Yesterday was another listless trading session although extremely profitable for my members as the US earnings season is drawing to a close with one of the best quarters of growth for quite some quarters. But that, and the tantalising prospect that corporate tax reductions and deregulation from the Trump Administration, and hopes of better growth, seems to be priced in. The market needs more to trade on, and it’s happening at a time when news/statements from the White House environs continue. There’s the fracas over the bans on immigration and court proceedings and there was also news late yesterday that US prominent retailer Nordstrom had pulled Ivanka Trump’s fashion line from its shelf, copping a tweet from @RealDonaldTrump. Not that this is an especially big market issue, but it keeps the continuation of comments from Washington front of mind.
To mark my 1250th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2750 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 can you please contact me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it made 180 points yesterday and is now ahead by 491 points for February having made 1734 points in January, 1351 in December, 1971 in November and 1582 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 1800 points.
The US Dollar continues to retreat (though it has clawed back up a tad this morning). Equity markets are flat to the point where you wonder if they’re open, while there appears to be more action in the Bond market, with yields lower across the board, including in Europe and more broadly there, despite political uncertainty in France, and in the past 24-48 hours more Greece news, an IMF report drawing attention to their unsustainable debt.
The latest IFOP poll in France has Macron as winning in the second round against Le Pen 64-36. (Whether you view that as a contra indicator, it’s up to you.) Gold is up $5.10 so far in the session to $1,241.20. Running a little against the tide, base metals are higher, copper by 1.73%, while iron ore in China was up modestly again yesterday, by $0.24. Oil is also up smalls.
Overnight, the RBNZ (New Zealand Central Bank) has left the cash rate unchanged at 1.75% (no surprise at all), but the outlook for the OCR is more dovish than the market had expected. The market had been priced for 1½ hikes from the RBNZ over the next 12 months (37 bps), but this morning’s RBNZ OCR track has it steady not only through this year and next and not hiking until 2019. As a dampener on the inflation outlook, the RBNZ said that the NZD remains higher than sustainable for balanced growth, endeavouring to talk it down in the process. In response, not a surprise perhaps that the Kiwi has been trading lower initially in response, the NZD/USD down from 0.73 just before the announcement, down to 0.7195 on what has been a large overnight move following the RBNZ Statement.
In other news Deputy Governor Jon Cunliffe of the Bank Of England was speaking yesterday and his comments looked to be more cautious on the outlook than BoE MPC member Kristin Forbes’ comments were the day before alluding to the potential for a rate hike. This did not affect Sterling which closed unchanged.
This morning on the economic front for the second consecutive trading session have no news of importance due form either the Euro-Zone or the UK. At 1.30 pm we have US Weekly Jobless Claims. Finally at 3.00 pm we have Wholesale Inventories.
There are two Fed speakers this afternoon. St. Louis President James Bullard (FOMC nv this year) is speaking first at 2.10 pm, followed by Charles Evans (v) speaking three hours later. Evans is more toward the two rate hike camp – more dovish than the consensus – while Bullard is in the one more and done” camp on the basis that the forecasts have the economy continuing to dawdle along at full employment with inflation close to target, not foreseeing the need to tighten further. (Of course, whether Administration policy changes that outlook is a large uncertainty)
March S&P 500
My S&P plan worked perfectly yesterday with the market trading lower to my 2282 buy level with a 2281 low print before rallying back above 2290 and this rally enabled me to cover my long position at my 2287 T/P level and I am now flat. As I mentioned in one of my emails to my Platinum Members yesterday was the 37th consecutive trading session when the S&P has not moved by more than 1%. This is a new unwanted record as far as traders are concerned, explaining why the VIX is now trading at multi-year lows. This will not last and when it does we will see an acceleration in the market. With this lethargic market it is pointless in looking for more than 5/6 Handles on each trade. Today I will again look to buy the S&P on any dip lower to 2279/2285 with a 2274 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 2265/2271 with a 2259 wider stop. My only interest in selling the S&P is still on a rally higher to 2304/2310 with the same 2315 stop.
EUR/USD
It took a while but finally my long 1.0645 Euro position worked out with the market trading back above 1.07. This rally enabled me to cover this position at my 1.0670 T/P level and I am now flat. Today I will again look to buy the Euro on any dip lower to 1.0615/1.0645 with a 1.0585 stop. I still do not want to be short the Euro at this time especially ahead of the Trump/Abe meeting this weekend.
March Dollar Index
The Dollar eventually hit my 100.10 buy level before finally rallying overnight and this rally enabled me to cover this position at my revised 100.35 T/P level and I am now flat. Today I will again look to buy the Dollar on any dip lower to 99.55/99.90 with a 99.20 stop.
March DAX
My DAX plan worked perfectly yesterday with the market trading lower to my 11480 buy level before bouncing 100 points and this rally enabled me to cover my long position at my 11530 T/P level and I am now flat. The DAX continues to hold its key 11400 support level and this is vital as a break and close below this level is potentially very bearish. Today I will again look to buy the DAX on any dip lower to 11480/11530 with a 11440 stop. If I am taken long and subsequently stopped out I will be a more aggressive buyer in front of 11400 with a 11350 stop. I still do not want to be short the DAX at this time as we are still in an uptrend.
March FTSE
My FTSE plan also worked well with the market hitting my 7080 buy level before rallying to my 7110 T/P level and I am now flat. This morning the FTSE rally is continuing as we await the BoE Governor Carney’s speech in London this evening at 6.30 pm. Today I will again look to buy the market on any dip lower to 7060/7090 with a 7025 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
I am still flat the Dow as none of my parameters got hit yesterday. Following on from my comments on how overvalued and over extended this market is, the Weekly Investors Intelligence Advisors Survey was released and shows a reading of 69.9% bullish. This is the highest level of optimism in 30 years. The last time the Bullish Percentage was higher was in January 1987, as the Dow was in the latter stages of its rally ahead of the stock market crash the following October. Of course we do not short the market on this statistic as if and when we do get a sell extreme the charts will then tell us when to go short. There is no doubt in my opinion that we are in for a rocky second half of 2017 with the Trump victory postponing a US recession by probably 9/15 months. Today I will again leave my Dow buy level unchanged at 19930/19990 with the same 19880 stop. My only interest in selling the Dow is still on a rally higher to 20160/20220 with a 20270 tight stop.
March BUND
The Bund hit my 164.25 sell level with a 164.42 high print before trading to a 164.10 low as I write this commentary. I did not sell the Bund myself and if you are short you can take your profit here. Given the ongoing political debacle in France and Germany Bond yields have fallen as the money comes into the Bond market for safety reasons. The Bund has very strong resistance from 164.40/164.90 as this is where the 200 Day Moving Average comes in coupled with the fact that the market is very overbought. Today I will look to sell the Bund on any rally higher to 164.40/164.75 with a 165.05 stop. Given how overbought the Bund is trading I do not want to be long the market at this time.
Gold Rolling Contract
Gold has continued to rally off its extreme oversold 1123 early December low with the market now testing its next resistance level at 1245. The Daily Sentiment Index is one of the best technical tools you can use and when the DSI printed in single digits for the first two weeks in December it was only a matter of time before this market turned around. This low reading also occurred in Silver and was one of the main reasons why I bought Silver in my pension fund at 15.80. Today I will raise my Gold buy level to 1222/1229 with a 1215 tight stop. Gold should have good support at the 1220/1227 level as this area was good resistance initially before we eventually broke higher last week.
Silver Rolling Contract
No change as I am still a buyer of Silver on any dip lower to 17.30/17.60 with a 16.95 stop.
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