Volatility is picking up ahead of the ‘Brexit’ vote next week with markets now moving in tandem with every new poll released. After I posted yesterday morning Sterling recovered on rumours that an incoming ICM poll for the Guardian newspaper that two weeks ago shocked markets by showing the ‘Leave’ camp gaining significant ground would now show ‘Remain’ back in the lead. This turned out to be wrong as just after the London close the Guardian revealed that the results of a pair of ICM polls – one telephone and one on line – shows ‘leave’ enjoying a 53/47% advantage. Having rallied about 1 ½ cents against the US Dollar on the earlier ‘Remain’ rumour, ‘Cable’ promptly gave back all of these gains to sit at 1.4140 this morning.
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 new Platinum Service it made 85 points yesterday and is now ahead by 357 points for June. The previous three months saw gains of 1532, 2175, and 2265 points respectively. Since I started this service over 12 months ago it has averaged a monthly gain of 2200 points.
The latest ‘poll of polls’ tally published by Bloomberg and which does not distinguish between phone and internet methodologies and includes ‘don’t know’ or ‘won’t say’ shows 46/42.5 in favour of ‘Leave’.
The risk-off mood is reflected in a fall in US stock Indices by between 0.75% and 1%, despite the 45% jump in the share price of Linkedin on news that Microsoft plans to pay $26bn for the networking site. The Vix gauge of S&P options volatility has jumped 4 points to 21 which is its highest reading since 25 February. This follows a near three-point jump last Friday and now leaves the measure above its long term average of about 20. In this context I was a little surprised to see the AUD close higher on the day.
The US Dollar closed a touch weaker in Index terms with the narrow DXY Index down about 0.2%, though this is largely because the Yen continues to display its pre-eminent safe-haven characteristic with USD/JPY now challenging its May low at 105.55. The Nikkei which closed 3.5% lower yesterday has lost another 1% this morning to sit at 15,859.
Meanwhile US 10 Year Treasuries continue to attract safe haven flows with 10s down to 1.61% while UK Gilts have rallied on the view the Bank of England could have to ease again if the UK votes ‘leave’, even if the Pound gets hammered.
This morning on the economic front we have UK CPI and PPI at 9.30 am. This is followed by Euro-Zone Employment and Industrial Production at 10.00 am. At 11.00 am we have the US NFIB Small Business Optimism while at 1.30 pm we have Retail Sales and Import Prices. Finally at 3.00 pm we have Business Inventories.
June S&P 500
Finally we are seeing some pressure on the downside for the S&P which had rallied over the previous three weeks despite awful economic data as the prospect of ‘Brexit’ looms at next week’s Referendum. Shortly after the S&P hit my 2085 buy level I emailed my Platinum Members to exit their long position for a small gain at 2088.50 in expectation of being filled in the Dow plus I was already long the FTSE at this time and I wanted to reduce my risk and I am now flat. I am very surprised that we have not seen any rally as yet ahead of the FOMC tomorrow but given how weak the European Indices are trading I would not rule out a rally ahead of tomorrow where I believe there is no chance of the Fed hiking interest rates at this stage. Yellen is very cautious by nature and in my opinion will use any excuse to leave rates on hold. As I am already long the Dow I will look to buy the S&P on any dip lower to 2066/2072 with a 2059 wider stop which is just below the key 2062 next support level. My only interest in selling the S&P is on a rally higher to 2090/2095 with a 2099 stop which is just above yesterday’s rebound high.
EUR/USD
My Euro plan worked well yesterday with the Euro trading lower to my 1.1240 buy level before having a nice rally to 1.13. As I was already short the Dollar Index I emailed my Platinum Members to exit this position at 1.1260 and I am now flat. Today I will again look to buy the Euro on any dip lower to 1.1190/1.1230 with a 1.1160 tight stop. I still do not want to be short the Euro at this time.
June Dollar Index
My short 94.80 Dollar position finally worked out yesterday with the Dollar trading lower to my 94.40 T/P level with a 94.28 low print and I am now flat. Today I will again look to sell the Dollar on any rally higher to 94.90/95.30 with a 95.65 stop.
June DAX
My DAX plan worked well as shortly after I posted the DAX traded lower to my 9675 buy level before having a nice rally to 9725 which enabled me to cover this position at my revised 9715 T/P level as emailed earlier to my Platinum Members and I am now flat. Subsequently the DAX resumed its sell-off very late in the European session and as a result is very oversold this morning by trading below the bottom of its Daily Bollinger Band and at the bottom of its Williams Index following its 800 point decline since last Thursday. Given how oversold this market is trading I will now look to buy the market from 9520/9565 with a 9460 stop which is just below the April low print. Given how oversold the DAX is trading I do not want to be short the market at this time.
June FTSE
Unfortunately my FTSE plan did not work out so well yesterday. Shortly after I posted the market traded lower to my 6055 buy level before stopping me out this morning at 6010 and I am now flat. Just like the DAX above the FTSE is oversold but unless we get a change in sentiment towards ‘Brexit’ then we will probably stay this away until we get the Referendum result next week. The FTSE has strong support between 5940/5970 and today I will again look to buy in this area with a wider 5905 stop. I still do not want to be short the market at this time.
Dow Rolling Contract
Finally very late in the US Trading session the Dow traded lower to my average buy level at 17740. I am still long and I will leave my stop unchanged at 17675. If I am stopped out of this position I will be a more aggressive buyer in front of 17640 with a 17570 stop. Given the fact that we have the FOMC tomorrow I do not want to be short the Dow at this time.
September BUND
No change as I am still a seller on any rally higher to 165.50/165.90 with a 166.25 stop. I will leave my buy level unchanged at 163.70/164.10 with the same 163.50 tight stop.
Gold Rolling Contract
No change as I do not want to chase the market higher from here and I will leave my buy level unchanged at 1257/1264 with the same 1249 stop.
Silver Rolling Contract
I am still flat Silver and today I will raise my buy level slightly to 16.85/17.15 with a 16.45 stop.
Recent Comments