Yesterday’s trading session saw an improvement in risk sentiment with European equities closing in positive territory while US equities also closed higher. The US Dollar is stronger against most currencies and US Treasury yields are also higher with the move led by the front end of the curve. The Euro has been up and down amid political turmoil in Germany which did not affect the German DAX which surged after opening lower. Meanwhile it has been announced that Fed Chair Yellen will resign as a member of the Fed’s board of governors once her successor as Fed leader has been sworn in. This move was widely expected.
To mark my 1475th 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 85 points yesterday and is now ahead by 814 points for November, having made 657 points in October, 447 in September, 1460 in August, 1096 in July, 1023 in June, 1076 in May, 1335 in April, 1375 in March, 1481 in February and 1734 in January. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points.
Health care and IT were the leading equity sectors in Europe while Telcos was the outstanding performer in the US. Meanwhile US energy shares struggled reflecting softness in oil prices amid doubts over the outcome from next week’s OPEC meeting with other oil producers including Russia.
Sterling is the only G10 currency that has outperformed the USD over the past 24hrs helped along by an increase in confidence that the UK Government will manage to agree a divorce bill with Europe. Cable currently trades at 1.3260 (+0.20%), after trading down to 1.3187 late yesterday.
While higher US Treasury yields boosted the USD, the greenback also benefited from EUR weakness amid political disarray in Germany. Yesterday EUR dropped 70 pips to 1.1722 after Merkel declared the Jamaican coalition discussions had failed. The pro-market Free Democratic Party walked out of the talks, saying that differences with the environmentalist Green party were too great to bridge. The move lower was then reversed during the European session, but later in the day comments from Merkel drove the EUR back down to 1.1732. The German Chancellor said she would rather face new elections than govern without a majority, but also said that she is open to a grand coalition.
Meanwhile, comments from ECB President Draghi to the EU Parliament did the EUR no favours stating ‘despite a firm economic recovery, inflation dynamics have yet to show convincing signs of a self-sustained upward trend’.
The Australian Dollar has traded in a 20 pips range since I posted yesterday morning with softness in oil and precious metals more than countering the improvement in risk appetite. AUD now trades at 0.7544,15 pips lower relative to yesterday’s European open. NZD/USD did push up toward 0.6840 after the local close yesterday, but drifted back with USD strength.
US 10-year Treasury yields initially dipped under 2.33% yesterday, on a mild risk off move associated with the German political developments. But any thoughts of testing the 200dma average around 2.305% evaporated as risk sentiment improved and equity markets pushed upwards. Yields rose to currently sit just over 2.36%, up around 2bps on the day. The strong leading index reading helped push US 2-year Treasury yields up to a new cycle high of 1.75%, nearly 3bps higher and maintaining flattening pressure on the US curve.
In other news, U.S. President Donald Trump said he will designate North Korea a state sponsor of terrorism, subjecting the regime to additional sanctions and reinforcing that nation’s status as an international pariah.
This morning on the Economic Front we have UK Public Finances (PSNCR) at 9.30 am. This is followed at 1.30 pm by the Chicago Fed National Activity Index. Finally we have Existing Home Sales at 3.00 pm.
Fed Chair Janet Yellen is speaking later tonight at the stern Business School ‘in conversation with Mervyn King’. But is not until 6 pm NY time which is 11.00 pm Irish time. This should be an interesting interview in light of recent developments.
December S&P 500
Shortly after I posted the S&P traded higher to my 2574 T/P level on my latest long 2571 position and I am now flat. With the Fear & Greed Index closing neutral with a 50 print last night and the improvement in the McClellan Oscillator as mentioned in yesterday’s commentary there is plenty of room for the US stock markets to rally further. My own view is still that the S&P can push to major resistance from 2620/2640 before we finally may see a more sustained sell-off. We are now in one of the more bullish periods of the year as this is Thanksgiving Week and I certainly would not try to go short the S&P until we break and close below 2550. Today I will again look to buy the market on any dip lower to 2568/2574 with a 2563 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 2552/2558 with a 2547 stop.
EUR/USD
The buy the dip mentality for the Euro is also working well with my latest 1.1750 long position leading to a rally above 1.18 shortly after I posted yesterday morning. This rally hit my 1.1775 T/P level before the market subsequently traded lower to my second buy level at 1.1745. As I wanted to be flat overnight I emailed my Platinum Members to exit this position for a small gain at 1.1750 and I am now flat. The Euro has strong support from 1.1660/1.1705 and today I will be a buyer in this area with a 1.1630 tight stop.
December Dollar Index
No change as my only interest in selling the Dollar is still on a rally higher to 94.40/94.75 with the same 95.05 stop.
December DAX
Thankfully we had no sell level in the DAX yesterday as the market surged after I posted 24 hours ago. Despite the fact that the DAX was on a sell signal I had no interest in going short as yesterday’s 200 point rally off the early morning low again proves how difficult it is to be short the market. Given the extent of the rally I will now raise my buy level to 12880/12940 with a 12830 stop which is just below last week’s low print at 12840.
December FTSE
I am still flat the market which is struggling on the back of the stronger Sterling. Even though the other main Indices are trading higher I will leave my buy level unchanged from 7290/7325 with a 7260 stop. The 7280 level is key as a break and close below here should see an acceleration to the downside.
Dow Rolling Contract
The Swiss National Bank are now the biggest hedge fund in the world with an alleged $90 billion invested in the US stock market alone. As of March 31 2017 they own 3% of Apple. This fund is now so big and extremely profitable given the 17% rally in the US markets so far this year. However when these markets do turn the big question is how do they get out of their positions without suffering material loses. This is why I have not been short the stock markets for most of the last few years as you just cannot going against the Central Banks who continues to control all asset classes. Yesterday the Dow rallied strongly off its intra-day low of 23250 with a near 200 point rally as yet again short positions got crushed. Today I will now raise my buy level to 23270/23340 with a 23210 stop. Remember a break and close below 23250 is a sell signal.
December NASDAQ
Yesterday the NASDAQ was the weakest of the US Indices and for this reason I covered my long 6305 position at my revised 6310 T/P level and I am now flat. Today I will again look to buy the market on any dip lower to 6245/6275 with a 6210 tight stop. Remember a break and close below 6250 is a sell signal.
December BUND
No change as I am still a seller on any rally higher to 163.35/163.70 with a 164.00 stop.
Gold Rolling Contract
Yesterday Gold completely reversed last Friday’s $25 gain on strong volume. After Silver hit my buy level I emailed my Platinum Members to lower their buy level in Gold to 1275. I cannot emphasise the importance of my Platinum Service which certainly proves its worth when market volatility picks up as shown by the increased profitability over the past few weeks. As I wanted to be flat Gold overnight I covered this long position at 1277. Gold has strong support at 1260 and today I will only be a buyer on any further dip lower to 1257/1264 with a 1250 stop.
Silver Rolling Contract
Silver traded lower to my 17.10 buy level. I will only add to this position on any further move lower to 16.70 with a 16.40 stop. Meanwhile I will now lower my T/P level on this position to 17.20. If I either scenario happens I will be back with a new update for my Platinum Members.
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