Apart from the DAX which closed 2.5% higher, yesterday was neither strongly risk-on nor risk-off, while the US Dollar sold off during the New York trading session. Chinese Consumer and Producer Inflation for July came and went without any market fanfare, with the deflation of Producer Prices cooling less negative at -1.7% from -2.6% against a market expectation of -2.0%, as a slower rate of commodity/purchased price declines evident pretty much across the board. It is therefore no coincidence for example that spot Chinese Spot Iron ore prices are now on par with year earlier levels.
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 please email me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it lost 42 points yesterday but is still ahead by 300 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.
Yesterday was a strong day for European Equities that saw the Eurostoxx 600 Index close up 0.92% while the DAX as mentioned above closed 2.5% higher at 10690. The DAX has now rallied over 15% since its post Brexit low on June 24. The rally in European stocks was led by banks stocks which closed 1.13% higher. However the US Stock markets closed flat to modestly higher, with the NASDAQ closing at a new all-time high with a 0.25% gain. The VIX Index has likewise closed little changed at a two year low with an 11.66 print.
Sterling remained generally soft, continuing to trade below 1.30 against the US Dollar with a 1.2960 low print early yesterday morning, before making a modest recovery into the New York close back to 1.30, benefitting as did other majors as the US Dollar ran out of steam. Meanwhile UK Industrial and Manufacturing Production for June were in line with expectations, though the June UK Trade Report revealed a larger than expected deficit, coupled with a large adverse revision to May. Neither Report on the pre-Brexit economy had any lasting fallout on Sterling.
US data was also inconsequential, the NFIB Small Business Optimism revealing no change, as small business reported no step up or down in actual compensation or plans. After the US Wholesale Inventories and Sales Report for June, the Atlanta Fed GDPNow estimate for Q3 GDP was shaved to 3.7% from 3.8%.
This morning we have no economic data of note due from either the Euro-Zone or the UK. At 12.00 pm we have the US MBA Mortgage Applications. This is followed by the JOLTS Job Openings at 3.00 pm which is a huge favourite of Fed Chair Yellen. Finally at 7.00 pm we have the US Monthly Budget Statement.
September S&P 500
The S&P has now closed above last Friday’s ‘’Open Gap’’ for the last two trading sessions. This move higher could now be deemed a ‘’Breakaway Gap’ which tends to be bullish. However against this we have the VIX trading near record lows at 11.66 as Fund Managers and Hedge Funds just chase yield. The best example of this is to see Spanish Bonds for 10 Years trading below 1% which to me is just incredible. We now have $12 Trillion of World Bond Yields trading with a negative interest rate which again is just insane, but as Keynes famously said ‘’Markets remain illogical longer than I remain solvent’’ and this is certainly through as regards both Bonds and equities at this time. Today I will leave my buy level unchanged at 2165/2171 with a 2160 stop. My only interest in selling the S&P is still on a rally higher to 2189/2195 with a 2201 stop.
EUR/USD
The Euro rallied over 1.11 yesterday as the market continues to trade sideways which it has done for most of the past 12 months. I am still flat the Euro and today I will raise my buy level to 1.1080/1.1110 with a 1.1065 stop which is just below yesterday’s low print.. I still do not want to be short the Euro at this time as in my opinion the Fed are only going to do a max of one rate hike this year if they even do one, and to me the US Dollar continues to priced wrongly.
September Dollar Index
Unfortunately the Dollar just missed my 96.60 sell level with a 96.52 high print before selling off back to 96.00 and I am still flat. Today I will lower my sell level slightly to 96.10/96.40 with a 96.75 stop.
September DAX
I was totally wrong with my DAX call yesterday as despite the market trading at the top of its Daily Bollinger Band and Williams Index the DAX just exploded to the upside with a 200 point rally after lunch. This rally saw the market trade higher to my average sell level at 10540 before thankfully stopping me out of this position at my tight 10605 stop level before rallying another 100 points shortly after I was stopped. The DAX is extremely overbought after its 15% rally in the past six weeks and is due a correction. The 10700 is just above a 10690 ‘Open Gap’ from early this year. Given how overbought the DAX is trading I will again look to sell the market on any further rally higher to 10740/10800 with a 10850 stop. I still do not want to be long the DAX at this time.
September FTSE
My FTSE plan worked well with the market trading higher to my 6815 sell level before having a nice sell-off which enabled me to cover this position at my revised 6792 T/P level and I am still flat. Today I will again look to sell the market on any rally higher to 6825/6855 with a 6890 stop. My only interest in buying the FTSE is on a dip lower to 6700/6730 with the same 6670 stop.
Dow Rolling Contract
Yet again as both the NASDAQ and S&P made new all-time highs the Dow is still trading below its July high print at 18622 and I am still flat. I am going to stay flat today as I want to see how the Dow reacts when eventually it pays catch-up with the other US Indices. On the other hand if the Dow fails to make a new high then I will look to put on a more macro short position. Remember the low VIX is a warning that the US markets are ripe for a correction.
September Bund
No change as I am still a buyer on any dip lower to 166.50/166.80 with a 166.20 tight stop. The price action is still telling me not to be short the market at this time.
Gold Rolling Contract
Gold continues to trade in a narrow range above the key $1310 level and I am still flat. I am not going to chase this market higher and today I will leave my buy level unchanged at 1318/1326 with a 1308 stop.
Silver Rolling Contract
I am still flat Silver and today I will now raise my buy level slightly to 19.40/19.80 with a 18.85 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:
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