US equities rebounded yesterday and continued overnight boosted by cautiously hopeful comments from US Treasury Secretary Mnuchin over the weekend. The risk positive mood has seen the US Dollar weakened against most currencies while US Treasury yields are higher led by the 5y part of the curve. US equities opened the week on a positive mood aided by Steve Mnuchin FOX TV interview on Sunday in which he expressed optimism the US can reach an agreement with China that will forestall the need to impose trade tariffs. Overnight comments from White House trade advisor Peter Navarro also helped as he confirmed the US and China are ‘’are already at the negotiating table’’ while Chinese Premier Li Keqiang made conciliatory comments around opening up the Chinese market.
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For anyone following my Platinum Service it made 55 points yesterday and is now ahead by 1487 points for March, having made 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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All major US equity indices closed over 2.5% stronger, more than reversing the sharp losses recorded on Friday. Technology shares led the rebound, despite the fact that Facebook was under pressure after the Federal Trade Commission confirmed it has an open non-public investigation into Facebook’s privacy practices. Facebook shares closed 0.67% higher, after dipping more than 5% intra-day.
European equities on the other hand opened the week with a negative tone. The Stoxx 600 index closed 0.72% down on Monday which is just over 10% lower since its highest close of 2018 on January 23. The Index now trades at its lowest level since February 2017. After the softer than expected PMI prints last week, the rebound in the Euro, up 0.86% over the past 24hrs appears to be weighing on sentiment and raising concerns over the growth outlook for the region. The Euro is currently trading at 1.2451 after trading to a low of 1.2240 mid last week.
USD weakness was also evident in risk sensitive currencies with NOK (1.04%) and NZD ( 0.90%) leading the way in the G10 group. NZD is now knocking on the 73c mark, after trading to a low of 0.7154 last week, a level which at the time raised the prospect for a swift move sub 70c. The AUD ( 0.48%) has also benefited from the improvement in risk sentiment and after briefly trading sub 77c yesterday morning, the pair now trades at 0.7745.
Sterling has continued its steady ascendency against the USD, trading above the 1.42 mark for the first time since the brief spike above the level on March 22. Cable now trades at 1.4233, after reaching an overnight high of 1.4245, the 1.4345 high on January 25 is now well within sight. UK politics have not really contributed to the Sterling strength, however it is worth noting that Labour is said to be proposing amendments to ensure a hard Brexit is avoided in the case Parliament rejects the negotiated Brexit deal. Meanwhile, former PM Tony Blair has also reiterated his calls for a referendum on the final Brexit deal.
Ease in trade tensions has lifted almost all currencies against the USD, but JPY is the G10 exception. The yen retains its preeminent safe haven characteristics and unsurprisingly the improvement in risk sentiment has seen USD/JPY on a steady rise over the past 24hrs. The pair now trades at 105.41, up 0.62% over the past 24hrs.
In other news, Russia is facing a wave of diplomatic expulsions with the US and many European allies announcing a coordinated decision to expel Russian diplomats in response to the poisoning of a former Russian spy in the UK.
This morning on the Economic Front we have Euro-Zone Money Supply and Consumer Confidence at 9.00 am. Finally we have the US Richmond Fed Manufacturing Index and the Conference Board Consumer Confidence Index which will both be released at 3.00 pm.
Later at 4.00 pm the Fed’s Bostic will speak on the Economy at a conference in Atlanta.
June S&P 500
It is so hard to maintain a short position in any US Index as I have no doubt that the Plunge Protection Team bought the S&P hard after the close on Friday and again yesterday afternoon after the S&P tried to close the ‘’Open Gap’’ from Friday at 2594 but stopped short with a low of 2602 before spending the rest of the session trading higher. My buy level at 2595 was unfortunately missed. Subsequently the S&P traded higher to my initial 2645 sell level but you had to be quick to take any gain as the market only had a 5 Handle sell-off to 2640 before accelerating into the close. I emailed my Platinum Members to raise their sell level to 2658/2670 which the market reached overnight and I am now short at an average rate of 2664. I am not comfortable in being short especially as the S&P is now trading over my key 2660 resistance level as mentioned in yesterday’s commentary. The 200 Day Moving Average comes in at 2590 which is where we bottomed on Friday and again on Sunday night when the Futures Markets re-opened. This morning the S&P has the potential to leave another ‘’Open Gap’’ from last night’s close at 2658 as we currently trade at 2670. I will now use any weakness back to 2666 to cover my 2664 short position and I will then look to buy the S&P on any dip lower to 2649/2659 with a 2643 stop. I will leave my stop on my exiting short position at 2677.
EUR/USD
Thankfully we covered any short position in the Euro yesterday morning with the market now trading at 1.2450. The big question here is this the break that I have been looking for? I think it is certainly a good risk/reward trade here as long as we can hold key support at 1.2360. Today I will move my buy level higher to 1.2375/1.2415 with a tight 1.2345 stop as I look for a move higher to 1.2650 and then 1.28/1.29 where I will look to put on a macro short position as I just cannot see the Euro breaking the strong resistance level at 1.30 in the near-term.
June Dollar Index
Late yesterday the Dollar traded lower to my 88.60 buy level. I am still long and will now lower my T/P level on this position to 88.75. The large speculators have now got their largest long Dollar position since 2011 which is a warning sign that this Dollar sell-off is in its final stages. If I manage to cover this position at 88.75 I will then look to re-buy the Dollar on any dip lower to 88.00/88.40 with a 87.60 stop. I will also raise my stop on my 88.60 position to 88.20.
June DAX
The DAX had a wild trading session yesterday with the market spiking to a 11705 low print and this move lower had me long at an average rate of 11765. Unfortunately in anticipation of some of my other Index buy levels being filled I covered this position too early at my revised 11800 T/P level and I am now flat. With the DAX holding the February low and 500 Day Moving Average at 11710 this market is still a buy on dips. Today we have support at 11900 and I will now look to buy the market on any dip lower to 11850/11910 with a 11795 stop. I still do not want to be short the market at this time.
June FTSE
My FTSE plan worked well with the market trading lower to my 6785 buy level before rallying to a rebound high so far this morning at 6895. Unfortunately I covered my long position too early at 6805 and I am now flat. Despite the strong Sterling the FTSE has recovered well with the market holding the key 6750 support level which is the 200 Week Moving Average. Today I will again look to buy the FTSE on any dip lower to 6810/6850 with a 6770 stop.
Dow Rolling Contract
Unfortunately the Dow missed my 23600 buy level with a 23741 low print before rallying as expected to currently trade at 24350. It is so difficult to be short any equity market for any length of time as the Fed no that a crash in the market will ruin their good work over the past nine years. There is no doubt the market came back from the abyss on Friday as we were certainly on ‘’Crash Alert’’ for yesterday but this scenario has now gone on hold for the moment. We now know that any break of the 23300/23600 support level will have huge downside risk as mentioned yesterday. Given the strong rebound yesterday any sell-off over the coming days should be limited. Today I will now raise my buy level to 24000/24200 with a 23890 tight stop. I still do not want to be short the Dow at this time.
June NASDAQ
Frustratingly the NASDAQ just missed my 6530 buy level by a few points before rallying nearly 300 points to trade at 6825 this morning. The NASDAQ has huge resistance at 6875 and today I will be a small seller on any further rally to 6875/6920 with a tight 6950 stop. My only interest in buying the market is on a dip lower to 6650/6700 with a 6620 stop.
June BUND
No change as I am still a buyer on any dip lower to 157.80/158.20 with a 157.45 stop.
Gold Rolling Contract
Gold has massive resistance at 1375 and strong support at 1300/1310. This range has held Gold all year as we mainly have traded sideways within this range. I am still flat Gold and today I will now raise my buy level to 1325/1335 with a 1318 stop.
Silver Rolling Contract
I am still flat Silver and today I will now raise my buy level to 16.40/16.70 with a 16.10 stop. If I am taken long I will have a T/P level at 16.95.
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