Weaker than expected US economic growth reported last Friday for the June Quarter after an underwhelming outcome form the Bank of Japan, set the tone for markets on Friday and again yesterday. The currency markets started the week with the Japanese Yen strong and the US Dollar weaker after the US growth disappointment. US Treasury Yields eased and the Fed Funds Futures curve is only pricing in a 40% chance of the Fed lifting rates again by the end of the year and one hike not fully priced in until the first half of 2018. Yesterday, the US ISM Manufacturing release was barely a miss, coming in at 52.6 against consensus of 53.0, while the report revealed little change in the Employment component that remained soggy at 49.4, after June’s 50.2 as we await the Employment component in tomorrow’s Non-Manufacturing ISM
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 172 points on Friday to finish July with a gain of 1682 points following its 2550 point gain in June. The previous three months saw gains of 1532, 2175 and 2265 points respectively. Since I started this Platinum Service in June 2015 it has averaged a monthly gain of over 2100 points.
Yesterday’s ISM release had a minimal impact on the US Dollar with the Bloomberg Spot Dollar Index closing up 0.34% following its 1% rise on Friday after the GDP data which came in at an awful 1.2% against expectations of a 2.6% print. Despite the weak data where Construction Spending for June came in down 0.6% against expectations of a 0.6% rise, 10 Year Treasuries rose 6bps to close at 1.51%.
While the US ISM Manufacturing release was a small miss, the final July Euro-Zone counterpart was revised up slightly to 52.0 from 51.9. However in the lead up to the Bank of England Meeting on Thursday, the preliminary UK Manufacturing PMI was revised down to 48.2 from the original 49.1 print, only boosting expectations further that the Bank will ease Monetary Policy further, through an expected lowering of the Bank Rate if not further asset purchases (QE). This weak number helped push Sterling weaker with the EUR/STG trading close to 0.85.
This morning on the economic front we have the RBA Meeting and rate announcement at 5.30 am. This is followed at 9.30 am by UK Construction PMI. At 1.30 pm we have US Personal Income/ Spending and the PCE Defaltor. Finally at 2.45 pm we have the ISM New York.
Just before lunch the Fed’s Kaplan is due to speak at a lecture in Beijing.
September S&P 500
Despite the Dow closing down seven of the past eight trading sessions, the S&P made a new recovery high at 2173, which underscores the highly divergent nature of current market action. Subsequently having made this high the S&P traded to a 2159 low print before having a small bounce into the close. I am still flat the S&P and today I will now raise my buy level slightly to 2155/2161 with a 2149 stop. Again if I am taken long and subsequently stopped out of this position I will be a more aggressive buyer on any further dip lower to 2130/2136 with a 2124 stop. Despite the Dow trading heavy the price action in the S&P is still telling me not to go short ahead of the key Non-Farm Payrolls data on Friday.
EUR/USD
My idea of not shorting the Euro is proving to be correct but unfortunately we have not been able to get a long position on board and we are still flat as the Euro approached the July highs at 1.1180. This area from 1.1170/1.1200 is critical as a break and close over 1.1210 opens up the possibility of a move higher to at least 1.1350. Today I will now raise my buy level to 1.1070/1.1110 with a 1.1035 stop. I still do not want to be short the Euro at this time.
September Dollar Index
Today I will now lower my sell level in the Dollar to 96.25/96.55 with a 97.05 stop. It is now clear that the Dollar has very strong resistance at the 97.00/97.50 area while the Dollar needs to break its 91.80 low from early May to really see an acceleration lower.
September DAX
My DAX plan finally worked out yesterday morning following the revision higher to the PMI data which saw the DAX open at my 10440 sell level as indicated in Friday’s Commentary. Subsequently the DAX got hit hard on the ramifications of the stress test for European Banks and in particular Deutsche Bank (which I have mentioned at length over the previous six weeks) and the Italian Banks which are just a mess. This sell-off in the DAX enabled me to cover my short position at my 10360 T/P level as outlined earlier to my Platinum Members and I am now flat. Today I will again look to sell the DAX on ay move higher to 10430/10500 with a 10535 stop which is just above the April highs at 10522. My only interest in buying the DAX is still on a dip lower to 10120/10170 with a 10070 stop.
September FTSE
I am still flat the FTSE and I will now lower my buy level to 6580/6610 with a 6535 stop. I would expect the FTSE to having difficulty in trading too much lower ahead of the Bank of England Meeting on Thursday where there is now a good chance of a rate cut especially after yesterday’s weak Manufacturing PMI data. With the continued weakness in Sterling I do not want to be short the FTSE at this time.
Dow Rolling Contract
As I mentioned in my S&P commentary above the Dow has now closed down in seven of the last eight trading sessions, despite the S&P making new highs on a few of these trading days. My Dow plan from last Friday worked very well with the Dow hitting my 18360 buy level yesterday afternoon before having a nice rally which enabled me to cover this position at my revised 18410 T/P level as emailed earlier to my Platinum Members and I am now flat. The next big support for the Dow is from 18255/18315 and today I will be an aggressive buyer on any dip lower to this area with a 10195 stop. I still do not want to be short the Dow at this time.
September BUND
My Bund plan worked very well on Friday with the market hitting my 167.00 buy level shortly after the open before rallying nearly 100 points following the disappointing US GDP Report. Unfortunately as I wanted to be flat into this economic release I emailed my Platinum Members to cut this position at 167.12 and I am still flat. Today I will still be a seller on any rally higher to 168.00/168.40 with a 168.70 stop. I will also use any further sell-off to 166.60/167.05 to buy the Bund with a 166.35 stop which is just below the key 166.50 pivot point and now key support level.
Gold Rolling Contract
Unfortunately Gold rallied hard on the back of the US GDP Report without me being able to get a long position on board and I am still flat. Today I will now raise my buy level to 1326/1334 with a 1319 stop.
Silver Rolling Contract
My long 20.10 Silver position worked well on Friday as Silver followed Gold higher after the GDP release and this rally enabled me to cover this position at my 20.40 T/P level and I am now flat. Today I will again look to buy Silver on any dip lower to 19.75/20.15 with a 19.40 stop.
Recent Comments