Yesterday’s seemingly dire China December trade numbers cast a pall over risk market as well as AUD and NZD during Monday’s trading session, albeit AUD is back to 0.72 and the sell-off in European and US stock markets has been limited to +/-0.5%. Citibank kicked off the US earnings season with better than expected results with the stock closing up 4% and financials are bucking the trend of US stock weakness across all other S&P sectors. Bond yields are little changed on Friday’s close.
To mark my 1750th 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 To demonstrate this value, a monthly subscription over the same period would cost 4440 euro in total This offer represents a 38% discount and is open to both new and existing members. If anyone is interested in this offer can you please email me on bryan@tradernoble.com for detail
For anyone following my Platinum Service it made 30 points yesterday and is now ahead by 779 points for January, having made 2803 points in December, 1541 points in November, 2094 points in October and 1279 points in September Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
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Currencies
AUD and NZD both took a knock upon the release of the December China trade data yesterday showing exports -4.4% y/y against expectations of a +2.0% and imports down -7.6% y/y against +4.5% expected. The former is seen to be symptomatic of weaker global demand that transcends the impact of US tariffs, with weaker exports to the Euro-Zone as well as the US. Weaker imports meanwhile are viewed as evidence of an even sharper slowdown in China’s economy. If there is silver lining in yesterday’s numbers, it is that they surely further incentivize China to do what is necessary to strike a reasonably comprehensive trade deal with the US (and where talks resume in Washington on Jan 30th).
AUD/USD has recovered to as high of 0.7220 in overnight markets and currently suits around 0.7210, about a quarter of a cent up on its post-trade data lows, amid what is a generally flat performance by the big dollar, include EUR/USD, the biggest component of USD Indices. The latter is despite another downside surprise in Euro-Zone data (EZ Industrial production- 1.7% vs -1.5% expected ) and warnings that both Germany and Italy may have fallen into technical recessions in Q4 (both countries having recorded negative Q3 GDP readings). Q4 numbers will be revealed at the end of the month.
ECB President Draghi speaks this afternoon in Strasbourg, ostensibly only to deliver the 2017 (yes 2017) ECB annual report, but might choose to say something about recent Euro-Zone data.
Sterling has been quite volatile ahead of the parliamentary vote on Theresa May’s deal today (time not known) but is currently up about 0.2% on Friday’s close. EC President Juncker and European Council President Tusk sent a letter to Theresa May saying the EU was firmly committed to work speedily on a subsequent trade deal by the end of 2020, so the Irish backstop need not be triggered. But the letter did not provide any of the legal reassurances that Brexiteers are clamouring for, so political analysts expect May’s deal will be comprehensively voted down. MP Steve Baker, who is part of the Brexit-supporting ERG, said that its group would vote against the deal.
Bloomberg reported a survey of FX strategists that forecast GBP could move to 1.34-1.35 in the event of a second referendum or May’s deal passing and as low as 1.22 in the event of a general election (raising the risk of a Jeremy Corbyn government with socialist tendencies). Strategists saw GBP heading to 1.15 in the event of no-deal, although this seems a less likely outcome with parliament stepping up its efforts to take control of the process to prevent such a scenario.
Equities
The US Indices closed down 0.5% yesterday but already these losses have been erased with the Futures Market up 0.6% this morning as China recovered from yesterday’s sell-off with the Shanghai Composite closing 1.48%.. Financials have held up the S&P where all other sub-Indices are in the red. This is after CitiiGroup reported Q4 earnings per share of $1.61 against a street consensus of $1.55, even though its trading revenue suffered during the Q4 market volatility. Both JP Morgan and Wells Fargo report their earnings prior to Today’s market open, BoA and ML report pre-market open on Wednesday and Netflix at the closing bell on Thursday.
Bonds
US yields are narrowly mixed, with the 2-year Treasury Note currently 0.6bp lower at 2.535% and 10s +0.7bp at 2.708%, so really nothing to see here. Euro-Zone yields are lower, with 10 year German yields -1bps and some peripheral yields as much as 2.7bps lower (Spain).
Commodities
Oil fell by over $1 on Friday and closed off about the same again yesterday (WTI -90 cents and Brent -$1.30), before reversing yesterday’s losses overnight. The message about the (ill?) health of global demand is the obvious fundamental pretext for lower prices. By the same token, base metals are all lower and iron ore flat, though steel rebar futures are up 1%. Gold is up $1.
This morning on the Economic Front we have Euro-Zone Trade Balance at 10.00 am. Next we have US Empire Manufacturing and PPI at 1.30 pm, ahead of ECB President Dragi’s speech in Strasburg at 3.00 pm.
Finally the Fed’s Kaskari. George and Kaplan are all speaking this afternoon at 4.30 pm, 6.00 pm and 6.15 pm respectively.
March S&P 500
Market volume was light yesterday with just 6.8 billion shares traded. Outside of Christmas Eve, which was a half-day, it was the lightest volume day since late November. The S&P closed 0.5% lower and this was enough to see the McClellan Oscillator fall to +242 from last Friday’s +322 print. The Bears are certainly worried as the S&P does not appear it wants to give up much of it’s 260 Handle rally since the low of December 26. However for the Bulls to regain proper control we need to see the S&P break and close over its 50 Day Moving Average which comes in at 2633 this morning. Unfortunately the S&P just missed my 2564 buy level yesterday with a 2567 low print and I am still flat. Today I will now raise my buy level to 2562/2574 with a 2554 tight stop. I will also raise my sell level to 2617/2632 with a tight 2640 stop.
EUR/USD
I am still flat the Euro as we wait for the key UK Parliament vote on ‘’Brexit’’ some time later today. Ahead of this key vote I will leave my 1.1370/1.1410 buy level unchanged with the same 1.1335 stop. I no longer want to be a seller of the Euro at this time.
March Dollar Index
No Change as I am still a buyer on any dip lower to 94.05/94.45 with a 93.70 stop.
March DAX
The DAX is trading 150 points higher this morning helped by the 1.48% gain in the Shanghai Composite. I am still flat and today I will now raise my buy level to 10750/10820 with a 10690 stop. I no longer want to be a seller of the DAX at this time as the price action is positive despite the awful economic data released over the past two months. Remember a market that does not fall on bad news has to be respected.
March FTSE
Frustratingly the FTSE missed my buy level yesterday by 10 points before rallying ahead of the ‘’Brexit’’ vote later. Today I will now raise my buy level to 6750/6790 with a 6715 tight stop.
Dow Rolling Contract
It took time but finally the Dow traded higher to my 24090 sell level overnight before the market sold off 60 points. As I wanted to bank some points for yesterday’s trading session I emailed my Platinum Members at 7.00 am to exit any short position at 24060 or lower and I am now flat. I no longer want to be short the Dow at this time as the price action is still bullish after the 2300 point rally since December 26. Today I will now raise my buy level to 23600/23780 with a 23550 stop.
March NASDAQ
I am still flat the NASDAQ and today I will also raise my buy level in this contract to 6460/6520 with a 6415 stop. The NASDAQ has small resistance at 6700 and today I will now raise my sell level slightly to 6690/6750 with a 6785 stop.
March BUND
Just like the FTSE above the BUND also missed my call yesterday with the Bund falling shy of my 164.90 sell level with a 164.88 high print before falling 50 points and I am still flat. Today I will leave my 164.90./165.30 sell level unchanged with a lower 165.60 stop.
Gold Rolling Contract
Gold has not moved much over the past week. I am still flat and today I will again leave my 1267/1276 buy level unchanged with the same 1259 stop.
Silver Rolling Contract
No Change as I am still long at 15.60 with the same 15.75 T/P level and 15.25 stop. If any of the above levels are hit I will be back with a new update for my Platinum Members.
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