The ADP Employment estimate of private sector payroll growth in the US for July came in at 179K, a shade above the 17OK consensus, with the prior month surprisingly revised down by 4K to 172K despite the outsized gain reported by the BLS for June Non-Farm Payrolls. More importantly, the July Non-Manufacturing ISM Survey reported a small drop in the headline index, to 55.5 from a very strong 56.5 in June and just beneath the 55.9 expected. However under the hood, the details were generally better than the headline. In particular, the New Orders Sub Series rose to 60.3 which was the highest reading since October 2015, while Net Export Orders rose 2 ½ points to 55.5. Employment slipped 1.3 to 51.4 but four of the last five months have been above the 50 threshold. On every one of the sub-indices, the July reading is higher than the average of the last six months although Prices Paid fell to a four month low of 51.9.
To mark my 1100th issue of Tradernoble Daily Commentary I am offering 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 10 points yesterday and is now ahead by 170 points for August having made 1682 points in July. The previous three months saw gains of 1532, 2175 and 2265 points respectively. Since I started this Platinum Service in June 2015 it has averaged a monthly gain of over 2100 points.
Fed speak was confined to Chicago Fed President Charles Evans, who told reporters that ‘’I do think perhaps one rate increase could be appropriate this year…. I get there in the following way: I think the real economy is doing quite well in the US especially given all the headwinds we are facing and the uncertainty from abroad’’. This from one of the traditionally most dovish FOMC Members who is currently a non-voter but who rotates back to the voting roster next year.
As for the markets, US equities have ground out small gains with the S&P 500 closing up 0.3%, led by energy stocks linked to a rebound in Crude. Both WTI and Brent closed $1.50 higher despite a build in crude inventories reported by the EIA, though gasoline inventories dropped. This follows a fairly flat day in Europe in contrast to Tuesday’s sharp declines, despite more pressure on European bank shares and where the likes of Italy’s Unicredit were halted limit down for the third consecutive day.
US Treasury Yields were initially higher in the wake of the US data, but prices have since retreated to leave 10 year yields 1.4 bps lower on the day.
The currency markets were flat although the US Dollar did strengthen a touch with the EUR/USD closing in New York at 1.1150 as against 1.1225 on Tuesday.
This morning on the economic front the ECB will publish its latest Economic Bulletin at 9.00 am. At 12.00 pm we have the Bank of England rate announcement and Asset Purchase Target. This is followed by the US Challenger Job Cuts at 12.30 pm and the Weekly Jobless Claims at 1.30 pm. Finally at 3.00 pm we have US Factory Orders.
September S&P 500
The S&P traded in a very narrow range as we await the NFP data on Friday and I am still flat. Today I will raise my buy level to 2145/2151 with a 2139 stop which is just below Tuesday’s low print. I still do not want to be short the S&P at this time as I will continue to wait for a sell extreme that exists for more than a few days. The price action for the S&P has been very resilient over the past week as despite the huge sell-off in bank shares the S&P is holding in nicely, helped in no uncertain terms by the weaker Dollar and rebound in Crude prices yesterday.
EUR/USD
The Euro traded lower to my 1.1150 buy level. I am still long and I will now raise my stop on this position to 1.1095. I still do not want to be short the Euro at this time.
September Dollar Index
As I am now long the EUR/USD I will now raise my sell level in the Dollar to 96.10/96.50 with a 96.80 stop. After a huge drop in the Dollar over the past week the Dollar is due a rally and we may have seen the start of this rally late yesterday.
September DAX
I am still flat the DAX which just missed my buy level before having a late day rally. Today I will now raise my buy level slightly to 10070/10130 with a 10025 stop. Remember the 100.50/101.00 should act as strong support for the DAX at least initially. With the NFP due tomorrow I still do not want to be short the DAX at this time.
September FTSE
Unfortunately the FTSE just missed my 6555 buy level with a 6565 low print before following the other markets higher. With the Bank of England Rate announce due at 12.00 pm I am going to stay flat until we get this news event out of the way and if the FTSE sell-off on this news I will be a buyer on any dip lower to 6520/6550 with a 6485 stop. Just like the other Indices I still do not want to be short the FTSE at this time.
Dow Rolling Contract
Yesterday was the first day of the past eight days that the Dow closed higher. Unfortunately before the Dow rallied after lunch the Dow just missed my 18250 buy level with an 18256 low print and I am still flat. As mentioned over the past few days the Dow has very strong support at the 18200/18250 area and today I will now raise my buy level slightly to 18230/18290 with an 18170 tight stop. Despite the negative price action since the Dow made its high on July 20th at 18622 I do not want to be short the market at this time.
September BUND
Finally just before the close last night the Bund rallied and this enabled me to cover my 166.80 long position for a small gain at 166.90 and I am now flat. Today I will again look to buy the Bund on any dip lower to 166.20/166.60 with a 165.85 stop. Remember the Bund has good support at the 166.20/166.50 area. Given the recent sell-off in the Bund I do not want to be short the market at this time especially as we should the market trade higher if we get a weak NFP Report tomorrow.
Gold Rolling Contract
No change as I am still a small buyer on any dip lower to 1330/1338 with a 1323 tight stop.
Silver Rolling Contract
Silver traded lower to my 20.40 buy level. I am still long and I will now raise my stop on this position to 19.90. The one worry in relation to my long position is the fact that the Daily Sentiment Index reading has now jumped to 91% bulls, hence the reason I have raised my stop on this position.
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