Before the official start of the four – day Easter break, there was a bit of good news about the US economy, courtesy of an upward revision to Q4 GDP, from 1.0% to 1.4% which was driven by an upward revision to consumer spending to 2.4% from 2.0%. Fast forward four days, and the Atlanta Fed published its latest ‘GDP Now’ estimate of First Quarter Growth, which has been chopped to a dismal 0.6% from 1.4%. This follows the release of the February data on Personal Income and Spending, the main feature of which was a large 0.4% downward revision to the January spending figures from 0.5% to 0.1% in nominal terms, and from 0.4% to 0.0% in real terms.
To mark my 1000th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2500 for my Platinum Daily Commentary 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 235 points last Thursday and is now ahead by 2170 points for March having made 2265 points in February and a record 3365 points in January. Since I started this service last June it has made over 22,000 points.
February Spending rose by just 0.1% as expected. As a result, the Atlanta Fed has knocked down its Q1 real consumer spending estimate to 1.8% from 2.5%. Alongside, the worse than expected January Trade data which saw a Deficit print of $62.9bn has seen them increase the estimate drag on growth from net exports, to -0.52 percentage points from -0.26.
The negative growth connotations of the Personal Income and Consumption data somewhat deflected attention from their inflation component – in particular the Fed’s preferred core PCE deflator. This held steady at 1.7% in February, against expectations for a rise to 1.8%. This though is still up from 1.3% a year ago, and it may only be slightly mischievous to suggest that relative to Atlanta Fed’s latest GDP estimate, inflation in the US is now tracking three times faster than its real growth rate.
The latest batch of US data sets the backdrop for an appearance tonight by Fed Chair Janet Yellen before the Economics Club of New York. Following a somewhat shambolic post – FOMC press conference on March 16 and a string of sound bites from numerous FOMC Members since then that suggest they attended a different FOMC Meeting to the one Yellen chaired, I can only hope that Ms Yellen takes heed of many people’s judgement on her 16 March performance, namely ‘must try harder’.
The US data released yesterday has had the effect of pulling the US Dollar lower with the narrow DXY Dollar Index closing down a third of a percent and the broader BBDXY BY 0.4%. Dollar weakness has been led by the British Pound (+0.9%) and the Canadian Dollar which rose 0.75%. With regards to positioning, Friday’s IMM data for the week ended 22 March and which captures ‘Fed Week’ shows overall US Dollar speculative longs down to their smallest since mid – July 2014.
The exception to the weaker Dollar has been USD/JPY, and which has risen to a high of 113.70 which is its best level since Mid – March.
This morning on the economic front we have no data of note from either the UK or the Euro-Zone. The only US data due is the Consumer Confidence Index at 3.00 pm.
June S&P 500
Very unusual to see that both my buy and sell levels got hit since I last posted on Thursday especially since we had a large range. Shortly after I posted on Thursday the S&P traded lower to my 2013 buy level with a 2012.25 low print before spending the rest of the trading session rallying which enabled me to cover this position at my 2018.50 T/P level. Early Monday morning this rally continued after the US markets re-opened with the S&P hitting my 2037 sell level before subsequently trading lower to 2021.50 and this enabled me to cover this position at 2032 and I am now flat. Again no matter how weak the economic data is the ‘buy the dip’ mentality continues and as I have repeated numerous times over the past few weeks you can only be short the market for a few hours before the market turns around and rallies. Today I will again try to sell the S&P on any rally higher to 2038/2043 with a 2048 stop. My only interest in buying the S&P is still on a dip lower to 2013/2018 with a 2008 stop. If I am taken long and subsequently stopped out I will be an aggressive buyer in front of 2002 with a 1996 stop.
EUR/USD
Unfortunately I covered my long 1.1180 position for a small loss at 1.1175 on Thursday as I wanted to be flat for the long weekend in Europe and I am still flat. Today I will again look to buy the Euro from 1.1120/1.1150 with a 1.1085 stop. I still do not want to be short the Euro following the two large upside Key Day Reversal’s this month.
June Dollar Index
My short 96.35 Dollar position worked well on Thursday as shortly after I posted the Dollar traded lower to my 96.05 T/P level as indicated to my Platinum Members and I am still flat. Today I will again look to sell the Dollar on any rally higher to 96.45/96.75 with a 97.10 stop.
June DAX
Very late in last Thursday’s trading session the DAX traded lower to my 9890 buy level and with the DAX closed until this morning I emailed my Platinum Members to cut this position at 9900 and I am still flat with the DAX trading at 9970 this morning. Today I will again look to buy the DAX on any dip lower to 9835/9885 with a 9785 tight stop. To me the price action is telling me that it is only a matter of time before we break the key 10100/10200 resistance level and trade back to at least 10500.
June FTSE
My FTSE plan worked well on Thursday with the market hitting my 6035 buy level before having a subsequent rally which enabled me to cover this position at my 6055 T/P level and I am still flat. Today I will again look to buy the market on any dip lower to 6020/6050 with a 5985 stop. Despite the negative price action I still do not want to be short the market at this time.
Dow Rolling Contract
It took a while but the Dow finally hit my 17610 sell level yesterday morning. Subsequently the Dow traded lower to a 17490 low print which enabled me to cover this position at my 17560 T/P level and I am still flat. There is no doubt after the 2200 point rally in the Dow over the past six weeks that we have huge resistance at the 17700 area. Today I will again look to sell the Dow from 17630/17690 with a 17750 stop. Despite the positive price action I still do not want to be long the Dow at this time.
June BUND
It took a while but thankfully the Bund traded lower late in Thursday’s trading session which enabled me to cover my short 163.15 position at 162.90 as emailed to my Platinum Members and I am now flat especially with the Bund following the US Bond markets higher this morning and break the post ECB rate cut high at 163.42. The break of this high is significant as it now negates the huge downside Key Day Reversal recorded on that day. It looks like the Bund yield wants to at least test parity and trade with a negative interest rate which is just insane but these are the Central Bank terms that we live under now. Today I will try the sell side again on any further rally to 163.60/164.00 with a 164.35 stop.
Gold Rolling Contract
Gold just missed my 1199 buy level with a 1205 low print early yesterday morning and I am still flat. Today I will raise my buy level slightly to 1194/1202 with a 1187 stop.
Silver Rolling Contract
No change as I am still long at 15.25 with the same 14.80 stop.
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