The RBNZ after the New York markets closed, left Interest Rates on hold at 1.75% but the language has spurred some Kiwi buying. Despite policy remaining “accommodative for a considerable period”, the RBNZ has brought forward the first expected tightening, increased its inflation forecasts, and incorporated some stimulatory impacts from the new Government’s policies. It is a clear tightening bias. They seem to have gotten rid of the notion of rate cuts in what looks to be a first step toward beginning the normalisation of rates. The NZD initially spiked to 0.6960 from 0.6920, and is now trading at 0.6950.
To mark my 1450th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2750 for my Platinum Service which includes 1 to 4 updated emails throughout the trading day. This offer is open to both new and existing members and if anyone is interested in this offer can you please contact me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it made 10 points yesterday and is now ahead by 111 points for November, having made 657 points in October, 447 points in September, 1560 in August, 1096 in July, 1023 in June, 1076 in May, 1375 in April, 1335 in March, 1481 in February and 1734 in January. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points.
Elsewhere, the past 24 hours has again been quiet for trading with minimal moves across all asset classes except Bitcoin. The AUD/USD tilted back up yesterday toward the higher end of its recent trading range, possibly getting a tailwind from still solid Chinese trade growth and commodity demand. Iron ore imports are up 6.3% ytd to October, Australia enjoying a bilateral merchandise trade surplus at over 4% of GDP for the same period.
In the US, there has been more wire chatter about Republicans debating their tax bill, and the news arising from discussions does not look hopeful for an early resolution. Yesterday the Washington Post reported that Senate Republican leaders are considering a one-year delay in the implementation of a major corporate tax cut, saving $100bn. Another report suggests that Senate Republicans are considering fully repealing individual federal tax deductions for state and local taxes – including property taxes – and preserving the estate tax, both proposals likely to get political pushback from within the party.
Meanwhile, in two state Governor elections, the Democrats beat the Republicans, an unsettling heads up for Republicans ahead of the mid-term elections next year, a reminder they need to go to the mid- terms with political achievements including promises of tax reform in a voter-friendly approach. The USD has been largely unmoved, with again very tight 1-2bps ranges for Treasuries. Equities have been hovering in an Expectations of the tax reform bill being passed in its current form are so low, that bad news for a deal has barely stirred the market. The USD is down slightly, in the order of 0.1%, and has tracked sideways in a very tight range for more than a week now. Meanwhile not helping volatility in equity markets was the fact that the VIX has now closed with a 9 Handle for the fourth consecutive trading session with a 9.78 print.
This morning on the Economic Front we have the German Current Account Balance at 7.00 am and this is followed at 9.00 am by the latest ECB Economic Bulletin. At 9.30 am we have UK Industrial Production, Construction Output and the Trade Balance and the NIESR GDP Estimate at 1.00 pm. Finally we have US Weekly Jobless Claims and Wholesale Inventories at 1.30 pm and 3.00 pm respectively.
There are several European events to keep one eye on later today including the ECB’s Nuoy testifying to the European Parliament, the EC updating their economic forecasts and the ECB’s Coeure speaking. (Reportedly, he was pushing back on the open-ended QE last month.) There are also a flurry of other ECB speakers too including Mersch, Constancio, Villeroy de Galhau, and Lautenschlaeger, the last two also pushing back.
December S&P 500
Unfortunately the S&P just missed my 2578 buy level with a 2580 low print before spending the rest of yesterday’s trading session trading higher despite the likelihood of US Tax Reform again getting delayed as outlined above. I am still flat the S&P and today I will continue to be a seller on any rally higher to 2603/2609 with a 2614 stop. Again if I am taken long and subsequently stopped out of this position I will be a more aggressive seller in front of 2622 with a 2630 stop. Meanwhile I will now raise my buy level to 2579/2585 with a 2574 stop.
EUR/USD
I am still flat the Euro which again traded in a narrow range yesterday. Today I will lower my buy level slightly to 1.1490/1.1530 with a 1.1460 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 1.1390/1.1445 with a 1.1345 wider stop.
December Dollar Index
No change as I am still a seller on any rally higher to 95.15/95.45 with a 95.75 stop.
December DAX
As I have mentioned for the past few days the price action in the DAX worries me since we made our latest new all-time high last Wednesday with volume also waning. For these reasons I will leave my buy level unchanged from 13225/13275 with a 13180 stop. However even though the DAX is severely overbought I am reluctant to go short having lost money on that idea last Wednesday.
December FTSE
The FTSE recovered some of Tuesday’s loses in yesterday’s trading session helped by the renewed weakness in Sterling. With Bank of England Executive Director for Markets speaking this morning in Singapore we may finally see some more volatility after months of sideways action. In my near 30 years of trading the FTSE I have never seen such low volatility. Today I will now raise my buy level slightly to 7420/7455 with a 7390 tight stop.
Dow Rolling Contract
I have no idea the timing of when this market is finally going to roll over but the latest Weekly Investors Intelligence Advisors Survey jumped to 64.4% bullish. This new high has exceeded every single advisor optimism of the past 30 years. There is now doubt the combination of weakening breath and extreme bullish sentiment that the Dow’s advance is in its very late stage. As usual we have to wait for a sell extreme to get short. However the Dow does have channel resistance from 23675/23760 and today I will be a small seller in this area with a 23820 stop. Meanwhile I will leave my buy level unchanged from 23370/23440 with a 23310 stop.
December NASDAQ
I am still flat the NASDAQ and today I will now raise my buy level to 6255/6295 with a 6225 stop. Remember a break and close below 6240 is a sell signal. I will also raise my sell level slightly to 6385/6425 with a 6470 wider stop.
December BUND
I am still flat the BUND which is now trading in a severely overbought condition with strong resistance at 164.00. Today I will be a seller on any further rally to 163.95/164.35 with a 164.65 stop. Meanwhile given how overbought we are trading I will leave my buy level unchanged from 162.35/62.75 with a 162.00 stop.
Gold Rolling Contract
Gold made a slight new high today while Silver did not as the lack of movement in this market continues. Again as I do not trust this market I will leave my buy level unchanged from 1258/1265 with the same 1251 stop.
Silver Rolling Contract
My long 16.95 Silver position worked well with the market trading to a rebound high at 17.25 before again selling off into the New York close. This move higher hit my 17.05 T/P level and I am now flat. Today I will again look to buy Silver on any dip lower to 16.60/16.90 with a 16.30 stop. If I am taken long I will have a T/P level at 17.05. If I am taken long and either of the above parameters happen I will be back with a new update for my Platinum Members.
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