Markets ended the month of May in a cautious mood amid mixed US economic data and a Guardian Poll that suggested Britain to be more in favour of leaving the EU. US and European equity Indices ended the day marginally in the red. Oil prices climbed above $50 and then quickly retreated while in currencies the US Dollar had a mixed trading session, losing ground against the NZD and the AUD, but outperforming Sterling and the oil linked currencies.
To mark my 1075th 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 140 points yesterday. The month of May ended with a gain of 1532 points following a gain of 2175 points in April and 2265 points in March. Since I started this Platinum Service over 12 months ago it has averaged a monthly gain of 2200 points.
US Income Spending beat expectations in April, jumping to 1% versus 0.7% expected, but Consumer Confidence fell in May and the Chicago PMI also disappointed. A rebound in spending was expected given the constrained spending in March due to Easter seasonal, but the drop in the Conference Board’s measure of May Consumer Confidence to 92.6 from 94.7 triggered a bigger negative reaction, particularly given the solid print by the Michigan Consumer reading last Friday. The Chicago PMI slipped to 49.3 in May from 50.4 previously and along with other soft regional PMI prints it has raised expectations of a weak ISM print this afternoon.
US Treasury Yields had a volatile trading session moving higher initially, then losing ground after the data releases. Month end buying was probably also a factor. 2 year Yields closed 4 bps lower at 0.88% while the 10 Year closed 2 bps lower at 1.84%.
Looking at the G10 currencies, the NZD is at the top of the leader board followed by the AUD. Sterling sits at the bottom closing down 1% against the US Dollar following a Guardian Poll showing voters leaning towards ‘Brexit’. Meanwhile both the CAD and NOK underperformed with the moves consistent with a sharp drop in oil prices in the latter part of the session.
Oil prices initially traded over the $50 mark, but in a somewhat belated fashion, prices followed the drop in equities and US Bond Yields. The lack of expectations of any agreement on drop in supply at the OPEC Meeting tomorrow is probably also a factor at play.
Overnight the Nikkei closed down 1.65% after PM Abe delayed introducing a Sales Tax for up to 2 ½ years, while the China Caixin PMI came in as expected with a weak 49.2 print.
This morning on the economic front we have German and Euro-Zone Manufacturing PMI at 8.55 am and 9.00 am respectively. This is followed at 9.30 am by UK Mortgage Approvals and Manufacturing PMI. At 2.45 pm we have US PMI. Next at 3.00 pm we have the very important ISM and Construction Spending. Finally at 7.00 pm the Federal Reserve will release its Beige Book.
June S&P 500
My S&P plan worked very well yesterday with the market trading lower to my 2088 buy level before having a nice 10 Handle rally into the close which enabled me to cover this position at my 2094 T/P level and I am now flat. Given the amount of economic data releases due today I would expect to see another volatile trading session. If the S&P sells off on the back of these data releases I will then look to buy the market ahead of the Beige Book at 7.00 pm. Today I will again look to buy the S&P on any dip lower to 2085/2090 with a 2081 stop. If I am taken long and subsequently stopped out of this trade I will be a more aggressive buyer in front of 2072 with a 2066 stop. Given the fact that today is the beginning of a new month I do not want to be short the S&P today.
EUR/USD
I am still flat the Euro and today I will raise my buy level slightly to 1.1080/1.1110 with a 1.1045 stop. I still do not want to be short the Euro at this time.
June Dollar Index
Finally my short 95.75 Dollar position worked with the market selling off just after the US Markets opened and this enabled me to cover this position at my 95.50 T/P level and I am now flat. Today I will again look to go short on any rally higher to 96.10/96.50 with a 96.80 tight stop.
June DAX
My DAX plan also worked well with the DAX trading lower to my 10240 buy level before having a nice rally to 10280. As I was already long the FTSE and S&P I emailed my Platinum Members to exit this position at 10255 and I am still flat. This morning the DAX is selling off again on the back of the weak Chinese PMI and the delay in the introduction of the Japanese Sales Tax. However with the ECB Meeting and Dragi press conference tomorrow I would not press the downside from here. For these reasons I will again look to buy the DAX on any further dip lower to 10110/10170 with a 10050 stop.
June FTSE
The FTSE traded lower to my 6220 buy level yesterday. I am still long and I will leave my stop unchanged at 6170 which was tested this morning but so far has held this level. With today been the start of a new month I would expect to see some fund buying and I will now look to T/P on this position on any move higher to 6240. If I am stopped out of this trade I will be a more aggressive buyer in front of 6150 with a 6120 stop.
Dow Rolling Contract
As I was already long both the DAX and FTSE I emailed my Platinum Members to reduce their buy level in the Dow to 17700/17760. Subsequently the Dow traded lower to my 17735 buy level before having a nice rally overnight to 17830 which enabled me to cover this position at my revised 17775 T/P level and I am now flat. Today I will again look to buy the Dow on any dip lower to 17650/17710 with a 17600 stop. I still do not want to be short the Dow at this time.
June BUND
Incredibly the Bund only traded in a 140 point range for the whole of May. I expect the Bund to stay bid ahead of tomorrow’s ECB Meeting and if and when the Bund Yield finally prints with a negative reading then I will look to put on a more Macro short position. Today I will move my buy level higher to 163.45/163.75 with a 163.10 stop which is just below the 100 Day Moving Average at 163.20.
Gold Rolling Contract
I am still flat Gold and today I will raise my buy level slightly to 1199/1206 with a 1192 stop.
Silver Rolling Contract
No change as I am still long at 16.15 with the same 15.55 stop. Again if I am stopped out of this trade I will be a more aggressive buyer on any dip lower to 15.00/15.40 with a 14.60 stop.
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