In a quiet trading session, US and UK equity Indices edged a little bit higher buoyed by technology and financial shares while European Indices drifted lower weighed down by energy shares following a sharp drop in oil prices. The lack of major data releases has kept G10 currencies contained within recent ranges and in Emerging Markets, the Turkish Lira has recovered some ground after sliding 4.6% on Friday following the attempted coupe.
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 Platinum Service it made 20 points yesterday and is now ahead by 1025 points for July having made 2550 points in June. The previous three months saw gains of 1532, 2175 and 2265 points respectively. Since I started my Platinum Service in June 2015 it has averaged a monthly gain of over 2200 points.
News of Softbank Group agreement to buy ARM Holdings boosted technology stocks while bank shares got a lift following better than expected earnings results from Bank of America. Meanwhile the fall in oil prices weighed down on energy stocks. WTI and Brent fell 3.1% and 2.9% respectively amid concerns of growing glut in product markets, particularly gasoline, suggesting a decline in demand for oil by refineries.
As for currencies, Sterling has made a rare appearance at the top of the G10 Leader Board, gaining 0.54% against the US Dollar. The Sterling 24bn takeover of ARM by Japanese tech giant Softbank gave the pound an initial boost while hawkish comments from the Bank of England’s Weale also boosted the currency. Weale said that he wanted to see concrete evidence of a ‘’Brexit’’ inspired economic slowdown before considering cutting interest rates. Noting that ‘’I do not have any sense that either the consumer or business are panic-struck’’.
The Japanese Yen is the weakest of the G10 currencies in the past 24 hours despite the fact that markets in Japan were closed for a Public Holiday. A renewal of safe haven bid post the failed attempted coup in Turkey as well as comments from Suga who is the Chief Cabinet Secretary suggesting that the Government has no plans to issue deficit bonds for stimulus package appear to have been the main drivers for Yen weakness. Meanwhile the EUR/USD again traded in a very narrow range.
Core Global Bond Yields also had a relatively steady session yesterday. 1OY US Treasuries drifted a little higher to 1.58%, while German Bunds ended the day 2bps lower at -0.018% and UK Gilts unchanged at 0.82%.
This morning on the economic front we have the Euro-Zone Bank Lending Survey at 9.00 am. At 9.30 am we have UK CPI, PPI and the House Price Index. This is followed at 10.00 by the very important German and Euro-Zone ZEW Survey and Euro-Zone Construction Output. At 1.30 pm we have US Housing Starts and Building Permits. Finally at 2.00 pm the IMF releases its latest WEO Global Growth update.
September S&P 500
Despite the Daily Sentiment Index closing at 87% bullish for the S&P last Thursday the market made a new closing all-time high yesterday. This combination typically occurs at or near the end of an advance. There is no doubt the market is over-valued and over-believed but until we get a sell extreme that lasts for more than a few days it is so difficult to be short. The S&P has major support at the 2134 level which is the 2015 high and I would still be a very aggressive buyer on any dip lower to 2136/2142 with a 2131 stop. Despite the market been so over-bought on both a Daily and Weekly basis my only interest in selling the S&P is still on a rally higher to 2174/2179 with a 2185 stop.
EUR/USD
The Euro continues to trade in a very narrow range ahead of Thursday’s ECB Meeting and Dragi press conference. Today I am still a buyer on any dip lower to 1.0980/1.1020 with a 1.0945 stop. I will also leave my sell level unchanged at 1.1160/1.1200 with a 1.1240 stop.
September Dollar Index
As I wanted to book some points for yesterday’s trading I emailed my Platinum Members to cut our short 96.75 position from late Friday at 96.55 and I am now flat. Today I will again look to sell the Dollar on any rally higher to 96.90/97.30 with a 97.60 tight stop.
September DAX
The next major resistance level for the DAX does not come in until 10330/10380 and I will use any rally to this area over the coming days to go short with a 10430 stop. My only interest in buying the DAX is still on a dip lower to 9890/9940 with a 9835 stop.
September FTSE
The FTSE also traded in a narrow range and I am still flat. Today I will raise my buy level slightly to 6560/6590 with a 6535 stop. I will still be a small seller on any rally higher to 6710/6740 with a 6775 tight stop which is just above the high of 2015.
Dow Rolling Contract
The Dow closed up yesterday for the seventh consecutive trading session and 13 of the past 15 days which is a near record sequence for this market. Just like the S&P above, the Dow is extremely over-valued on a Daily and Weekly basis but despite this the market closed at a new all-time high and this fact has to be respected. Today I will move my sell level higher to 18670/18740 with an 18795 stop. Given how over-bought the Dow is trading I still do not want to buy the market unless we sell of dramatically to the 2015 high at 18351 where I will be an aggressive buyer with an 18270 stop.
September BUND
Unfortunately the BUND just missed my 166.70 sell level with a 166.67 high print before having a nice sell-off and I am still flat. With the ECB Meeting on Thursday followed by the Dragi press conference I am going to raise my sell level slightly to 167.00167.40 with a 167.70 stop. I still do not want to be long the Bund at this time.
Gold Rolling Contract
Gold to me is still heavy and trading well below its recent 1375 high. As I have mentioned a few times over the past two weeks Gold has strong support at the 1300 level and I would expect any test of this key support to be followed by a decent rally initially before we sell-off again. Today I will leave my buy level unchanged at 1302/1313 with the same 1295 stop.
Silver Rolling Contract
The DSI reading for Silver is still at extreme levels. Frustratingly Silver just missed my 19.60 buy level today before having a nice rally and I am still flat. Today I will now lower my buy level slightly to 19.10/19.50 with an 18.65 stop.
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