Last Friday’s BoJ powered equity rally stalled yesterday with disappointing data releases and fading hopes of output cuts in oil weighed down on sentiment. Yesterday’s disappointing PMI reading from China set the tone for the start of the European trading session and although initially European equities managed to post small gains, the drop in oil prices and a new soft Manufacturing print soured the initial positive mood.
To mark my 1000th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2500 for my Platinum Service which includes all my Premium Daily Commentaries and 1/5 updated emails throughout the day. This offer is open to both existing and new members and if anyone is interested please email me on bryan@tradernoble.com for details.
For anybody following my Platinum Service it made 140 points yesterday on the first trading day of February having made 3365 points in January. Since I started this Platinum Service last June it has generated a return of over 17500 points.
January’s US ISM Manufacturing rose trivially to 48.2 from 48.0. New Orders rose to 51.5 from 48.8, suggesting the Headline Index could rise over the next couple of months, however the Employment Index was disappointing falling to 45.9 from 48.0. Meanwhile Oil prices gave back some of the gains from last week after concerns that Iran will raise its export targets, despite comments from Saudi Arabia willingness to cooperate. WTI and Brent closed down over 6% and 5% respectively at $31.6 and $34.13.
In the end the Eurstoxx Index finished the day down 0.79%, while the DAX closed 0.7% lower. The FTSE outperformed closing 0.39% lower aided by a better than expected Manufacturing PMI print. Meanwhile the US Indices closed flat after another wild down, up and then fade into the close trading session.
Economic data also drove the move in Currencies yesterday. The US Dollar is weaker against most G10 with Sterling the outperformer boosted by a stronger than expected Manufacturing PMI print at 52.9 versus 51.7 expected. The Australian Dollar has traded sideways despite the RBA leaving Interest Rates unchanged at its meeting overnight. The RBI (India Central Bank) also left Rates unchanged at its overnight meeting.
In Commodities Gold continues to outperform closing up 0.5% at $1129 and now well above the previous resistance at $1080/$1100 which should now act as good support on any subsequent sell-off. Copper closed 0.7% higher despite the softness in the Chinese equity markets while Iron ore continued its recent rebound closing up 3% at $43.
Looking at other data releases, European PMI’s printed a mixed fortunes in the Euro-Zone. Italy’s PMI fell to 53.2 from 55.6, well below the consensus expectations of of 54.8. France’s PMI was unchanged at 50 and Germany’s flash estimate of 52.3 narrowly beat expectations leaving the Euro-Zone overall unchanged at 52.3.
In the US, December Personal Income rose 0.3% versus 0.2% expected. Nominal Consumption and the core PCE Deflator were unchanged, but real spending – the direct GDP component – rose by 0.1% which was in line with consensus.
Just before the US Markets closed last night, Fed Vice Chair Fisher was speaking in New York and he noted that it was too difficult to gauge the impact from recent turmoil in financial markets and uncertainty over China on the US economy, which meant that policy makers are unsure what to do next.
This morning on the economic front we have German Unemployment at 8.55 am. This is followed at 10.00 am by Euro-Zone PPI and the Unemployment Rate. Finally at 2.45 pm we have the ISM New York.
At 6.00 pm the Fed’s George will speak on the US economy in Kansas.
March S&P 500
I was very unlucky with my S&P calls yesterday as shortly after lunch the S&P traded as low as 1912.25 just missing my 1912 buy level before mounting a 28 Handle rally to 1940 which just missed my 1943 sell level and as a result of all this I am still flat. I have no doubt that the rally over the past 10 days is a counter rally and that we will see the market retest the 1804 low print over the coming weeks. However as long as the S&P can stay above the key 1888/1900 support then I will continue to look to buy dips. As mentioned yesterday the S&P has strong resistance from 1940/1950 and then major resistance at 1972/1988. I would expect the S&P to make at least a temporary top in one of these resistance areas. Today I will continue to look to sell the S&P on any further rally to 1943/1950 with a 1955 stop. I will also lower my buy level slightly to 1903/1910 with a 1897 stop. Again if I am taken long and subsequently stopped out I will use my 5 Handle Rule to go long again with a stop below whatever new low is printed.
EUR/USD
2016 so far has been surprisingly quiet for Currency trading with the Euro trading in a narrow range so far. I am still flat and today I will raise my buy level slightly to 1.0840/1.0870 with a 1.0795 stop. I still do not want to be short the Euro at this time.
March Dollar Index
No change as I am still a seller on any rally higher to 99.70/100.00 with a 100.25 stop. Remember a break and close over 101 is very bullish.
March DAX
Unfortunately the large rally off the lows last evening just missed my 9830 sell level with the rebound high at 9800 before markets have opened and traded lower on the continuing weakness in Oil which is currently trading below $31. I am still flat the DAX and today I will lower my sell level to 9790/9850 with a 9895 stop. My only interest in buying the DAX is on a further dip lower to 9540/9610 with a 9485 stop.
March FTSE
My FTSE plan worked well yesterday as the market traded lower to my 5950 buy level before having a nice rally to 6030 only to fall apart again this morning with the FTSE currently trading 100 points lower at 5930. As I was long the Dow I cut my long FTSE position too early at 5970 and I am still flat. Today I will again look to buy the market on any further dip lower to 5860/5900 with a 5835 stop.
Dow Rolling Contract
While I was unlucky with my S&P fill above the Dow buy level worked perfectly with the market hitting my 16300 buy level before having a nice 200 point rally which enabled me to cover this position at my 16370 T/P level as outlined earlier to my Platinum Members and I am now flat. This morning the Dow is again on the defensive on the back of the weaker Oil prices and weaker US economy. However the price action is still positive as long as we can hold the 16100 support level. Today I will again look to buy the Dow on any further dip lower to 16200/16270 with a 16140 stop. My only interest in selling the market is still on a rally higher to 16540/16630 with a 16700 stop.
March BUND
My short 163.70 BUND position worked out with the BUND having held up initially after I posted finally getting hit hard before lunch which enabled me to cover this position at my 163.20 T/P level and I am now flat. The BUND is trying to rebound this morning on the back of the weaker equity markets and I will again look to sell the market on any further rally to 163.60/163.90 with a 164.15 stop.
Gold Rolling Contract
I am still flat Gold which as I mentioned in the economic commentary above has now clearly broken the previous 1080/1100 resistance level. This area should now act as strong support on any subsequent sell-off. Today I will raise my buy level slightly to 1106/1114 with a 1099 stop.
Silver Rolling Contract
No change on what has so far in 2016 has been very narrow based trading in Silver. I am still long at 14.30 with the same 13.95 stop.
Recent Comments