Amid a thin holiday trading environment with China, Hong Kong, the US and Canada all out on Monday, European equities were unable to follow the positive lead from Japan, closing marginally lower. European bond yields pushed up with the move led by the back end of the curve, oil prices continued to march higher while moves in currency markets have been rather subdued. Bank of England Governor Carney has been speaking last night and just like ‘’The Who’’, he admits he has no idea when the next UK financial crisis will be, but the best strategy is to prepare for it nonetheless.
To mark my 1525th 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 This offer is open to both new and existing members and if anyone is interested in this offer can you please email me on bryan@tradernoble.com for details
For anyone following my Platinum Service it made 83 points yesterday and is now ahead by 1550 points for February having made 879 points in January, 946 points in December, 823 points in November and 657 points in October. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points.
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Yesterday just after I posted the Nikkei had a solid day closing up almost 2%, its best daily performance since January this year. However, this positive lead from Asia did not have a lasting effect in Europe. After initially opening higher, European equities drifted lower over the course of the session with the STX Europe 600 index closing 0.63% down on the day.
Meanwhile European government bonds drifted higher with the move led by the back end of the curve. 30y Bunds climbed 4.6bps to 1.388% while the 10y tenor rose 2.8bps to 0.73%. UK Gilts also rose with the 10y bond climbing 2bps to 1.60%.
After an initial surge close to the end of the European session, US Dollar Indices have given back most of these gains and are essentially unchanged over the past 24hrs. Looking at G10 currencies, JPY is the big underperformer, down 0.32% against the USD and the pair currently trades at 106.85, almost one big figure above the lows recorded last week. Yesterday’s Japan better than expected Trade data had little effect on the currency, but the positive move seen in the domestic equity market appears to have been the driver for the softer yen. That said given the sharp decline in USD/JPY over the past week, is not that surprising to see the currency stage a small rebound.
Sterling briefly traded sub 1.40 yesterday while BoE Governor Carney’s speech last night did not elicit a reaction by the currency. The Governor said that ‘’something will go wrong again even if we do not know exactly what or precisely when,’’ adding that ‘’Accepting this means our best strategy is to create an anti-fragile system that can withstand potential shocks when they happen.’’
In commodities, oil prices have continued to surge higher with WTI +1.3% and Brent 1.9%. Soothing words from OPEC representatives appears to have been the driver for the gains. The market rebalancing has gained massive momentum as the Organization of Petroleum Exporting Countries and its partners work to trim output, OPEC Secretary-General Mohammad Barkindo said Monday in Nigeria. Meanwhile, United Arab Emirates Energy Minister Suhail Al Mazrouei said OPEC, Russia and other producers are looking at ways to ‘’institutionalize’’ their cooperation beyond the end of this year.
Although the AUD has had a quiet session, up 0.06% over the past 24hrs and currently trading at 0.7911, relative to other G10 currencies, the AUD is the best performer, followed closely by NOK and DKK. The move higher in oil prices probably played a supporting role for the AUD and NOK, although looking at other commodities, performance has been mixed. Iron ore is unchanged at $76.89 while gold is down 0.53% and copper is off 1.6%.
This morning on the Economic Front we already had the release of German PPI which came in strong at +0.5% versus +0.3% expected. At 10.00 am we have the German ZEW Survey for Current Situation/Expectations and this is followed at 11.00 am by UK CBI Selling Trends/Total Orders. Finally we have Euro-Zone Consumer Confidence at 3.00 pm as we have no US data again today.
March S&P 500
My S&P plan worked well with the market trading the whole of my 2722/2730 buy range which put me long at an average rate of 2726 before we rally as expected into the Futures close and this enabled me to cover this position at my revised 2726 T/P level and I am now flat. Unfortunately the S&P missed my 2758 sell level last Friday and today I will lower my sell level slightly to 2752/2760 with a 2766 stop. If I am taken short and subsequently stopped out of this position I will be a more aggressive seller on any further rally to 2780/2792 with a 2802 stop. My only interest in buying the S&P is on a dip lower to 2708/2716 with a 2702 stop.
EUR/USD
No change as I am still a buyer on any dip lower to 1.2270/1.2310 with the same 1.2230 stop. My only interest in selling the Euro is still on a rally higher to the 1.27/1.29 area and if and when we test this area I will be back with a tighter sell level.
March Dollar Index
I am still flat the Dollar and today I will raise my buy level slightly to 88.45/88.85 with a 88.10 stop. I still do not want to be short the Dollar at this time.
March DAX
My DAX plan worked well with the market trading lower to my 12375 buy level before rallying to my revised 12400 T/P level and I am now flat. The weaker Euro is so far preventing the DAX from selling off and today I will again look to buy the DAX on any dip lower to 12240/12310 with a 12190 tight stop. I still do not want to be short the DAX at this time.
March FTSE
Despite the weakness in Sterling the FTSE sold off yesterday and I am still flat as thankfully we had no buy levels. Today I will lower my sell level to 7270/7310 with a 7340 stop. The FTSE has good support from 7130/7170 and today I will be a buyer in this area with a 7095 stop.
Dow Rolling Contract
The one market guaranteed volatility every day is the Dow with the market getting hit hard after I posted yesterday morning before rallying into the 4.30 pm close. I am still flat and today I will now lower my sell level slightly to 25450/25600 with a 25680 stop. If I am taken short and subsequently stopped out of this position I will be a more aggressive seller on any further rally to 25900/26100 with a 26180 stop. The Dow has good support from 24850/24950 and today I will be a buyer in this area with a 24780 stop.
March NASDAQ
No change as I am still a buyer on any dip lower to 6530/6575 with a 6490 stop. Meanwhile I will now lower my sell level to 6900/6960 with a 6995 stop.
March BUND
Shortly after the BUND opened this morning the market traded lower to my 158.10 buy level. With the US T Bond breaking key support at 144.00 I emailed my Platinum Members to exit any long Bund position at my revised 158.13 T/P level and I am now flat. The BUND has better support from 157.20/157.60 and today I will be a buyer on any dip to this area with a 156.85 stop. I am still not comfortable in being short the Bund so I will have no sell range at this time.
Gold Rolling Contract
Gold continues to trade heavy which is no surprise with the Daily Sentiment Index closing at 84% bulls last Friday. I am still flat Gold and today I will now lower my buy level to 1312/1320 with a 1305 stop.
Silver Rolling Contract
Silver struggled to rally yesterday and with Gold trading heavy I emailed my Platinum Members to exit and long Silver position at my revised 17.70 T/P level on my latest long 16.65 position and I am now flat. This morning Silver is trading at 16.55 and looks like it may have a nasty sell-off from here to the next good support area from 15.80/16.20 where I will be a buyer with a 15.50 stop.
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