after its aggressive move higher over the past few days. Unfortunately the BUND also missed my 166.30 sell level with a 166.19 high before having a nice move lower and I am still flat. The Bund has strong support at 165.25/165.55 and I will be a buyer in this area with a 164.88 tight stop. I will also move my sell level lower to 166.20/166.50 with a 166.85 stop.
Gold Rolling Contract
No change as I am still a small buyer on any dip lower to 1307/1314 with a 1299 stop.
Silver Rolling Contract
Unfortunately I was stopped out of my long 19.63 Silver position at 18.95. Subsequently I have bought Silver again at 19.12 with a 18.60 stop.
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