Markets have shifted from a wait and see stand to a slightly more suspicious mode ahead of the Fed and Bank of Japan Meeting’s this week. US equities retreated from new record highs pulled down by energy shares as oil prices fell. Oil prices have remained under pressure on concerns of oversupply and lack of demand while a Barclays Bank Report yesterday showed that demand for the third Quarter of 2016 has grown at less than one-third the rate it did in the same period last year. Meanwhile European Indices managed to end the day in positive territory, helped along by a better than expected German IFO Report.
To mark my 1100th issue of Tradernoble.com 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 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 90 points yesterday and is now ahead by 1307 points for July having made 2550 points in June. The previous three months saw gains of 1532, 2175 and 2265 points respectively. Since I started this Platinum Service in June 2015 it has averaged a monthly gain of over 2200 points.
The Business Climate Index for the IFO Report fell less than expected in July from 108.7 to 108.3 versus 107.5 expected. This suggests that the German economy has not yet been materially affected by the UK decision to leave the EU.
In contrast, the UK CBI Business Optimism Index fell to a dire -47 versus -15 expected and -5 previously. This was the latest in a series of surveys to suggest the ‘’Brexit’’ vote is dampening business confidence in the UK. The FTSE 100 Index closed up 0.3% while GBP/USD was little changed at 1.3134.
Looking at other currencies, most G10 Currencies have traded within fairly constrained ranges. The Yen has edged a little bit higher against the US Dollar, climbing 0.30% over the past 24 hours and probably reflecting a little bit of uncertainty on the magnitude of the expected Fiscal and Monetary stimulus due to be announced on Friday. The CAD and NOK are the two major underperformers closing down 0.66% and 0.33% respectively, weighed down by fall oil prices which fell on average by 2.0%. The USD/CAD has now broken above the upper band of its 1.2460/1.3180 range which has held since early April closing at 1.3211 in New York. The next resistance level is at the 100 day moving average at 1.3315.
In Global Bond Yields, US 10y Treasuries closed flat while in Europe the Bund closed 1.2bps lower at -0.04%.
This morning on the economic front we have UK BBA Loans for House Purchase at 9.30 am. Later this afternoon at 2.45 pm we have US Markit Services/Composite PMI. Finally at 3.00 pm we have US Consumer Confidence Index, New Home Sales and the Richmond Fed Manufacturing Index.
September S&P 500
Thankfully by the time you got to read yesterday’s Daily Commentary the S&P was trading at 2164 before rebounding and then getting hit to a low just below 2156 before rallying into the close. With the FOMC Meeting and rate announcement tomorrow at 7.00 pm I would expect the market to remain quiet to firm ahead of this decision. However sentiment remains elevated as shown by the latest Daily Sentiment Index Reading which rose to 87% bulls, which matches the highest level of optimism in two years. Despite this optimism I still expect the S&P initially to have difficulty in taking out the May 2015 highs at 2134. As mentioned over the past two weeks any test of this level will see me been an aggressive buyer with a 2128 stop. Today I will leave my buy level unchanged at 2146/2152 with a 2141 stop. Given the importance of tomorrow’s Meeting I do not want to be short the S&P at this time despite the lopsided bullish reading.
EUR/USD
My long 1.0960 average Euro buy level from last Friday worked out yesterday morning as the Euro had a nice rally which enabled me to cover this position at my 1.0990 T/P level as emailed earlier to my Platinum Members and I am now flat. I must confess I am staggered by the low volatility in the EUR/USD over the past few months. However as long as the Euro can hold its June 24 low at 1.0910 it is difficult to be short the market. Today I will again look to buy the Euro on any dip lower to 1.0930/1.0960 with a 1.0895 stop. I still do not want to be short the Euro at this time.
September Dollar Index
It took time but finally the Dollar sold off and this enabled me to cover my short 97.55 position from last Friday at 97.25 and I am now flat. Today I will again look to sell the Dollar on any rally higher to 97.5097.80 with a 98.20 tight stop. I still do not want to be long the Dollar at this time.
September DAX
The better than expected IFO Survey helped the DAX to rally strongly yesterday and this rally occurred despite the weaker US Stock market. I am still flat the DAX and I will continue to look to sell the market on any rally higher to 10350/10400 with a 10450 stop. I have to respect that the DAX has now closed over key support at 10080 for the fourth consecutive trading session and for that reason I will now raise my buy level to 10040/10100 with a 9995 tight stop.
September FTSE
No change as I am still a buyer on any dip lower to 6570/6605 with a 6735 stop. I will also leave my sell level unchanged at 6720/6750 with a 6785 stop as the FTSE just slowed to a crawl after its incredible 16% rally post ‘’Brexit’’.
Dow Rolling Contract
No change as I am still a small seller on any rally higher to 18640/18700 with an 18775 stop. I will still be an aggressive buyer on any dip lower to 18350/18410 with an 18290 stop.
September BUND
The Bund after another brief sell-off yesterday morning managed to re-group and close again over the key support at 166.50. I am still flat the Bund and today I will now raise my buy level slightly to 165.75/166.15 with a 165.45 stop. My only interest in selling the Bund is still on a rally higher to 167.25/167.55 with the same 167.75 stop.
Gold Rolling Contract
My long 1314 Gold position from last Friday finally worked out with the market trading to a 1321 high print. This rally enabled me to cover my long position at my revised 1317 T/P level and I am now flat. Today I will again look to buy Gold on any dip lower to 1299/1308 with a 1291 stop.
Silver Rolling Contract
No change as I am still long Silver from last Friday at 19.60 with the same 19.05 tight stop. If I am stopped out of this position I will be a very aggressive buyer on any further dip lower to 18.20/18.60 with a 17.75 stop.
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