With the U.S. out for Martin Luther King Day and Cash stocks and Bonds both closed, trading was quiet. In the UK, Prime Minister May’s ‘’Plan B’’ for Brexit essentially the resoundingly rejected Plan A but with an intent to go back to Brussels and try find a different solution to the Irish border conundrum, not much has happened in markets. The IMF downgraded its global growth forecasts for the second time in three months, to 3.5% from 3.7% last October and this is weighing on equity markets this morning which are opening lower.
To mark my 1750th 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 To demonstrate this value, a monthly subscription over the same period would cost 4440 euro in total This offer represents a 38% discount and is open to both new and existing members. If anyone is interested in this offer can you please email me on bryan@tradernoble.com for detail
For anyone following my Platinum Service it made 12 points yesterday and is now ahead by 994 points for January, having made 2803 points in December, 1541 points in November, 2094 points in October and 1279 points in September Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
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Downgrades within the Euro-Zone, to France and Italy but more significantly Germany – Europe’s ‘’growth engine’’ – and by a chunky 0.6%, are largely responsible for the downgrade, as too Turkey in the Emerging Markets universe.As well as the downgrade, the IMF sees the balance of risks to its outlook skewed to the downside, citing trade tariffs, a renewed tightening of financial conditions, a ‘’No Deal’’ Brexit and a deeper-than-anticipated slowdown in China.
Frankly, all factors which could look a lot less troublesome in the coming few months if for example, the U.S. and China strike a trade deal, equity markets maintain the gains seen since late December (so easing financial conditions) Article 50 gets extended for the UK (highly likely) and the nascent signs of a China growth pick up evident in yesterday’s December activity readings, prove sustainable.
Against this glass half full interpretation of developments, US stock market fortunes took a small hit yesterday on reports that the US trade representative had briefed US lawmakers on the lack of progress on the issue of alleged theft of Intellectual property China (who of course deny it occurs and demand proof).
Also noteworthy are reports, courtesy of the Xinhua News Agency, that President Xi Jinping warned China top leaders that the party is facing ‘’sharp and serious dangers of a slackness in spirit, lack of ability, distance from the people, and being passive and corrupt,’’. It notes that while such warnings aren’t new, the mention of “serious” threats to the party’s “long-standing rule” appeared to be.
Currencies
Not much movement to note in FX markets even though they did not enjoy the luxury of the MLK Day holiday. AUD/USD sits a little lower than where we left it yesterday at just below 0.7130. It made an overnight low of 0.7120, its weakest since 9th January and the bottom edge of what some technical analysts are regarding and an important support zone. Thursday’s labour force survey will be an important fundamental test now. Meanwhile Sterling is slightly higher by ongoing optimism that a ‘’Hard Brexit’’ will be avoided on March 29th.
In this respect, a group of cross-party lawmakers, including members of PM May’s Conservative Party and the opposition Labour Party, have proposed a bill to force PM May to delay Brexit if agreement cannot be reached in Parliament by Feb. 26. There is a good chance this gets up. If so, it further flattens the tail risk of a Hard Brexit on March 29, though note all 27 EU nations will need to agree to an extension, so it would not eliminate the risk completely.
Bonds
The US Cash Bond market has been shut though Bond Futures prices are a touch higher consistent with slightly weaker stock futures. In Europe, both Bunds and Gilts have rallied; Bund yields some 0.7bp lower and Gilts a bigger 2.9bps at 10 years.
Equities
European equities finished lower, the Eurostoxx 50 by 0.3% led by a 0.6% drop in the German Dax, while the FTSE was flat. S&P futures are off about 0.4% and the NASDAQ by 0.6%
Commodities
Commodity prices are mixed with oil up 10 cents or so but copper and aluminium both off by just over 1%. Iron ore futures are flat and gold $2 lower. This morning on the Economic Front we have UK Unemployment and Public Sector Borrowing Requirement at 9.30 am. This is followed at 10.00 am by the German ZEW Survey and the Euro-Zone Economic Sentiment. Finally at 3.00 pm we have US Existing Home Sales.
March S&P 500
The S&P Futures are trading almost 20 Handles lower than where we closed on Friday night. I am still flat. As mentioned yesterday the S&P has strong support at its 50 Day Moving Average which comes in at 2625 and above this key MA we have trendline support at 2642. Today I will now raise my buy level slightly to 2624/2638 with a higher 2615 stop. My only interest in selling the S&P over the coming days is a further rally to 2712/2730 with a 2742 stop. Remember a break and close over the 200 Day MA at 2741 is a breakout leading to a likely test of the December 3 high at 2810 ahead of the all-time high at 2941.
EUR/USD
I am still flat the Euro and today I will again lower my sell level to 1.1270/1.1315 with a 1.1240 stop. I will also lower my sell level to 1.1405/1.1445 with a 1.1480 stop.
March Dollar Index
I am still flat the Dollar. The Dollar has strong resistance from 96.40/96.80 and today I will raise my sell level to this area with a 97.20 stop.
March DAX
After Friday’s 250 point rally the market was weak yesterday and that weakness has continued this morning with the lower opening for the market. This move lower saw the DAX hit my 11070 buy level before rallying to my revised 11105 T/P level as emailed to my Platinum Members and I am now flat. The DAX has strong support from 10960/11020 and today I will be a buyer on any dip to this area with a 11905 tight stop. I still do not want to be short the DAX at this time.
March FTSE
Earlier this morning the FTSE traded lower to my 6870 buy level. I am still long and I will now raise my stop on this position to 6829 with a now lower 6800 T/P level. If any of the above levels are hit I will be back with a new update for my Platinum Members.
Dow Rolling Contract
No Change as I am still a buyer on any further dip lower to 24220/24400 with the same 24050 stop. I will continue to be an aggressive seller from 24950/25180 with the same wider 25300 stop. Remember the 200 Day MA comes in at 24968 and trendline resistance at 25240. These two areas above the market should repel any further rally and lead to a decent sell-off.
March NASDAQ
I am still flat the NASDAQ and today I will now lower my sell level to 6800/6860 with a 6905 stop. I still do not want to be long the NASDAQ at this time.
March BUND
The Bund finally traded higher to my 164.30 T/P level on my average 164.18 long position from last week and I am now flat. The BUND is opening higher this morning on the back of the weaker equity markets. Today I will again look to buy the market on any dip lower to 163.75/164.15 with a 163.40 stop.
Gold Rolling Contract
No Change as I am still a buyer on any dip lower to 1260/1269 with the same 1252 stop.
Silver Rolling Contract
Shortly after I posted yesterday morning I was stopped out of my latest 15.60 long position at 15.25 and I am now flat. Today I will again look to buy the market on any further dip to 14.65/15.05 with a 14.30 stop. If I am taken long I will have a T/P level at 15.29.
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