Genesis 1973 album laments the loss of English folk culture and increasing American influence. 43 years on, England can now have back as much of the former as it cares for, but has to hope it can look forward to even more of the latter. The Pound meanwhile continues to be sold, and while cable is 125 points off yesterday’s intraday lows, it is still mired below $1.30 and looks well on its way to meeting the next major support target of $1.20 by the middle of next year (or should that read the middle of next week?) . News yesterday of another three UK property funds suspending redemptions (bringing the total so far to six) is the latest addition to negative influences on Sterling.
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 155 points yesterday and is now ahead by 180 points for July having made 2550 points in June. The previous three months saw gains of 1532, 2175 and 2265 points respectively. Since I started this service in June 2015 it has averaged a monthly gain of over 2200 points.
The Pound again sits at the foot of the G10 FX scoreboard in the past 24 hours, -0.74% against the dollar, while the Australian dollar has just pipped the Japanese Yen to top spot, so fully recovering from the dip seen earlier Wednesday yesterday on some combination of a risk-off market tone and to some, minds, the re-insertion of an explicit easing bias into Tuesday’s post-meeting RBA statement. Risk sentiment is a little improved into the New York close, with the VIX back down below 15 (14.96) and US equity Indices showing gain of 0.5-0.75% into their New York close, shrugging of the sea of red seen is Europe earlier Wednesday (Eurostoxx 50 -1.83% with the FTSE100 -1.25%).
Sovereign yields at 10 years are little changed in either Europe or the U.S., which does imply a pullback higher from intraday lows, and led by the front end of the US curve after the US Non-Manufacturing ISM printed a stronger than expected 56.6 up from 52.9 in May and 53.3 expected. The rise was led by new orders (+4.7 points) and business activity (+4.4 point). While the employment sub-index was also higher (52.7 from 49.7) this is more consistent with a pickup in employment in August/September than necessarily suggesting a much stronger rise in Non-Farm Payrolls to be reported this Friday. Also in this respect, the separately reported Help Wanted on-line job ads series showed a further fall in June. As for the June FOMC minutes published last evening, perhaps the most that should be said about them is the uncertainty word count reached a new high of 13. They were completely non market-moving.
Just as markets cannot seem to hold AUD down, so the Euro continued to show no signs of Brexit contagion, back above 1.11 against the USD. This might not last as we head into some key political event risk in September/October (specifically the re-run of the Austrian presidential elections and the Italian referendum on constitutional reform to the Senate. The latter is viewed as a no-confidence vote in PM Renzi’s ruling Democratic party (PD) but where the Five Star Movement, led by sardonic comedian Beppe Grillo and who is demanding a referendum on ditching the euro, has just overtaken the PD in four separate opinion polls.
This morning on the economic front we just had the release of German Industrial Production which printed a very weak -1.3% versus 0.00%. This is followed at 9.30 am by UK Industrial Production and the US Challenger Job Cuts at 12.30 pm. At the same time the ECB will release its Minutes of its last Monetary Policy Meeting. Next we have the US ADP Employment Change at 1.15 pm followed at 1.30 pm by the US Weekly Jobless Claims. Finally at 3.00 pm we have the UK NIESR GDP estimate.
September S&P 5OO
My S&P plan worked really well as I waited until near the bottom of my buy range to buy the market as I was already long the FTSE. As a result I went long at 2071 before the market had as expected a nice rally into the Fed Minutes which enabled me to cover this position at my 2082 T/P level and I am now flat. Interestingly the S&P traced out an upside Key Day Reversal yesterday and with the McClellan Oscillator closing at +58 it is very difficult not to continue to look to buy dips in this market. If the S&P can break and close over 2115 then it is hard not to rule out a move to new highs which would be incredible given the international back drop. I do not trade the US Long Bond as this market can make the DAX look tame in comparison but the Daily Sentiment Index closed with a reading of 95% bulls which is one its highest readings on record. The yield closed at a new all – time low of just 2.20% and remember this Bond has a term of 30 years. Today I will again look to buy the S&P on any dip lower to 2080/2086 with a 2074 stop. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer on any further dip lower to 2065/2071 with a 2058 wider stop. Given the fact that we had this upside Key Day Reversal I do not want to be short the S&P at this time.
EUR/USD
I am still flat the Euro and this morning I will now raise my buy level to 1.0980/1.1030 as we await the latest ECB Minutes from last Month’s ECB Meeting. I will also raise my sell level slightly to 1.1170/1.1220 with a 1.1260 tight stop.
September Dollar Index
With the ECB Minutes due at 12.30 pm I want to be flat heading into this event and I have now decided to cover my short 96.30 Dollar position here at 96.10 and I am now flat. My only interest in selling the Dollar today is on a further rally higher to 96.60/97.00 with a 97.35 stop.
September DAX
It is amazing with the FTSE above its Pre – Brexit levels and the S&P only 1% lower than this economically life changing result the DAX is still 1000 points lower. There is no doubt the gravity of the Deutsche Bank news is having a huge effect yet is not hitting the two indices above as yet. I am still flat the DAX and I will leave the same wide ranges as yesterday where I am a buyer on any dip lower to 9170/9220 with a 9110 stop. My only interest in selling the DAX is still on a rally higher to 9640/9700 with a 9750 stop.
September FTSE
I am not having much joy with my FTSE calls as yet again after the market traded lower to my average buy level at 6455 after I posted yesterday the FTSE followed Cable lower before stopping me out of this position at 6410. Subsequently the FTSE tested the April high at 6385 before having a nice 120 point rally and I am still flat. I am still convinced that selling the FTSE is wrong especially with the continued weakness in Sterling. Remember EUR/GBP was trading below 0.70 just last December and yesterday this currency pair was trading over 0.86. Today I will again look to buy the FTSE on any dip lower to 6420/6450 with a 6370 stop which is just below yesterday’s low print.
Dow Rolling Contract
My Dow plan worked well yesterday as I was already long both the FTSE and S&P I waited to buy the Dow until near the bottom of my buy range at 17750 before the market as expected had a nice rally into the Fed Minutes which enabled me to cover this position at my 17820 T/P level and I am now flat. Today I will again look to buy the Dow on any dip lower to 17780/17840 with a 17725 stop which is just below yesterday’s low print. I still do not want to be short the Dow at this time.
September BUND
No change as I am still short the Bund at 167.75 with the same 168.20 stop. With the huge DSI Reading in the Long Bond as mentioned in my S&P commentary above hopefully this extreme reading will eventually lead to a decent sell-off in the Bund.
Gold Rolling Contract
No change as I am still a small buyer on any dip lower to 1335/1342 with the same 1327 stop. However given the extreme bullishness towards Gold I would be careful with any long position.
Silver Rolling Contract
Following on from my comments about the extreme DSI reading in Silver yesterday it transpires that the 5 day DSI reading has jumped to 94.5% which is the highest reading since the May 2011 top at $51. With this extreme reading I am going to refrain from buying Silver today for the first time in over a year unless we trade lower to 17.90/18.50 where I will be an aggressive buyer against the key 18.10 support with a 17.45 stop.
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