Yesterday’s trading session has been marked by further strength in the US Dollar, further rises in US Treasury and global bond yields, and commodity price volatility. US equities finished flat to lower, again led down by tech shares (especially semiconductor related stocks). Alphabet has reported after the bell, earnings beating estimates with after-hour trading marking their shares higher. In the wash up of the further rally in the USD, the AUD has made a new low for the year, reaching 0.76 in late NY trading. The preliminary estimates of PMIs for Germany, France and the Eurozone all pointed to solid rates of growth continuing into the second quarter.
To mark my 1550th 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 details
For anyone following my Platinum Service it made 28 points yesterday and is now ahead by 1496 points for April, having made 1760 points in March, 2256 points in February, 879 points in January, 946 points in December, and 823 points in November Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
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The US Dollar has been on a further tear, taking up in Europe where the trading mood ended last week. The DXY is up 0.69% and the spot Bloomberg Dollar Index up 0.84%, now looking like it is setting the scene and looking for some clean air for a move above its rather restricted trading range evident for most of this year. The DXY has been testing its highs for this year seen in the earlier part of January. It has been a yield driven story, with rises in US yields along the curve, by a net 1-2 bps in net terms for the session, 10s having tested close to 3% with an intra-session high of 2.996% earlier in the session and ending the US session at a still sturdy 2.975%. The market is pricing toward three more Fed rate hikes this year.
In the commodity space, base metals have had some big moves, but this time lower as the US softened its sanctions position on Rusal with the proposal to remove sanctions on the company if its owner Oleg Deripaska relinquishes control of the company. Base metals retreated quickly, Aluminum down 7.05% for the session and having retraced the big move up last week and back to levels of 10 days ago. Nickel also fell back, down 3.81%, copper by 0.69%. When this move happened, oil went lower along for the ride, but it has since retraced on news of Iranian-backed Houthi rebels in Yemen launching unsuccessful missile attacks against Saudi Arabia. Brent is currently trading at $US75/bbl, with WTI knocking on the door of $US69/bbl. French President Macron has just arrived in Washington in an effort to keep the Iran lifting of sanctions deal alive to avert US sanction among a host of other political and economic discussions, all highly relevant for oil, not to mention the state of geopolitical tensions.
On the economic front, the main data of interest has been the French, German and Euro-Zone preliminary PMIs for April. They showed very little sign of flinching from the still-high levels still evident in March. There was very little change in the Manufacturing, Services, and Composite PMIs, the Composite PMIs steady-to-fractionally higher. Germany’s was at 55.3 (+0.2), France’s at 56.9 (+0.6), and the Euro Zone’s at 55.2 (steady). All three were marginally stronger than consensus. As solid as they are, none of this is likely to shift the lingering concerns that the ECB has about persistently low wages growth and inflation ahead of this week’s meeting and thus baulk from giving clear guidance on ending QE in September. But it will bolster the view of continued strong growth laying the foundation for a pick-up in inflation to follow.
Just after I go to press, the RBA’s Chris Kent is speaking on ‘’The Limits of Interest-Only Lending’’ at a housing industry breakfast. But the big one today is the CPI which came in weaker than expected with a 0.4% print versus the consensus of a rise of 0.5%. The AUD is now trading on the highs of the day at 0.7615.
This morning on the Economic Front we have the German IFO Business Climate at 9.00 am and this is followed at 9.30 am by UK PSNB. Next we have the ECB’s Villeroy speaking in London at 10.30 am while at 2.00 pm we have the US FHFA House Price Index. Finally we have New Home Sales, The Richmond Fed Manufacturing Index and the Conference Board Consumer Confidence which will all be released at 3.00 pm.
June S&P 500
My S&P plan worked very well with the market trading to my 2663 buy level with a 2658.50 low print before rallying to an overnight high so far at 2680. Unfortunately as I had to go out last night I stupidly covered my long position for a small loss at 2662.50 and I am now flat. Hopefully you were able to make nice gains across the three US Indices. The McClellan Oscillator closed slightly negative last night but as long as the S&P can hold the key 2656 support level this market will continue to be a buy on dips. Yes the market is overvalued but with European Equities continuing to hold on to recent gains it is difficult to see how this market can fall for the time being. Google reported better earnings after the close and this is helping the S&P so far this morning. Today I will again look to buy the market on any dip lower to 2656/2666 with a 2649 tight stop. My only interest in selling the S&P is on a rally higher to 2698/2708 with the same 2715 stop.
EUR/USD
The market has traded in a sideways range between 1.2200 and 1.2500 for the past four months with 90% of this trading with a 1.23 handle. Last Friday we finally broke below 1.23 and overnight we traded to a low at 1.2185. This could be significant especially with the Dollar Index breaking out to the upside after months of consolidation below 90.00. Yesterday after the Euro traded lower to my 1.2230 buy level we had a small rally to 1.2250 and I used this move higher to cover my long position at my revised 1.2235 T/P level and I am now flat. I feel a break is close at hand and if it is to the downside, it could be large with a target price of 1.15. Today I will be a small seller on any rally higher to 1.2255/1.2300 with a tight 1.2335 stop. Remember speculators hold a record long position in the Euro at this time which is another reason to be a seller on rallies. Therefore a break and close below 1.2150 could be significant.
June Dollar Index
I am still flat the Dollar and today I will now move my buy level higher to 90.00/90.40 with a tight 89.70 stop.
June DAX
The sideways to higher prices for the DAX continues with the market again trading over 12600 this morning. I am still flat and today I will now raise my buy level to 12400/12460 with a 12345 tight stop. I will continue to be a seller into the 100 Day and 200 Day Moving Averages from 12690/12750 with the same 12795 tight stop.
June FTSE
The FTSE traded higher to my 7345 sell level before having a small sell-off. The price action continues to be bullish for the FTSE as the traders who sold the market on the break of 6950 are forced to cover their positions. With Sterling resuming its decline there is no point in staying short the FTSE and I covered this position at my revised 7335 T/P level and I am now flat. Today I will now raise my buy level to 7290/7325 with a 7255 stop.
Dow Rolling Contract
My Dow plan also worked well with the market trading lower to my 24340 buy level before rallying nearly 200 points. Unfortunately I covered this long position too early at 24358 and I am still flat. Today I will again look to buy the Dow on any dip lower to 24210/24370 with a 24140 stop. I still do not want to be short the Dow at this time.
June NASDAQ
With both the S&P and Dow trading lower to my buy levels late yesterday I lowered my NASDAQ buy level which was not filled. For those members who did buy the market at my initial 6630 buy level then you had a nice gain. Today I will again look to buy the market on any dip lower to 6585/6635 with a 6545 stop. I still do not want to be short the NASDAQ at this time.
June BUND
No change as I am still long at an average rate of 158.10 with the same exit level at 158.05. Thankfully the Bund is higher this morning and if the market trades higher to my 158.05 exit level I will be back with anew update for my Platinum Members. Meanwhile I will leave my stop unchanged at 157.45.
Gold Rolling Contract
I am still flat Gold and as I have a big position in Silver I will now lower my Gold buy level to 1303/1311 with a 1296 stop.
Silver Rolling Contract
Silver got hit hard yesterday and is now down over 3% from the highs made on Friday. This move lower saw Silver trade the whole of my 16.70/17.00 buy range for an average long position at 16.85. Even though the Managed Accounts have only reduced their record short position by a small amount I have to respect the price action in Silver and today I will now lower my T/P level to 16.90. I will leave my stop unchanged at 16.35.
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