Lots of soul searching no doubt from EU leaders on day two of their Summit with UK PM Cameron back home. They officially called for an ‘orderly exit’ and for the ball to get rolling once a new UK PM is appointed. It was made clear that if the UK wants to access along the lines of the Norway Model, then they must abide by the EU’s ”four freedoms”, goods, services, capital and people, the latter the political sticking point for the UK voters.
To mark my 1100th issue of Tradernoble Daily Commentary I am offering a special year rate of Euro 2500 for my Platinum Service which includes 1/4 updated emails throughout the trading day. This offer is open to 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 lost 5 points yesterday but is still ahead by 2465 points for June. The previous three months saw gains of 1532, 2175 and 2265 points respectively. Since I started this service over 12 months ago it has averaged a monthly gain of over 2200 points.
Anyway, words and talks is one thing, actions are another and all that is still to play for. The markets meanwhile are lifting their sights at least for now and starting to re-focus outside ”Brexit”. Equities had another good session, with the Eurostoxx 600 up 3.09%, banks by 2.51% and the FTSE as expected by 3.58%, though European Bond markets were singing to a somewhat different tune, yields generally lower, but US Treasury Yields rose. Industrial commodity prices were generally higher as the US Dollar lost some further ground. WTI closed up $1.60 while Gold closed flat at $1322. The big mover was Silver which rose 4% to a new high for the year at $18.40.
In currency markets the Euro and Sterling have spent the session consolidating into somewhat higher levels with GBP/USD spiking 200 points from yesterday’s low to a high of 1.3540 before easing back while The EUR/USD closed over 1.11.
As for data, Germany’s June CPI was in line with 0.2% y/y expectations. US Personal Spending was a little stronger than expected, helped by a lower savings rate offsetting weaker income growth. The Atlanta Fed consequently revised up its GDPNow estimate for Q2 from 2.6% to 2.7% and Consumer Spending up from 4.1% to 4.3%. The headline PCE Deflator was lower at 0.9% y/y while the core Deflator was steady at 0.2%/1.6% y/y but still no closed to hitting the Fed’s target of 2%. Elsewhere the Fed released the results of its annual bank stress tests, clearing 31 of 33 major banks.
This morning on the economic front we have German Unemployment at 8.55 am. This is followed at 9.30 am by UK GDP, Index of Services, Total Business Investment and Trade Balance. At 10.00 am we have the Euro-Zone CPI while at 12.30 pm we will get the account of the last ECB Monetary Policy Meeting. Next at 1.30 pm we have the US Weekly Jobless Claims and Canadian GDP. Finally at 2.45 pm we have the Chicago Purchasing Manager’s Survey and the Bloomberg Consumer Comfort Index.
Later at 6.30 pm the Fed’s Bullard will speak in London.
September S&P 500
Unfortunately I was totally wrong with my S&P call yesterday not once but twice as the market ignored the huge ‘Open Gap’ that is still outstanding from 2028/2042.50 and rallied to a high of 2075 for an incredible 74 handle rally off Monday’s low print. This move again proved my theme that you can only be short these markets for a few hours/days before we see aggressive buying. In my view it is the Central Banks who are still propping up these markets and by their actions have certainly prevented the S&P having a significant downside Key Month Reversal which would have had major bearish implications. Yesterday’s rally retraced 2/3rd of the decline from Friday’s 2113 high in the S&P and 18011 high in the Dow. To me looking at the price action it is only a matter of time before the S&P makes new all-time highs which could possibly see the market eventually rally to the 2200/2240 major resistance that I have mentioned over the past six months. Today I will look to buy the market on any dip lower to 2047/2054 with a 2042 stop. If I am taken long and subsequently stopped out of this position I will be a very aggressive buyer from 2031/2037 with a 2023 stop. Despite the S&P been short-term overbought I do not want to be short the market at this time especially as we are at Quarter end today and the beginning of a new month tomorrow ahead of the July 4th Holiday weekend in the US. For the record I was stopped out of my short 2034 S&P position at 2045 before going short again at an average rate of 2055 only to be stopped out of this position at 2064 and I am now flat.
EUR/USD
No change as I am still a seller on any rally higher to 1.1150/1.1190 with a 1.1225 stop. Remember I will be a very aggressive buyer on any dip lower over the coming weeks to 1.0800/1.0850 with a 1.0750 stop.
September Dollar Index
No change as I am still a seller on any rally higher to 96.20/96.80 with the same 97.30 stop.
September DAX
In contrast to my S&P plan yesterday my DAX plan worked well with the market trading higher to my 9620 sell level before subsequently selling off which enabled me to cover this position at my 9570 T/P level and I am now flat. I still believe that last week’s Referendum result will be better for the UK with the Euro-Zone continuing to struggle. This should see the DAX underperform both the S&P and the FTSE. It interesting that the DAX is now 850 points lower from last Thursday’s close against the FTSE which closed just below its pre-”Brexit’ result. I would expect this trend to continue. Today I will be a small buyer on any dip lower to 9380/9440 with a 9325 stop. I will also look to sell the DAX on any rally higher to 9730/9790 with a 9845 stop.
September FTSE
As mentioned above the FTSE is back to its level from last Thursday helped yet again by a weaker Sterling. It is incredible that with bank stocks lower by an average of over 20% that the FTSE is unchanged showing how specific you have to be in picking individual stocks. The FTSE has strong support from 6195/6225 and today I will be a buyer in this area with a 6160 stop. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer at 6100/6140 where the real support for the FTSE lies with a 6070 tight stop.
Shortly after I posted yesterday GBP/USD (known as Cable) traded back to the 1.3370 area before having a huge rally to 1.3540. I emailed my Platinum Members to cover half of this position at 1.3520 while raising my stop on the other half to 1.3390 which unfortunately got stopped out overnight. This gave me an average gain of 115 points off my long 1.3340 position. Given the significance of the 1.3300/1.3340 15 year trendline I will again look to buy Cable on any dip lower to 1.3320/1.3370 with a tight 1.3275 stop.
Dow Rolling Contract
The Dow which fell 1000 points between Friday and Monday has now regained 750 points in the last two days. Thankfully we had no sell level in the Dow. Just like the S&P above I expect the Dow to make new highs over the coming weeks/months as the positive price action following this aggressive sell-off has been very impressive. This move higher is so frustrating especially after I was stopped out of my long 17225 position at 17150 on Monday and was not able to get a long position on board again. Today I will now move my buy level higher to 17550/17620 with a 17485 stop.
September BUND
My short 166.85 Bund position finally worked out this morning with the market just after hitting my 166.55 T/P level and I am now flat. Today I will again be a seller on any rally higher to 166.85/167.15 with a 167.40 stop. I still do not want to be long the Bund at this time.
Gold Rolling Contract
No change as I am still a small buyer on any dip lower to 1290/1297 with a 1283 stop.
Silver Rolling Contract
Silver continued its recent rally with a 4% gain yesterday to new highs for the year. The rally in Silver was unconfirmed by Gold which still sits below its $1358 high made last Friday morning. As I mentioned yesterday the open interest in Silver is near record levels which is a worry for the bulls. However if strong resistance from from 18.65/19.00 can be taken out there is no resistance after this band until near $21.50. Today I will raise my buy level to 17.80/18.20 with a 17.35 stop.
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