While still under a positive tone, US and European Equity markets took a breather yesterday following the gains triggered by last Friday’s better than expected Non-Farm Payrolls Report. Oil prices got a boost on the back of an OPEC announcement that it plans to hold informal talks in September with expectations of a potential oil production freeze helping other commodity linked currencies outperform. Core Global Yields ended the day little changed, but notably 10 Year Spanish Bonds traded sub 1% for the first time ever, boosted by the hunt for higher yield against an improved global growth outlook.
To mark my 1100th 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 in this Service please email me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it made 25 points yesterday and is now ahead by 342 points for August having made 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.
While European Equity Indices managed to end the day marginally in positive territory, US Equity Indices closed with small losses with the rebound in energy and other commodity related sectors offset by declines in healthcare shares.
The better tone in commodity prices has helped commodity linked currencies outperform with the Australian Dollar at the top of the G10 Leader Board. The AUD closed 0.5% higher at 0.7650 after reaching an intra-day high of 0.7672. The market has clearly moved on from the RBA Rate cut last week with the AUD now trading 1.3 cents above the low reached last Tuesday.
So although the US Dollar was weaker against commodity linked currencies, the greenback still managed to outperform on a broad base. The Dollar Index climbed 0.17% yesterday, marking the fourth consecutive day of gains. So far higher Interest Rates and a stronger US Dollar have not been an impediment for stronger equities and commodities with stronger economic data and prospect of further Central Bank easing outweighing any concerns over a stronger Dollar.
In other news, Donald Trump gave an economic policy speech yesterday in an attempt to refocus his campaign on the economy. Trump called for aggressive sanctions against US trading partners, a reversal of environmental regulations and large tax cuts for individuals and businesses. Meanwhile Hillary Clinton will deliver her economic speech on Thursday as the Presidential Campaign enters its final three months.
This morning on the economic front we have German Current Account Balance at 7.00 am. This followed at 9.30 am by UK Industrial and Manufacturing Production along with the latest Trade Balance. At 11.00 am we have the US NFIB Small Business Optimism, followed by the Nonfarm Productivity/Unit Labour Costs at 1.30 pm. Finally at 3.00 pm we have UK NIESR GDP Estimate, US Wholesale Inventories and IBD/TIPP Economic Optimism.
September S&P 500
Unfortunately the S&P just missed my 2184 sell level with a 2183 high print before falling eight Handles in an otherwise extremely quiet trading session. With the VIX trading below 12, complacency has really set in to the equity markets. However internal measures of breath and up/down volume was positive despite the S&P rallying over 200 Handles since its post-Brexit low at 1981 on June 27. Today I will now raise my buy level to 2164/2170 with a 2159 stop. I will also raise my sell level slightly to 2187/2193 with a 2197 tight stop. The 2190/2200 should act as strong resistance and initially lead to a decent correction before the market re-groups and trades higher.
EUR/USD
No change as I am still a buyer on any dip lower to 1.1010/1.1040 with a 1.0980 stop. Remember the Euro needs to break and close below its 1.0910 June 24 low before I will start to turn bearish.
September Dollar Index
Just like the Euro above, the Dollar traded in a very narrow range yesterday and I am still flat. Today I will leave my sell level unchanged at 96.60/97.00 with the same 97.30 stop.
September DAX
My DAX plan eventually worked well yesterday with the DAX trading higher to my 10460 sell level before trading to a low of 10405 which enabled me to cover this short position at my revised 10435 T/P level as outlined earlier to my Platinum Members and I am now flat. The DAX has very strong resistance at 10520/10550 which is the January/April high and a break and close above this level will be at least short-term bullish. Today I will again look to sell the DAX on any rally higher to 10510/10560 with a tight 10605 stop. Given how over extended the DAX is trading and despite the positive price action over the past week I do not want to be long the market at this time.
September FTSE
Just like the S&P above the FTSE also missed my 6800 sell level with a 6784 high print before trading lower and then rallying yet again into the London close. I am still flat the FTSE and today I will again look to sell the market on any rally higher to 6815/6845 with a 6875 stop. I will also raise my buy level slightly to 6700/6730 with a 6670 stop which is just below the now key 6680/6700 support zone.
Dow Rolling Contact
The Dow continues to trade below its July 18622 all-time high despite the S&P making another new record high yesterday. As long as the Dow trades below this key level we still have negative divergence, especially when we have the VIX trading near two year lows at the same time. Today I will again look to sell the Dow on any rally higher to 18640/18700 with an 18750 stop. Given how over extended the Dow is trading plus the fact that the price action is still negative I do not want to be long the Dow at this time.
September BUND
I did not have much luck with my calls yesterday with the Bund twice missing my 166.70 buy level by a few points before trading higher and I am still flat. Today I will lower my buy level slightly to 166.30/166.60 with a 165.95 tight stop. I still do not want to be short the market at this time.
Gold Rolling Contract
No change as I am still a small buyer of Gold on any dip lower to 1315/1323 with a 1307 stop which is just below the key 1310 support level. However a break and close below 1310 will be at least short-term bearish.
Silver Rolling Contract
The 19.00/19.20 area continues to be good short-term support for Silver. I am still flat the market and today I will again look to buy Silver on any dip lower to 19.10/19.40 with the same 18.75 stop. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer in front of 18.30 with a 17.75 stop.
For any of my UK members who may be interested I am doing a special all-day trading seminar over the Non-Farm Payrolls in London on September 2nd 2016. I will be assisted by Paul Wallace who is a trader that I have done a lot of joint presentations in both Dublin and London over the past 12 months. Paul is a very engaging and interesting speaker and together we will try and take you through how to trade markets live over an important economic indicator. If anyone is interested in this not to be missed event in my opinion you can check the details out on the following link:
https://summer2016londonlivetradingday.eventbrite.com
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