With Jackson Hole out of the way, markets and related news have been more focussed on Hurricane Harvey, some more news stories out of the West Wing and the resumption of UK-EU Brexit talks. It was a bank holiday in the UK. However just after the US Markets closed in New York, there was a nuclear missile launch by North Korea which flew over Japan which saw stock markets hit while USD/JPY dipping to a 108.50 low, as Japanese PM Abe confirmed that the missile passed over Japan. In currency markets, the post-Jackson Hole softening up further of the USD continued a little further, the Bloomberg spot dollar index down 0.06% and the Euroheavy DXY index off 0.53%. The AUD (+0.32%), EUR (+0.34%), GBP (+0.26%), and the NZD (+0.0.24%) have all continued to make some progress against the big dollar. The US data set was light with only the July Advanced Goods Trade balance and Wholesale inventories. The trade deficit, at -$65bn, was a little larger than expected, inventories slightly faster.
To mark my 1400th 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 can you please contact me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it made 112 points yesterday and is now ahead by 1288 points for August, having made 1096 points in July, 1023 in June, 1076 in May, 1376 in April, 1335 in March, 1481 in February and 1734 in January. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1700 points.
Net net, perhaps a small downward shaving of prospective Q3 US economic growth might have resulted. The Atlanta Fed’s GDPNow estimate, currently 3.4% will be updated again after Thursday’s personal spending/PCE deflators report. Whether the trade figures had anything to do with a news story out of the West Wing with President Trump demanding from Chief of Staff John Kelly some tariffs (“get me some tariffs”) is not known.
Meanwhile, the rain has continued in Houston in the aftermath of Cyclone Harvey with current weather maps showing forecasts of another 175mm of rain over the next 24 hours or so (7” for those thinking in inches) on top of as much as 50 inches rain hitting Houston so far. Some very early estimates are doing the rounds, but refining capacity has been closed, Texas refining capacity supplying around one third of the US’s requirements. Near term gasoline prices surged (September by 5.87%) refineries closed for preventative shutdowns. A hiatus in local refinery crude demand has seen WTI down, the October contract by $1.13/bbl, currently trading at $46.81/bbl. The impact on refineries will still take time to be assessed and how quickly they can re-start. President Trump is scheduled to go to Texas later today to get first- hand knowledge as local and Federal authorities come to grips with the scale of devastation.
As the Brexit countdown clock ticks (1 year and 212 days to go) talks are formally resuming again this week. The testy war of words continued. There are four days of talks ahead discussing the Irish border, EU citizens’ rights and the Brexit bill. Europeans are saying that only when progress is made on these will they move on to discuss a future trading deal. The divorce cost continues to be a major hurdle for both sides with big numbers being bandied around on the European side. To state the obvious, it’s all very unhelpful for consumer and business confidence in the UK, now with the clock ticking and the EU holding most of the cards. Though down marginally from late trade in Asia yesterday, EUR/GBP has over recent days continued on a path higher. It is now back to the highest levels seen since the 2009 pre-European debt crisis peaks.
This morning on the Economic Front we already had the release of German GFK Consumer Confidence for September which came in at 10.9 versus 10.8 expected. Finally we have Canadian Industrial Production at 1.30 pm, followed by US Conference Board Consumer Confidence at 3.00 pm.
September S&P 500
Now we know the significance of the phrase that ‘’Markets Never Sleep’’ as shortly after the US Markets closed last night North Korea launched it’s latest missile which flew over Japan and into the sea. All stock markets that were open got slammed on this news with the S&P trading the whole of my 2427/2432 buy range thus putting me long at an average rate of 2429.50. As all my Indices got filled very late I emailed my Platinum Members earlier this morning to cover any long S&P position at 2432 or higher and I am now flat. The 100 Day Moving Average has now moved higher to 2421/2423. This is the key level to watch as a break and close below here could well see a quick move lower to the June/July low at 2405/2402. Today I will again look to buy the market on any dip lower to 2416/2421 with a 2411 stop. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer in front of 2405 with a 2399 stop. With the McClellan Oscillator again closing in positive territory I do not want to be short the S&P ahead of Thursday’s month-end.
EUR/USD
After Friday’s large move higher the Euro traded in a narrow range for the last 24 hours. With round number resistance at 1.20 close by, it is only a matter of time before we test this level. Currency trends often end with a spike and sharp reversal. This is important given how severely overbought the Euro is currently trading. Today I will leave my sell level unchanged from 1.2030/1.2065 with the same 1.2095 stop. I will still be a small buyer on any dip lower to 1.1860/1.1895 with a 1.1830 stop.
September Dollar Index
Unfortunately after I posted yesterday the Dollar missed my 92.50 exit level on my latest long 92.60 position from Friday and I was subsequently stopped out of this trade at 92.20 and I am now flat. The Dollar has strong support at 91.90 and given how unloved the Dollar is, following its huge move lower from the 103.80 high print made on January 3 this year I will again look to buy the Dollar on any dip lower to 91.55/91.85 with the same 91.25 stop. As I go to press the Dollar has just hit my 91.80 buy level. I will only add to this position on any further move lower to 91.55. My T/P level on this position is 92.10 as I try to make up for yesterday’s Dollar loss.
September DAX
As most members trade on a spread betting account for once this was to your advantage with the DAX trading the whole of my buy 11970/12030 buy range after the re-open of the markets last night following the missile launch by North Korea. This put me long at an average rate of 12000 and with the DAX trading at 12062 shortly after the Futures Market opened this morning I emailed my Platinum Members to exit any long position here and I am now flat. The DAX has good support at the August low of 11930 ahead of very strong support at 11880. With the Euro looking to break 1.20, the DAX will be defensive and I will now look to buy the market on any dip lower to 11875/11930 with a 11840 tight stop. Given how oversold the DAX is trading I do not want to be short the market at this time.
September FTSE
The FTSE also traded the whole of my 7320/7350 buy range and I am now long at an average rate of 7335. In the last few minutes the FTSE traded to a 7307 low before bouncing 30 points and I have used this rally to exit my long position for a small loss at 7330 and I am now flat. Today I will be a more aggressive buyer on any further dip lower to 7225/7260 which is where the July low at 7242 comes in and any test of this area should see a decent bounce initially. If I am taken long my stop will be at 7195.
Dow Rolling Contract
My Dow plan also worked well as after the Dow re-opened at my 21660 buy level I emailed my Platinum Members this morning to cover this position at my revised 21715 T/P level and I am now flat. Today my only interest in buying the Dow is on a further dip lower to 21540/21600 with a 21485 stop. The Dow has strong support from 21500/21600 which if tested should also lead to a decent initial rally before eventually accelerating lower.
September BUND
Yesterday afternoon the Bund eventually traded higher to my 164.95 sell level. As I wanted to make up for the points lost earlier on my long Dollar position I emailed my Platinum Members to exit this position at 164.80 and I am now flat. The Bund closed at 164.74 before opening higher on the back of the weaker stock market. As I post this commentary the Bund is not far off the June high at 165.45. The Bund is extremely overbought and today I will again look to sell the market on a rally higher to 165.50/165.85 with a 166.10 stop.
Gold Rolling Contract
Gold rallied strongly yesterday helped by both the weaker US Dollar and later by the missile launch by North Korea. As I have mentioned over the past few days a break of 1300 will see an acceleration with the market trading to a 1321 high print so far. The 1295/1303 area should now be strong support and today I will be a buyer on any dip to here with a 1289 tight stop.
Silver Rolling Contract
Silver also rallied strongly today. A rise above 17.79 which is the high from June 6, would align Silver with Gold’s advance and this if this happens it would strengthen the bullish potential. I am still flat Silver and today I will now raise my buy level to 17.05/17.40 with a 16.75 tight stop.
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