A relatively quiet start to the week following a relatively quiet holiday-impacted end to last week with the JPY and NZD sharing equal top spot in terms of 24 hour FX performance, confirming the absence of any real rhyme or reason to this market. US stocks closed flat with energy and materials stocks the underperformers after oil gave back a little of its recent strength, but consumer stocks up on reports of good Black Friday sales. US bond yields are a touch lower at 10 years but still very much ‘home on the range’ (i.e. holding above 2.30%). Quiet markets are being compounded by the fact that we are still in front of all the week’s key event risks, one of which is the Senate confirmation hearing of Fed chair designate Jerome Powell later today.
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 46 points yesterday and is now ahead by 927 points for November having made 657 points in October. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points.
The Senate will be asking the question the band ‘’The Who’’ did in their 1978 Classic “Who are you?” The overall impression Powell chooses to convey will likely be a line from an earlier (1971) Who hit “Won’t Get Fooled Again”, i.e. “Meet the new boss, the same as the old boss”.
We have already heard from one Fed speaker last night, Dallas Fed President Robert Kaplan – a current FOMC voter. “If we wait too long to see actual evidence of inflation, we may get behind the curve and have to subsequently raise rates more rapidly,” Kaplan wrote in an essay. “This type of rapid rate rise has the potential to increase the risk of recession.” Kaplan also indicated he sees possible imbalances in the financial markets, as well as the risks of an overheating labour market, as outweighing the chance that inflation could continue to under-run the Fed’s 2% goal.
Not so much an essay as now 280-character tweet, POTUS has been out saying “The Tax Bill is coming along very well, great support. With just a few changes, some mathematical, the middle class and job producers can get even more in actual dollars and savings and the pass through provision becomes simpler and really works well!”
More pertinent perhaps, US Republican Senator Orrin Hatch (who chairs the tax writing committee) and the No.2 Republican in the chamber, Senate Majority Whip John Coryn, have been out saying the Senate is likely to vote on a tax bill this week, both of them expressing hope of getting a unified tax bill passed by Christmas.
The US Dollar looks to have drawn a little support from tax bill optimism – as well as the Kaplan comments – having earlier in the day gained a small lift from news that US New Home sales surged by 6.2% in October against expectations for a fall of 6.3%. The Dallas Fed’s manufacturing activity reading meanwhile fell to 19.4 from 27.6, but should not mean much as far as Friday’s ISM manufacturing survey goes.
This morning on the Economic Front we have the Euro-Zone OECD Economic Outlook at 10.00am, and this is followed at 12.00 pm by the German GFK Consumer Confidence. At 1.30 pm we have US Trade and Wholesale Inventories. Next at 2.00 pm we have the FHFA House Price Index and House Price Purchase Index. Finally at 3.00 pm we have the Richmond Fed Manufacturing Index. Also at 3.00 pm Fed Chair designate Jerome (Jay) Powell is up before the Senate for his confirmation hearing. This will be early enough for the European as well as US market to pounce on his every word. Senate questioning might revolve around his ‘vision’ for the Fed, views on accountability and communications strategy, etc. Yet doubtless he will also be quizzed on such matters as his view of whether weak inflation this year is largely the result of transitory factors (after last week’s FOMC Minutes revealed creeping Fed doubts that they were). Perhaps as or even more important for stock market, will be his replies to questions about where his support lies – or does not – with respect to unwinding of various aspects of the post-GFC Dodd-Frank legislation.
December S&P 500
Yesterday the S&P made its 56th new all-time high for 2017 as this bull market continues day after day in a relentless fashion with every short position getting squeezed. The uniformity of optimism toward stocks is strong, as we have yet to see a news article that discusses a bearish market forecast for 2018. Therefore I would expect Wall Street Strategists to be unanimously or near-unanimously bullish stocks for the coming year or otherwise they would be out of a job. However, when it comes to financial markets, widely-shared views area recipe for a trend change, which is why I analyise sentiment so closely. As it stands, it is lopsidedly bullish. Yesterday’s 2606 high print is getting closer to my 2620/2640 major trend resistance line going back to 2009. Today I will now raise my buy level slightly to 2587/2593 with a 2582 stop. Meanwhile I will still be an aggressive seller on any further rally to 2634/2645 with the same 2651 stop.
EUR/USD
I am still flat the Euro which is finally selling off from yesterday’s overbought condition. The Euro has strong support from 1.1820/1.1855 and today I will now lower my buy area to this range with a 1.1790 stop. I still do not want to be short the Euro at this time.
December Dollar Index
Having watched the Dollar trade to a low of 92.40 I used that late recovery in the market to exit my long 92.70 position at my revised 92.84 T/P level and I am now flat as I did not want to have a position overnight. The Dollar is unchanged this morning and given how oversold it is after its recent 250 point decline I will again look to buy the market on any dip lower to 92.25/92.60 with a 91.95 stop.
December DAX
I am still flat the DAX and reluctant to chase the market higher from here given the recent volatility. Today I will again look to buy the market on any dip lower to 12860/12920 with the same 12810 stop. As it is month-end on Thursday I still do not want to be short the DAX at this time.
December FTSE
Unfortunately the FTSE just missed my 7365 buy level with a 7373 low print overnight and I am still flat. The FTSE is still trying to make a meaningful break higher off its 7385 100 Day Moving Average as the market is still hampered by the renewed strength in Sterling. Today I will raise my buy level slightly to 7340/7375 with a 7310 stop.
Dow Rolling Contract
My Dow plan worked well yesterday with the market trading higher to my 23640 initial sell level before selling off 100 points. As I wanted to bank some points for yesterday’s trading session I emailed my Platinum Members to exit this position at my revised 23618 T/P level and I am still flat. Today I will again look to sell the Dow on any rally higher to 23695/23755 with a 23810 stop. Given how overbought the Dow is trading I do not want to be long the market at this time.
December NASDAQ
The NASDAQ made yet another new all-time high yesterday as this bull market shows no signs of ending. I am still flat and today I will raise my buy level slightly to 6315/6355 with the same 6280 stop. I will also be a seller on any rally higher to 6475/6510 with a 6545 tight stop.
December BUND
I am still flat the BUND which is opening higher this morning. I will now raise my sell level slightly to 163.50/163.85 with a 164.20 stop.
Gold Rolling Contract
No change as I am still a small buyer on any dip lower to 1269/1276 with the same 1262 stop.
Silver Rolling Contract
Silver finally rallied to my 17.20 T/P level on my latest long 17.10 position. Subsequently Silver traded lower to my second buy level at 17.05. I am still long and will only add to this position on any further move lower to 16.70 with a 16.45 stop.
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