There are few bigger celebrities than Donald Trump and markets on Friday demonstrated that they fear him as President far more than they fear the Fed. In the hour after it was announced that Hillary Clinton’s emails were the subject of a new FBI probe, USD/JPY dropped from Y105.50 to Y104.50, the S&P dropped 20 points or 1% with the VIX spiking by 19% and 10-year Treasuries dropped 2bps from 1.85% to 1.83%. Earlier Friday, Q3 US GDP exceeded expectations at 2.9% (consensus was 2.6%) but on inspection the underlying growth rate looks to have been a fair bit less than that. Inventory accumulation accounted for 0.6% or about 20% of the growth rate. Private consumption ran at a rate of just 2.1%, less than half Q 2s 4.3% run rate. The US Dollar and Treasury yields jumped but only momentarily as algorithmic traders did what they do on above consensus headline numbers.
To mark my 1200th 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 they can email me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it made 206 points on Friday to finish October with a gain of 1572 points, having made 1142 points in September. The previous three months saw gains of 1782, 1682 and 2550 points respectively. Since I started this Platinum Service in June 2015 it has averaged a monthly gain of over 1900 points.
In the end there was no scary ending to the month of October with markets in general playing it cool ahead of a busy week of data releases, Central Bank meetings and what is turning out to be a fairly dramatic US Presidential election. The only scary move from yesterday’s trading session was the sharp drop in oil prices with WTI down 3.9% and Brent-4.1%. There is a growing sense of scepticism that OPEC will be able to achieve a pullback in production with talks over the weekend failing to provide a concrete agreement to cut production.
Friday’s risk off mood from the Clinton’s email saga failed to gained momentum yesterday with equity markets seemingly airing on the side of caution as we wait for more news. European equities fell at the open, reflecting Friday’s drop in US equities, but proceeded to trade sideways with energy stock underperforming as oil prices took a dive. Meanwhile US equities have moved in and out of positive territory before closing the day practically unchanged.
The cautious mood was also evident in currencies with all G10 pairs barring GBP recording modest moves against the USD. News that BoE Governor Carney will extend his time in office, following conflicting reports over the past couple of days lifted Cable back above the 1.22 mark. In a letter to Chancellor of the Exchequer, Carney said that he will extend his time in office by a year to 2019 to guide the economy through Britain’s split from the European Union. After briefly trading down to 0.7583, the AUD is currently trading at 0.7611 and is the second best performing G10 currency, up 0.13% over the past 24 hr. NZD is little bit softer, down 0.17% and after fleetingly trading with a 105 handle, USD/JPY is little change at ¥104.80.
As for data releases, both European advance CPI and GDP printed in line with expectations (core CPI 0.8% yoy and GBP 1.6% yoy) while US data releases were mixed. Chicago PMI disappointed dropping to 50.6 from 54.2,Personal Income rose 0.3% in September in line with expectations while spending rose to 0.5%, a tenth above consensus. Finally, the core deflator was in line with forecasts, rising 0.1% and leaving the yoy rate unchanged at 1.7%
This morning on the economic front we have the Bank of Japan Monetary Policy Statement at 4.00 am. Next we have UK PMI Manufacturing at 9.30 am. This is followed by US Markit Manufacturing PMI at 1.45 pm. Finally at 2.00 pm we have US Construction Spending and ISM Manufacturing.
December S&P 500
It took a while but finally on the announcement by the FBI at looking into Hillary Clinton’s emails the S&P dropped over 20 handles to my 2114 buy level before having a nice rally back to 2126 which enabled me to cover my long position at my 2121 T/P level and I am now flat. Yesterday was very quiet for the US stock market as we await the latest FOMC tomorrow at the earlier time of 6.00 pm. I do not expect any changes with the fact that Fed Chair Yellen is not having a press conference after the announcement. As it is the beginning of a new month plus the fact we have the FOMC tomorrow it is again difficult to short the market as the ‘’buy the dip’’ continues to reap rewards. The S&P needs to break an close below its October low at 2107.75 which may not happen until we get the Presidential Election result next Tuesday. Today I will again look to buy the market on any dip lower to 2112/2118 with a 2106 stop. Despite the negative price action and the fact that the bearish case is building for the S&P I still do not want to be short the market at this time.
EUR/USD
Unfortunately the Euro missed my buy level on Friday before as expected rallying strongly. I am still flat and today I will raise my buy level to 1.0910/1.0940 with a 1.0780 tight stop.
December Dollar index
I am still flat the Dollar and today I will lower my sell level to 98.70/99.10 with a 99.50 stop. Remember the key level to watch for the US Dollar is the December 2015 high at 100.51, a break and close above here which will be at least short-term bullish.
December DAX
My DAX plan worked well on Friday on what was a hugely volatile trading session for the market. Shortly after the European Markets opened the DAX traded lower to my 10580 buy level before having a nice 120 point rally which enabled me to cover this position at my 10650 T/P level and I am still flat. The market traded sideways yesterday and today I will again look to buy the DAX on any dip lower to 10530/10580 with a 10470 stop. I still do not want to be short the market at this time.
December FTSE
My FTSE plan also worked well with the market trading lower to my 6910 buy level shortly after the open before rallying to my 6965 T/P level and I am still flat. The FTSE has strong support at the 6860/6890 two month trend-line support and today I will again be a buyer in this area with a 6830 tight stop. The fact that today is the beginning of a new month when traditionally Fund Managers put new money into the stock market and for this reason I do not want to be short the FTSE today.
Dow Rolling Contract
Unfortunately the Dow just missed my 18070 buy level on Friday with a 18092 low print before rallying 140 points and I am still flat. Yesterday the VIX closed at 17.06 which was its highest close since the 18.06 print on September 14, which was the day the Dow traded to a low of 17,992. Again as the long as the Dow can hold the 17950/18020 area then it is difficult to go short. Today I will leave my buy level unchanged at 18010/18070 with the same 17950 stop.
December BUND
I am still flat the BUND having thankfully avoided the huge 200 point sell-off late last week. The BUND has support at the April low at 161.45 and below that at the March low at 160.90. Today I will raise my buy level to 161.30/161.70 with a 160.85 stop. The Bund should have strong resistance at the 162.80/163.10 area and today I will be a small seller in this region with a tight 163.35 stop.
Gold Rolling Contract
I am still flat Gold which is trying to break higher. Today I will raise my buy level to 1262/1269 with a 1254 stop.
Silver Rolling Contract
My Silver plan worked well with the market hitting my 17.50 buy level on the release of Friday’s US GDP data. The market subsequently rallied to a 17.95 high but unfortunately I covered my long position too early at 17.61 and I am still flat. Today I will again look to buy the market on any dip lower to 17.30/17.70 with a 16.95 stop which is just below the October low print at 17.09.
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