Equity markets closed back in the black yesterday with Treasury yields modestly higher amid further focus on Trump tariffs, with an attempted push back from two key GoP members, but an undaunted Trump. The US Non-Manufacturing for February remained very high confirming a very positive growth start for the year for the US economy. China stayed with its around 6% growth target, and with continued emphasis on quality growth. The US Dollar is marginally higher but the Euro is basically unchanged from where I marked prices 24 hours ago. Meanwhile the German DAX had a significant upside Key Day Reversal yesterday.
To mark my 1525th 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 55 points yesterday and is now ahead by 482 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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Whether short-lived or not, or perhaps taking a lead from Congressional push back from leading Republicans urging caution over Trump’s metal tariffs, equities in the US have regained their mojo, the S&P closing 1.10% higher while the Dow rose 336 points to close 1.37% higher at 24,875. US Treasury yields are modestly higher, 10s by 2.2bps to 2.89%, still below recent highs. US growth expectations were supported by a somewhat higher than expected US Non-Manufacturing ISM for February at 59.5 against expectations of 59.0 and January’s 59.9. Last year it averaged 57. Ahead of Non – Farm Payrolls on Friday, the employment component was down from last month’s very high 61.6 to a still solid 55, back to where it was in late 2017. That component reading and other high frequency reads on the labour market point to a still strong 200K payrolls read, but the real intense market focus will be on average earnings.
Some return to risk has seen less support for the ‘’safe haven’’ currencies, the Yen and the Swissy, both down by around 0.5%. This has driven some net small gain in the US Dollar Indexes despite smaller gains from the Euro, Sterling, and the AUD that is trading this morning at 0.7760. One currency that has come under some pressure has been the Canadian dollar, down by 0.8%, with Canada in the sights of the US President over trade. Trump tweeted that ’’tariffs on steel and aluminium will only come off if new & fair NAFTA agreement is signed. Also, Canada must treat our farmers much better. Highly restrictive’’. This has seen further downward pressure on CAD, taking USD/CAD up 0.9% to be knocking on the door of 1.30, its highest level since mid-last year. And this came despite renewed support for oil yesterday, with WTI up $1.34 and Brent by $1.18.
Trump seemingly is not backing down on tariffs though he might be signalling less of a potential escalation. House Speaker Paul Ryan said that he is exceptionally worried about a trade war, urging the White House not to proceed, but in response Trump referred to cars flooding in like water. He did though say that ‘’I don’t think you’re going to have a trade war’’. House Ways and Means Chairman Kevin Brady was speaking in Mexico City saying that ‘’I applaud the president for targeting unfairly traded steel and aluminium. But blanket tariffs that also sweep up fairly traded steel and aluminium, especially with trading partners like Canada and Mexico, they should be excluded’’.
Sterling outperformed, getting a lift after UK PM May spoke in Parliament, saying she was ‘’confident we can reach agreement’’ on a transitional Brexit deal. Pro-Brexit campaigners have been positive about her speech at the end of last week and the mood within the Conservative party is seen to be slightly better. Earlier in the session the UK services PMI beat expectations.
The results of the Italian election saw a somewhat lower Euro, but it has since steadied to have clawed back some ground this morning. The election results revealed likely political gridlock, the anti-establishment 5-Star Movement gaining the most seats and claiming the right to govern while the centre-right bloc also claimed the right to govern. The Euro did of course get some background support from Germany’s SPD party voting to support a Merkel-led government. Italian 10 year bond yields rose 3.3bps yesterday.
The Aussie has been on the sidelines, little affected yesterday after the bounce back in January building approvals but somewhat softer details from yesterday’s inventories, profits and aggregate wage data. China reaffirmed a continued growth target of 6% at yesterday’s People’s Congress, continuing to emphasise the importance of quality growth, reducing pollution and poverty. Further cuts to steel and coal production capacity were announced. Dalian iron ore futures were down 2.2% yesterday.
This morning on the Economic Front we have no data due from either the Euro-Zone or UK. At 3.00 pm we have US Factory Orders and Durable Goods Orders.
Finally the Fed’s Dudley speaks in the US Virgin Islands this afternoon.
March S&P 500
The increased volatility continues with the S&P now trading at 2724 off a 2647.50 low print on Friday as yet again no matter what the news the ‘’buy the dip’’ crowd returns with a vengeance. As I have repeatedly said over the past few weeks you have to be nimble and take your profit before the market runs away. Yesterday after the S&P traded higher to my 2713 sell level, I was not comfortable in being short and I emailed my Platinum Members to exit and short position at 2712 or better. Thankfully after I sent out this email the S&P traded to a 2709 low before rallying strongly into the close. I was very unfortunate yesterday as shortly after I posted the S&P traded to a low at 2664 just missing my 2658 buy level before subsequently following the DAX higher. For the bears to regain control the S&P needs to hold the 2730/2740 resistance level or else there is a far chance we will test last week’s 2789 rebound high. Today I will again look to sell the market from 2732/2744 with a 2751 stop. The S&P has strong support from 2689/2699 and I will be a buyer in this area with a 2683 stop.
EUR/USD
I am still flat the Euro which traded sideways yesterday. I will now raise my buy level slightly to 1.2220/1.2260 with a 1.2185 stop. I will also raise my sell level to 1.2390/1.2430 with a 1.2460 stop.
June Dollar Index
No change as I am still a buyer on any dip lower to 89.35/89.75 with a 89.05 stop. I still do not want to be short the Dollar at this time.
March DAX
Very frustrating as the DAX missed my 11710 buy level with a 11725 low print before rallying over 500 points in what turned out to be a significant Upside Key Day Reversal. Thankfully we had no sell level in the DAX yesterday. Yesterday’s move higher has to be respected and today I will move my buy level higher to 12060/12130 with a 12010 stop. I still do not want to be short the DAX at this time.
March FTSE
The FTSE also missed my 7035 buy level with a 7050 low print before rallying strongly into the close and I am still flat. Today I will now raise my buy level to 7080/7120 with a 7045 stop which is just below yesterday’s low print.
Dow Rolling Contract
The Dow is now trading over 600 points higher than the low registered shortly after I posted yesterday morning helped by the McClellan Oscillator which closed in positive territory last night with a +63 print. Yesterday after the Dow traded higher to my initial 24750 sell level we had a quick sell-off to 24690 and I used this move lower to cover my short position at my revised 24720 T/P level and I am still flat. As I mentioned in my S&P commentary above you have to be nimble in cutting positions before the market runs away from you. This morning the Dow is again trading higher at 24950 ahead of key resistance from 25000/25200. Today I will again look to sell the Dow on any further rally to 25020/25150 with a 25250 stop. I will also raise my buy level to 24530/24650 with a 24465 stop.
March NASDAQ
My NASDAQ plan worked well as after the NASDAQ traded higher to my 6825 sell level the market had a nice sell-off to a low at 6745 before rallying over 150 points into the close. I covered my short position at my revised 6810 T/P level and I am still flat. Yesterday the NASDAQ underperformed both the Dow and S&P and today I will again look to sell this market on any further rally to 6945/6985 with a 7015 tight stop.
June BUND
The BUND traded the whole of my 156.90/157.25 buy level for an average long position at 157.08. I am still long and I will now raise my stop on this position to 156.65. If I am stopped out of this trade I will be a more aggressive buyer on any further dip lower to 156.00/156.40 with a 155.70 stop. Meanwhile I will now lower my T/P level on this position to 157.25.
Gold Rolling Contract
No change as I am still a buyer on any dip lower to 1302/1312 with the same 1295 stop.
Silver Rolling Contract
Silver traded lower to my 16.40 buy level. I am still long and will only add to this position on any further move lower to 16.10 with the same 15.80 stop. Meanwhile I will leave my T/P level unchanged at 16.65.
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