The Fed has, as expected, left the Fed funds rate unchanged and without any overt reference to December as “on”. Not that a specific time reference was expected, data dependency and market developments still the ultimate drivers, including the aftermath of the Presidential election. I am still inclined to the view that the Fed will lift rates in December, subject of course to the data flow and market developments. Markets yesterday have continued to tilt toward risk-off, equities lower, Bonds getting support and the US Dollar losing some traction, especially against the yen. Gold is higher too. Oil is weaker, WTI testing $45, (currently $45.49) and with Brent current off 2%-plus for the session on news of higher inventories, also weighing on sentiment. The AUD continues to trade in the mid 76s, recovering after losing some traction in the wake of yesterday’s underwhelming September building approvals report.
To mark my 1200th issue of Tradernoble Daily Commentary I am offing a special 2 year rate of Euro 2750 for my Platinum Service which includes 1/4 updated emails throughout the trading session. This offer is open to both new and existing members and if any is interested can you please email me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it made 112 points yesterday and is now ahead by 55 points for November having made 1572 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.
This Fed meeting came with no press conference and updated forecasts for this meeting; that next comes at the December 15 meeting. So all the concentration is on the Statement that again noted that the case for a rate rise has continued to strengthen but the FOMC decided to wait for some further evidence of continued progress. The words “continued to” were added in this time before “strengthen” while “some” was also inserted before “further evidence” this time. Now waiting for “some further evidence” rather than just “further evidence” could be interpreted as a little more time specific, a hint of December perhaps.
The Statement also recognised that market-based measures of inflation compensation “have moved up” rather than remain low. Against those, the Statement though did dial back its description of household spending from “growing strongly” to “rising moderately” but against that recognised that. There was one less dissenter this time, only two, George and Mester, Rosengren going with the flow this time.
US Treasuries have been bid given the risk-off mood, 2y yields off 1.4 bps to 0.817% and 10s at 1.795%, down 3.2 bps. Neither benchmark yields have changed much since the FOMC announcement. And the market continues to price in an over 70% chance of the Fed hiking in December, at 72.8%, unchanged since the FOMC. Gold is over $1300.
This morning on the economic front the ECB will publish its latest Economic Bulletin at 9.00 am. This is followed by UK Services/Composite PMI at 9.30 am and by Euro-Zone Unemployment Rate at 10.00 am. At 12.00 pm we have the Bank of England Rate Announcement , Asset Purchase Target and Inflation Report. Next we have the US Weekly Jobless Claims and Nonfarm Productivity/Unit Labour Cost at 12.30 pm. Finally we have the US Services PMI and Composite PMI at 1.45 pm followed at 2.00 pm by ISM Non-Manufacturing and Factory Orders.
December S&P 500
The S&P plan worked well with the market hitting my 2096 buy level shortly after the European Markets opened before having a nice rally to 2106 which enabled me to cover this position at my 2101 T/P level. Subsequently I emailed my Platinum Members to re-buy the S&P on any dip lower to 2092.50 which the market obliged before rallying again to a 2099 high print which enabled me to cover this position at my second 2097 T/P level and I am now flat. While the S&P finally closed below its 2114 support level on Monday the Dow only closed below its 18,000 support level yesterday. The McClellan Oscillator is getting near oversold with a negative reading of -223, while the Daily Sentiment Index Reading hit 27% yesterday which is still well off the February low of just 7% bulls before the market surged. I am expecting a similar response this time as the S&P nears its next major low. Today I will again be a buyer of the S&P on any dip lower to 2079/2085 with a 2073 stop which is just below the key 2075 pivot point. Given how oversold the S&P is trading I still do not want to be short the market at this time especially ahead of the NFP tomorrow.
EUR/USD
The Euro again surged as expected with most market participants caught short. As I mentioned to my Platinum Members yesterday if anyone has any Dollar exposure I would look to hedge at 50% at near current levels as once the Euro can break and close over 1.13 for a couple of days then we may well attack the net key resistance at 1.18/1.20 over the coming weeks. Today I will raise my buy level slightly to 1.1000/1.1040 with a 1.0960 stop.
December Dollar Index
No change as my only interest in selling the Dollar is still on a rally higher to 98.20/98.60 with a 98.95 lower stop.
December DAX
The DAX traded lower to my average buy level at 10350. I was not comfortable in being long the DAX especially with the Euro/USD closing over 1.11 and I emailed my Platinum Members to exit this position at 10370 and I am now flat. Given how strong the Euro is trading, it is too risky to buy the DAX today and as I do not want to be short the market plus the fact that I have buy levels below in my other Indices I will stay flat the DAX and take another look tomorrow.
December FTSE
Unfortunately I was stopped out of my long 6860 FTSE position from late Tuesday at 6820 before the market subsequently hit my 6805 buy level. From this low the FTSE rallied to a 6835 high print which missed my 6840 T/P level and as I wanted to be flat overnight I emailed my Platinum Members to exit this position at 6817 and I am now flat. The FTSE is very oversold and trading outside the bottom of its Bollinger Band and at the bottom of its Williams Index. However the fact that the market again closed below the previous support at 6850/6875 is bearish. The FTSE has minor support from 6720/6760 and I will be a buyer in this area with a 6685 stop.
Dow Rolling Contract
Unfortunately the Dow missed my 17910 buy level with a 17912 low print before having a nice 100 point rally and I am still flat. Today I will lower my buy level to 17790/17850 with a wider 17725 stop. Given how oversold the McClellan Oscillator is trading plus the fact that the Dow is now trading over 700 points off its high I do not want to be short the market at this time.
December BUND
The BUND missed my 161.90 buy level with a 162.12 low print and I am still flat. I am not going to chase the market higher from here especially given the extent of the sell-off last week. Therefore I will leave my buy level unchanged at 161.55/161.95 with a 161.25 stop.
Gold Rolling Contract
Gold has now rallied over $60 in the last two weeks and is back trading over the original breakdown points at 1280/1300. I am still flat Gold which is now looking stretched and today I will leave my buy level unchanged at 1275/1283 with a 1268 stop.
Silver Rolling Contract
My Silver plan worked well with the market hitting my 17.40 buy level after I posted yesterday morning. As I wanted to be flat ahead of the FOMC I covered this long position at my revised 18.65 T/P level. Subsequently Silver sold off again and I emailed my Platinum Members to buy Silver again at 18.50. I am still long and I will now raise my stop on this position to 17.95 which is just below the key 18.00/18.20 support level.
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