With the US Markets closed for the Labour Day Holiday, the latest UK economic data and gyrations in the oil price captured most of yesterday’s headlines. That said much of the initial sharp spike higher in oil on the latest mumblings about a Saudi Arabia – Russia pact to freeze oil production and Sterling on the biggest ever monthly gain in its Service sector PMI were later given back. Thus Brent Crude jumped by $2 to $46.50 only to fall back to $45.0 on digestion of the full comments from officials and which appeared much more equivocal about prospects for a production freeze as early as this month when OPEC Officials meet in Algeria. Meanwhile GBP/USD ended the day just 0.1% higher, having earlier jumped about three-quarters of a cent although it is rallying again as I write this commentary.
To mark my 1150th issue of TraderNoble Daily Commentary I am offering a special 2 year rate of Euro 2500 for my Platinum Service 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 42 points yesterday and is now down just 28 points for September having made 1722 points in August and 1682 points in July. The previous three months saw gains of 2550, 1532 and 2175 points respectively. Since I started this Platinum Service in June 2015 it has averaged a monthly gain of over 2100 points.
As for the UK data, the Services PMI print of 52.9 up from 47.4 in July shows the sector rebounding from the late June Brexit shock with even more alacrity than the Manufacturing sector. Just glancing at some UK Trade statistics last night, we see that Britain runs a surplus with the rest of the work in services in the order of £50bn a year. While we instinctively think of Premier League football TV rights and global syndication of Britain’s Got Talent, the fact is some 70% of the UK services surplus is in Financial Services. This is the sector most at risk from any failure of the UK Government to negotiate a ”soft” Brexit that preserves the ability of financial services firms based in the UK to ”passport” to the rest of Europe. On this latter point, Japan issued a fairly stern warning to the UK in front of the G20 Meeting at the weekend.
The big FX movers over the past 24 hours were the NZD and JPY. The Kiwi underwent something of a stealth rally through the APAC session on no real news, while the Yen gained ground steadily following a speech by BoJ Governor Kuroda at a Kyodo news event. Kuroda defended the use of negative interest rates if the broader economic benefits to society were seen to outweigh the costs in relation to the terms of damage to profitability of the financial sector. He also repeated what he said at Jackson Hole, namely that the BoJ has ample scope to ease further in ”all three dimensions”. Yet the speech is being interpreted as meaning the BoJ has become increasingly uneasy over the use of negative rates and probably won’t do much or indeed anything when it convenes at it next meeting on September 21.
This morning on the economic front we already has the release of German Factory Orders which came in at +0.2% versus 0.5% expected. Overnight at its latest meeting Australia left its Interest rates unchanged. At 8.30 am we have German Construction PMI and this is followed by UK Car Registrations at 9.00 am and Euro-Zone GDP at 10.00 am. This is followed at 2.45 pm by US Services/Composite PMI. Finally at 3.00 pm we have US Labour Market Conditions Index Change, ISM Non Manufacturing Composite and TIPP Economic Optimism.
September S&P 500
Unfortunately the S&P just missed my 2174 buy level and I am still flat. We should see volatility start to pick up again as the US traders return to their desks after the summer holidays. August volatility was close to the lowest on record with the S&P closing within a couple of points for each Friday during the month. Today I will raise my buy level slightly to 2169/2175 with a 2164 stop. If I am taken long and subsequently stopped out of this position I will use my ”5 Handle Rule” to re-buy the market with a stop below whatever new low is posted. For new members if they click on the ”Education Tab” on my website it will give you an explanation of this great signal. My only interest in selling the S&P is still on a rally higher to 2192/2198 with a 2203 stop.
EUR/USD
Yesterday the Euro traded lower to my 1.1140 buy level before having a small rally. As I wanted to book some points for yesterday I emailed my Platinum Members to exit this position at 1.1152 and I am now flat. Today I will again look to buy the Euro on any dip lower to 1.1090/1.1120 with a 1.1055 stop. Remember the 1.1070/1.1100 is strong support and should lead initially to a decent bounce first off any test of this area before subsequently trading lower. I will still look to sell the Euro on any rally higher to 1.1235/1.1265 with a 1.1305 stop.
September Dollar Index
No change as I am still a seller on any rally higher to 96.25/96.55 with a 96.85 tight stop.
September DAX
My DAX plan worked well yesterday with the market trading lower to my 10675 buy level before having a nice this morning so far to a high of 10710. Just like the Euro above as I wanted to bank some points from yesterday I covered this position at 10685 and I am now flat. With the weakness in the Euro, it is difficult to be short the DAX and today I will again look to buy the market on any dip lower to 10610/10660 with a 10560 stop.
September FTSE
The FTSE also traded lower to my 6870 buy level shortly after I posted before having a small rally which enabled me to cover this long position at my revised 6890 T/P level and I am now flat. There is no doubt that the strength of Sterling over the past few days is weighing on the FTSE but I still would not be short and continue to look to buy the dip. For this reason I will again look to buy the market on any dip lower to 6820/6850 with a 6795 stop.
Dow Rolling Contract
Unfortunately the Dow just missed my 18465 buy level with a 18470 low print before having a nice rally and I am still flat. I am often asked how I know that the Central Banks are continuing to prop up the equity markets and will do everything in their power to prevent a stock market crash. I heard yesterday that the Swiss National Bank has an incredible $120bn invested in the US stock market and that they are the biggest shareholder in Facebook. Today I will again look to buy the Dow on any dip lower to 18380/18440 with a 18330 stop. I still do not want to be short the Dow at this time.
December BUND
I am still flat the Bund and today I will lower my buy level slightly to 163.80/164.20 with a 163.45 stop. I still do not want to be short the Bund at this time.
Gold Rolling Contract
I am still flat Gold and today I will raise my buy level slightly to 1309/1316 with a 1302 stop which is just below last week’s low print.
Silver Rolling Contract
Silver just missed my 19.30 buy level after I posted yesterday with a 19.32 low and I am still flat. If Silver can continue to hold the key 19.00/19.20 support level it could be very constructive going forward. Today I will move my buy level slightly higher to 19.10/19.40 with a 18.80 tight stop.
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