After a few days when it looked as though global markets , whether in FX, Interest Rates or Equities, were no longer moving in lock-step with intra-day swings in the oil price, oil looks to be back front and centre of things as shown by yesterday’s price action. Brent Crude closed within kissing distance of $50 for the first time since November last year while WTI Crude has advanced an even bigger $1.67 to close at $47.88, also its best level since November. This morning WTI is another $1 higher at just under $49 and now nearly double its $26 low print in early February. Supply disruptions in Nigeria, political instability in Venezuela and upgraded price forecasts for the second half of the year by the most well known US Investment bank in the energy space, are all being cited as being somewhat responsible for the latest moves higher.
To mark my 1075th 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 Platinum Service it made 10 points yesterday and is now ahead by 724 points for May having made 2175 points in April. The previous two months saw the same gain of 2265 points in both February and March after a record 3365 point gain in January. Since I started this service last June it has made over 24,500 points.
US Stocks recovered all of last Friday’s losses, with the S&P closing up 1% with gains led by Materials and Energy sectors. In third place is Information Technology led by Apple which closed 3.5% higher on news that Warren Buffett bought nearly $1bn worth of the stock.
In Bonds, just as weaker US stocks post last Friday’s strong US Retail Sales and Consumer Confidence data ended up pulling Treasury Yields lower, the stock market recovery and higher oil has now pushed nominal yields and break-evens back higher. The 10 Year Treasury closed 5.3bps higher at 1.75% while 10-year break-evens just over 2bps higher at 1.64%.
In Currencies, and after Monday’s early downside forays in both the Australian and New Zealand Dollar after China reported soft data over the weekend, these currencies reversed strongly to sit on top of the G10 Leader board along with the Canadian Dollar and the NOK. Significantly the AUD closed in New York above its 200 Day Moving Average and that gain has continued this morning with the AUD/USD back above the key 0.7300/0.7320 resistance area at 0.7350.
European Markets are opening higher this morning after the Nikkei closed 1.15% higher at 16,650 on the weaker Yen with USD/JPY now trading back above 109. The higher oil price is also helping markets but you got to wonder if a much stronger oil from here will start to impact on economic growth.
This morning on the economic front we have UK CPI, PPI and the ONS House Price Index at 9.30 am. This is followed at 10.00 am by the Euro-Zone Trade Balance. Next we have US CPI and Real Average Weekly Earnings at 1.30 pm. Finally we have US Industrial Production at 2.15 pm.
The Fed’s Williams and Lockhart are both speaking on the Economy at a conference at 5.00 pm while later at 6.15 pm the Fed’s Kaplan is also due to speak on the US economy.
June S&P 500
Just when it looked likely that we would finally take out the key support at the 2035/2040 area Warren Buffet comes in and saves the day with his $1bn investment in Apple. The S&P was trading at 2042 when this announcement came through and I emailed my Platinum Members to raise their sell level in the S&P which subsequently put me short at 2060 before very quickly stopping me out of this position at 2064 and I am now flat. Yesterday’s move again shows why we can only be short the equity markets for a few hours as despite the incredible over valuation of the US stock market with PE’s near the 22/24 level and a worsening economic situation. I have no doubt US stock markets will trade substantially lower but when and how are the two big questions that remain unanswered. This morning the S&P is trading higher again and I will now look to go short from 2076/2082 with a 2087 stop. I have to respect the price action and I will now move my buy level higher to 2054/2059 with a 2049 stop.
EUR/USD
The volatility in the Euro has just disappeared over the past 14 months as this time last year we were trading at 1.14. I am still flat the Euro and today I will raise my buy level slightly to 1.1260/1.1290 with a 1.1225 stop.
June Dollar Index
No change as I am still a small seller on any rally higher to 94.75/95.05 with the same 95.30 tight stop. For the Dollar to break much lower from here it needs to take out its 91.80 low print from two weeks ago.
June DAX
Thankfully we stayed out of the DAX yesterday having covered our 9950 short position at 9885 on late Friday. With most of Europe back at their trading desks this morning after the Whit Monday Holiday we are seeing the DAX trading 200 points higher at just below the 10,100 level. Today I will be a small seller on any further rally higher to 10160/10220 with a 10270 tight stop. My only interest in buying the DAX today is on a dip lower to 9930/9985 with a 9875 stop.
June FTSE
The FTSE is following the other markets higher which is frustrating as the market just missed my 6050 buy level by a few points after I posted yesterday morning and I am still flat. Today I will now move my buy level higher to 6090/6125 with a 6060 stop. The FTSE has strong resistance at the 6200/6225 area and I will be a small seller in this region with a tight 6250 stop.
Dow Rolling Contract
My long Dow position worked well yesterday helped by the Buffet investment in Apple which saw the Dow rally over 200 points. Unfortunately I had a T/P level at 17570 on my 17520 long position which was taken late Friday and I am now flat. Today I will try to sell the Dow on any further rally higher to 17810/17870 with a 17920 stop. Despite the positive price action my only interest in buying the Dow is on a dip lower to 17570/17630 with a 17510 stop.
June BUND
The BUND continues to sell-off from the 164.60 resistance level seen twice last week. I am still flat and today I will be a small buyer on any further dip lower to 163.00/163.30 with a tight 162.75 stop. The 163 level should act as good support and initially we should see the market rally off any test of this area.
Gold Rolling Contract
No change as I am still a small buyer on any dip lower to 1257/1264 with a 1251 stop.
Silver Rolling Contract
Silver traded lower to my 17.10 buy level yesterday afternoon. I am still long and today I will raise my stop on this position to 16.60.
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