It has been a relatively quiet 24 hours for markets with the moves in Sterling probably the major highlight. Bank of England Governor Mark Carney faced the Treasury Select Committee in Parliament and was quick to give himself a nice pat on the back for the bounce in business and consumer surveys in August, noting that part of the recovery in sentiment was ”because the bank took timely, comprehensive and concrete action and that action had an impact”. Although the Governor acknowledged that risks of recession had somewhat diminished, he noted that the UK economy still faced a significant slowdown due to the EU Referendum, adding that the Monetary Policy Members were ready to cut the cash rate further if necessary.
Due to the number of Members taking up my 2 year Euro 2500 for my Platinum Service in recent months, this will be the last month I am offering this special price which will rise to Euro 2750 on October 1 2016. If anyone is still interested in this original deal which has been in situ since January 1 can you please email me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it made 100 points yesterday and is now ahead by 80 points for September having made 1722 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.
Carney’s appearance in Parliament weighed on the pound, but the currency was already under pressure following softer than expected manufacturing data. In July Manufacturing Output fell -0.9% versus +0.3 expected, and although Industrial Production beat expectations the market focus was on the softer data print. The net effect is that the Pound is the worst G10 performer, closing down 0.75% against the US Dollar.
The US Dollar closed a little stronger in New York with the DXY up 0.11%. That said the NZD and JPY have outperformed with Tuesday’s theme still an influence on yesterday’s trading session. The AUD is little changed while the CAD lost ground against the US Dollar after the Bank of Canada left its Cash Rate unchanged but noted downside risks to the economy’s outlook.
Looking at other markets, US stocks have ended the day slightly softer dragged lower by declines in grocery chains after Sprout Farms Market cut earnings expectations. Meanwhile European equities played a bit of catch up from Tuesday’s moves and closed the day marginally higher, while core Global Bond Yields were practically unchanged.
Yesterday the US JOLTS Report provided some food for thought. The number of Job Openings in July jumped 4% to a new cycle high of 5,871K versus 5.630K expected. This report was a pleasant surprise and is consistent with the NFIB jobs-hard-to-fill measure which hit a new cycle high in August. That said, these figures are for July and at best they only partially offset the weaker August numbers seen in the ISM reports.
The Beige Book was also released last night and it showed the US economy grew at a modest pace in July and August, but there was no evidence of major upward pressure on wages and prices. So on this account, there is no need for the Fed to hike rates in September.
This morning on the economic front we already had the release of German Labour Costs which printed +0.2% versus +0.6% expected. Next at 12.45 pm we have the ECB policy Meeting which is the major highlight of the day. With no change is expected the Bank will release a new set of economic forecasts. I think there is a good chance we will get a downgrade to the growth and inflation outlook and as a result the risk is that Dragi in his press conference at 1.30 pm may hint at an extension of the Asset Purchase Programme which is due to end in March of next year. Also at 1.30 pm we have the US Weekly Jobless Claims. Finally at 8.00 pm we have US Consumer Credit.
September S&P 500
My S&P plan worked well with the S&P hitting my 2181 buy level before subsequently rallying and this move higher enabled me to cover my long position at my revised 2186 T/P level. I also emailed my Platinum Members to re-buy the S&P on any dip lower which we did at 2179.50 before after another rally attempt enabling us to cut this position at 2182.50 ahead of the Beige Book release and I am now flat. Finally the internals of the market are starting to perform with the S&P 600 Small Cap Index, the Russel Index and the S&P 400 Mid Cap Index at either at new all-time highs or new recovery highs. This is reflected in the McClellan Oscillator which closed at positive 35 last night after breaking positive on Tuesday with a +11 print. As I have mentioned over the past few weeks the path of least resistance for the S&P is to the upside and that it is only a matter of time before we break the next resistance level from 2200/2220. Today I will again look to buy the S&P on any dip lower to 2178/2183 with a 2172 stop. The 2175/2180 should now act as reasonable support. I still do not want to be short the market at this time.
EUR/USD
Thankfully the Euro traded lower after I posted yesterday which enabled me to cover my short 1.1250 position from Tuesday at my 1.1230 T/P level and I am now flat. With the ECB Meeting and Dragi press conference this afternoon I am going to stay flat until we see what they have to say. If as I suspect Dragi announces an extension to the ECB’s Asset Purchase Progamme then at the margin the Euro should turn negative and if it does I will again look to buy the market from 1.1155/1.1195 with a 1.1125 stop. I still do not want to be short the Euro as to me it is still only a matter of time before the Euro trades higher to its next resistance at 1.1400/1.1440.
September Dollar Index
I am still flat the Dollar and today I will now raise my sell level to 95.50/95.90 with a 96.30 stop.
September DAX
The DAX spiked higher to my 10770 sell level yesterday afternoon with a 10777 high print before subsequently trading lower. I did not sell the market myself and I am still flat. Today I will look to sell the DAX on any post ECB rally to 10840/10900 with a 10950 stop. My only interest in buying the DAX is still on a dip lower to 10590/10650 with a 10545 stop.
September FTSE
I am still flat the FTSE and today I will now raise my buy level to 6790/6820 with a 6760 stop.
Dow Rolling Contract
The Dow has struggled over the past six weeks since it made its 18,622 high on July 20 and the August 23 high at 18,631. Just like the S&P above, in my opinion it is only a matter of time before we break these levels and traded higher especially with the McClellan Oscillator finally pushing into positive territory. I am still flat the Dow which again juts missed my 18455 buy level yesterday with a 18472 low print before subsequently rallying. Today I will again move my buy level slightly higher to 18415/18475 with a 18360 stop.
December BUND
I am still flat the Bund which continues to push higher and today given that it is ECB day I will leave my buy level unchanged at 164.50/164.90 with a 164.20 stop. Despite the insane yield on the Bund I still do not want to be short the market at this time.
Gold Rolling Contract
No change as I am still a small buyer on any dip lower to 1329/1336 with a 1321 stop.
Silver Rolling Contract
Silver traded lower to my 19.75 buy level yesterday afternoon. I am still long and I will now raise my stop slightly to 19.05.
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