The news on the state of the US and European economies has been good over the past 24 hours, adding more sunshine to the global growth acceleration story. It has also been a day of contained currency moves, the USD still waiting for substantial news on tax reform and who the next Fed Chair will be, both supposedly arriving Thursday US time. There is also the key data ahead with the ISM Manufacturing report today and Non-Farm Payrolls Friday. The USD is little changed, US equities are up modestly, Bond Yields are little changed, while commodity prices are mixed, the exception being oil with WTI and Brent both making further gains.
To mark my 1450th 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 contact me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it ended flat yesterday to close October with a gain of 657 points, having made 447 points in September, 1560 in August, 1096 in July, 1023 in June, 1076 in May, 1375 in April, 1335 in March, 1481 in February and 1734 in January. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points.
The economic news out of Europe was the first to hit the screens with the first release of Euro-Zone GDP for Q3 up 0.6% for annual growth of 2.5%, both a tenth more than expected. The result also came with a one tenth upward revision to Q2. This outcome came with lower than formally-expected CPI for October at 1.4% (down from 1.5% that was also expected in the month). It was however anticipated after a one tenth lower print from Germany’s CPI the day before. The Euro was bought back after this data set, back to around where it was this time yesterday, trading at 1.165.
Ahead of the Bank of England meeting tomorrow morning, the Pound has been getting some support, up by a net 0.52%. Market pricing for a BoE rate hike edged a little higher from just under a 87% chance to a near 88% chance as UK short end Bond Yields pushed marginally higher. Brexit news also did the Pound no harm, the UK and the EC agreeing that talks need to be accelerated with the UK’s Davis to meet with his counterpart Barnier on Friday week. It has been reported that the UK Cabinet discussed a range of scenarios on negotiated Brexit outcomes. There was also a paper outlining impacts on industries, though this has not been released.
The economic news out of the US was also hot. It was a combination of stronger than expected prints from the October readings on the Chicago PMI and the Conference Board’s measure of Consumer Confidence coming with a (forecast) pick up in the Employment Cost Index (ECI) in Q3. Consumer Confidence came in at a very high 125.9, the best since 2000 with the Net Jobs Plentiful component at 18.8, the strongest since 2001. The ECI rose 0.7% after 0.5% in Q2. This year’s readings have been the highest since the GFC/pre-GFC, playing to the view that a pick-up in inflation remains in play, added to further by rises in oil prices.
The AUD lost traded lower during the London session yesterday after a softer than expected official China Manufacturing PMI (and lower RBA Credit growth). It’s trading at 0.7650/60 this morning.
This morning on the Economic Front we have UK Manufacturing PMI at 9.30 am. This is followed at 12.15 pm by US ADP Employment Change. Next we have US Manufacturing PMI at 1.45 pm, ahead of ISM Manufacturing/Prices Paid and Construction Spending which will both be released at 2.00 pm. Finally we have the FOMC Statement at the earlier time of 6.00 pm as the US clocks do not change until this weekend. As there is no press conference with Fed Chair Yellen scheduled this evening I would expect the FOMC to leave Interest Rates unchanged.
December S&P 500
I am still flat the S&P which traded in a narrow range ahead of this evening’s FOMC rate announcement. Despite the internal readings remaining negative I am still reluctant to go short the S&P until we get a sell extreme that breaks some key levels. Today I will raise my buy level slightly to 2558/2564 with a 2553 stop. Remember until we break and close below the important support at 2545 this market will continue to be a buy on dips.
EUR/USD
I am still flat the Euro which unfortunately just missed my 1.1610 buy level with a 1.1625 low print after I posted early yesterday morning. Ahead of the FOMC I am reluctant to chase this market higher and today I will leave my buy level unchanged from 1.1570/1.1605 with the same 1.1535 stop. Despite most analysts been bearish the Euro, I still believe that the Euro will move higher especially given how oversold the market is trading at this time.
December Dollar Index
No change as I am still a seller of the Dollar on any rally higher to 94.90/95.30 with the same 95.60 stop. With the Daily Sentiment Index reading at 91% bulls it is another reason why not to be long the Dollar at this time.
December DAX
The DAX continues to make new all-time highs despite trading in a narrow range and I am still flat. Today I will now raise my buy level to 13150/13210 with a 13095 tight stop. The DAX has strong resistance from 13385/13435 and I will be a seller on any rally to this area with a 13475 tight stop.
December FTSE
The renewed strength in Sterling ahead of a probable rate hike tomorrow is weighing on the FTSE. I am still flat and reluctant to chase this market higher for these reasons. Today I will therefore leave my buy level unchanged from 7395/7435 with a 7365 stop.
Dow Rolling Contract
The Dow is still consolidating its large gains over the past few weeks by trading sideways since making it latest all-time high last week. I am still flat the Dow and today I will raise my buy level slightly to 23270/23330 with a 23210 stop. I still do not want to be short the Dow at this time.
December NASDAQ
The NASDAQ helped by Apple shares made yet another new all-time high yesterday. I am still flat as the market fell short of my 6175 buy level. Today I will now raise my buy level slightly to 6150/6190 with a 6110 stop. The DAX has strong resistance from 6295/6325 and today I will be a small seller on any rally to this area with a 6355 stop.
December BUND
I am still flat the Bund as we wait for the FOMC Statement later. It is incredible that with Economic growth picking up substantially in Germany and the Euro-Zone that the Bund refuses to sell-off. This I find incredible. Today I will be a small seller on any rally higher to 163.30/163.65 with a 163.95 stop. Remember the September high at 163.40 should offer some initial resistance. Meanwhile I will not chase this market higher and I will leave my buy level unchanged from 161.75/162.15 with a 161.45 stop.
Gold Rolling Contract
As I have mentioned countless times over the past six weeks, everyone that I read and talk to are long Gold which in my opinion makes it difficult for the market to rally in this environment. As I am back long Silver I will now lower my Gold buy level to 1254/1262 with a 1248 tight stop.
Silver Rolling Contract
Late yesterday Silver finally traded lower to my 16.70 buy level. I will only add to this position on any move lower to 16.40 with the same 16.15 stop. Meanwhile I will now lower my T/P level on this position to 16.85.
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