Markets have been generally drifting with FX, Equity markets and Bond Yields trading in contained ranges. The short end of the US Treasury Curve edged a little higher while the Australian Dollar is weak trading at 0.7170 as I go to print on the back of somewhat weaker base metals. The equity market volatility is increasing as shown by the VIX which rose 0.62 to 15.82 while Iron ore got slammed yesterday closing down 6.7% to it lowest level since March at $51.21 amid weakness in the Dalian Iron Ore Futures market.
To mark my 1075th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2500 for my Platinum Service which includes 1/4 updated emails throughout the trading day. This offer is open to both new and existing members and if anyone is interested please email me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it made 45 points yesterday and is now ahead by 1145 points for May having made 2175 points in April. The previous two months saw the same gain of 2265 points for both February and March after a record 3365 point gain in January. Since I started this service last June it has made over 25,000 points.
There was two more Fed speakers yesterday, James Bullard, hawkish and a voter this year, and John Williams, a non-voter this year and generally regarded as more at the dovish end of the policy spectrum. Bullard was downplaying the influence of the proximity of the ‘Brexit’ Poll on June 23 to the June 15 FOMC Meeting, saying that the probability of an exit vote has fallen somewhat recently while speaking at a Financial Forum in Beijing. He also noted that even in the event of the UK leaving the EU ‘the next day nothing happens’ with departure negotiations then to go ‘very slowly’. Because of these factors, he does not expect it to influence the FOMC decision.
John Williams was a little more circumspect but far from an outright dove, saying he does not know what the Fed will do in June, with the Fed facing many uncertainties such as ‘Brexit’. What did catch the market’s attention is that he expects 2-3 rate hikes this year and maybe 3-4 next year, which is way more than market pricing of one for this year and next.
Get set for June or July is the clear message from the Fed. Yields along the Fed Futures curve rose a further 1-2 bps, the probability of a June 15 move at 30%, increasing to 54% by the July 27 FOMC Meeting.
The preliminary Euro-Zone/ German/French PMIs for May were about the only data of significance released yesterday. They revealed little change in the Manufacturing PMI at 51.5 from 51.7 and an unchanged Services reading at 53.1, both almost bang on expectations. Germany’s readings were a touch stronger, France’s a touch lower but also somewhat better overall.
The other big mover yesterday and which continued overnight is the weakening of the Canadian Dollar which is trading juts under 1.32 against the US Dollar on the back of the weaker oil price.
This morning on the economic front we already had the release of German GDP which came in as expected at +0.7%. At 9.30 am we have the UK Public Finance data and this is followed at 10.00 am by the German and Euro-Zone ZEW Survey. At 11.00 am we have the UK CBI Retailing and Reported Sales. Finally at 3.00 pm we have the US Richmond Fed Manufacturing Index and New Home Sales. Today also sees the European Finance Ministers meet and we can expect some comments to hit the wires at any stage during the day.
June S&P 500
The S&P plan worked very well yesterday with the market hitting my 2054 sell level with a 2056 high print shortly after I posted before having a quick 10 handle drop to 2044. Unfortunately as I post my Platinum Service 20 minutes after my Daily Commentary goes to print and I adjusted my sell level higher in the S&P to 2057 as I tried to be too clever and for once this strategy did not work and I am still flat. For anyone who did sell the S&P I hope you took your profit or if not you can take it here this morning. Yesterday’s trading was one of the lowest volume sessions of the year to date and as I expect this market to start to trade lower over the coming weeks I would expect volume to pick up on this next decline. Today I will again look to sell the S&P on any move higher to 2055/2060 with a 2065 stop. I will leave my buy level unchanged at 2029/2034 with a 2023 stop. Again as mentioned yesterday I am also an aggressive buyer on any dip lower to the 200 Day Moving Average at 2007/2013 with a 1999 stop from where I would expect an initial decent rally from here before the market eventually breaks the 2000 level.
EUR/USD
My Euro plan worked well with the Euro eventually trading lower to my 1.1190 buy level. As I am already short the Dollar Index I covered my Euro long position at 1.1215 just ahead of it printing above 1.1230 and I am now flat. Today I will again look to buy the Euro on any dip lower to 1.1125/1.1155 with a 1.1095 stop. Despite the negative price action I do not want to be short the Euro at this time.
June Dollar Index
No change as I am still short the Dollar at 95.30 from last week with the same 95.70 stop. Trading volumes in the FX market are way down due mainly to the lack of volatility which has been the main feature so far in 2016 and this in turn is really hitting the trading desks of the major banks.
June DAX
Just like the S&P above I also moved my sell level higher for my Platinum Members to 9975 and this level just missed by 2 points before the market subsequently fell 160 points and I am still flat. For those members who are still on my Premium service if you sold the DAX at my initial 9950 sell level then this trade would have worked out very well for you. This morning the DAX is trying to break the key 9750/9800 key support level which has held the market over the past few weeks and so far has bounced 80 points off its 9770 low print. Today I will move my buy level slightly higher to 9700/9750 with a 9650 stop. My only interest in selling the DAX is still on a rally higher to 9970/10020 with a 10060 stop.
June FTSE
Early this morning the FTSE just missed my 6080 buy level with a 6093 low print and I am still flat. Today I will move my buy level higher to 6065/6095 with a 6035 stop on what has been a very quiet and also low volume trading market over the past few weeks as the market is stuck between 6000 and 6200. A break and close over either of these levels should see the FTSE accelerated in the direction of that break.
Dow Rolling Contract
Unfortunately the Dow also just missed my 17420 buy level before trading higher and I am still flat. There is no doubt the huge rally that we have seen in Apple Shares over the past 10 days is helping to put a floor in the Dow. Today I will move my buy level higher to 10390/10450 with a 10330 stop. I still do not want to be short the Dow at this time.
June BUND
My Bund plan worked well yesterday with the Bund trading lower to my 163.38 buy level before having a nice rally into the close which enabled me to cover this position at 163.58 and I am now flat. Today I will again look to buy the Bund on any dip lower to 163.00/163.30 with a 162.80 stop which is just below the 100 Day Moving Average.
Gold Rolling Contract
No change as I am still a small buyer on any dip lower to 1228/1235 with a 1223 stop as Gold approached the key 1230 support level which I would expect to hold on its first attempt and have an initial decent rally off this support.
Silver Rolling Contract
No change as I am still a small buyer on any further dip lower to 15.80/16.15 with the same 15.40 stop as Silver continues to trade lower off is $18 double top made earlier this month. Silver needs to break and close 18.10 to re-establish its bullish trend.
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