Risk assets had another positive day boosted by the prospects of a new round of stimulus in some major economies and the removal of at least one source of UK political uncertainty. The renewed bout of optimism has also been helped by better data releases in recent days. Global Equities had a solid trading session with both the S&P 500 and Dow Jones setting new record highs. Shares in commodities, energy and transportation companies were the big winners while in Europe the move higher was led by auto and banking shares.
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 made 75 points yesterday and is now ahead by 720 points for July having made 2550 points in June. The previous three months saw gains of 1532, 2175 and 2265 points respectively. Since I started this Platinum Service in June 2015 it has averaged a monthly gain of over 2200 points.
That said, the FTSE100 was one notable exception. The UK equity index ended the day practically unchanged weighed down by the GBP outperformance. Over the past 24hrs the pound has rallied 2.04% against the USD (currently at 1.3251) following the unexpectedly quick resolution to the Conservative party leadership. While now one source of political uncertainty has been removed, helping the Pound outperform, the process and impact from leaving the EU still remains a big unknown. The expected softer data post Brexit has not yet surfaced and as such the Pound still looks likely to come under renewed downward pressure in the not too distant future.
After the GBP, the AUD (1.38%) and NZD (1.18%) are the other two G10 outperformers. The improvement in risk appetite coupled with a rise in commodity prices (Iron ore 6.6% to $59.4) have helped the antipodean currencies outperform with the AUD also buoyed by another solid NAB business survey. The AUD is back above 76c, having been there just before the UK referendum and after trading with a 73 handle overnight, the NZD is currently at 0.7299.
The Yen sits at the bottom of the G10 board, extending its decline by another 1.96% as investors wait for further details on the promised stimulus package by Abe. The steady decline in the Yen yesterday has also occurred against a backdrop of a stronger Nikkei and higher US T yields.
Indeed, as the world is seen to be a better place, core global yields drifted higher yesterday with soft demand on the 10y US Treasury auction also a factor for the selling pressure in US Treasuries. 10y Bunds ended the day 7bps higher at -0.09% and 10Y UST are currently at 1.5049%, 6bps higher.
Data releases took a back seat yesterday, but were mostly better than expected. The NFIB index of small business activity and sentiment rose to a six-month high of 94.5 from 93.8 and while the number of job openings in the JOLTS report dropped sharply to 5,500K, job openings have remained at an elevated level.
Speaking to parliament, BoE Carney said that the Pound depreciation should help narrow the current account gap and economic adjustment post the UK decision to leave the EU. Fed Bullard was also on the wires and noting that Brexit is likely to have close to zero impact on the US and he also reiterated his view for one more hike this year.
In other news, the UK parliament will debate a petition calling for a second EU referendum on Sep 5 after receiving over 4m signatures.
This morning on the economic front we have UK Bank of England Credit Conditions at 9.30 am. This is followed at 10.00 am by Euro-Zone Industrial Production. Next we have the Import Price Index from the US at 1.30 pm. Finally at 7.00 pm the Fed will release its Beige Book which will obviously be closely monitored by the markets.
The Fed’s Kaplan is due to speak on the Economy in Texas this afternoon.
September S&P 500
My S&P plan worked well yesterday with the market trading higher to my 2144 sell level shortly after lunch before having a nice sell-off which enabled me to cover this position at my revised 2139 T/P level as emailed to my Platinum Members and I am now flat. Thankfully we covered our position as yet again the S&P has made a new all-time high. However given how overbought the S&P is on a Daily and Weekly basis I would not chase the market higher from here as we are due a correction before the market eventually trades higher to my 2200/2240 long term target. Today I will again look to sell the S&P on any move higher to 2152/2158 with a 2163 tight stop. I will also raise my buy level to 2130/2136 with a 2123 stop as the previous April 2015 high at 2134 should now act as strong support.
EUR/USD
The Euro traded lower to my average buy level at 1.1080. I am still long and I will now leave my stop unchanged at 1.1035. If I am stopped out of this position I will be a more aggressive buyer on any dip lower to 1.0930/1.0970 with a 1.0895 stop.
September Dollar Index
As I was already long the Euro I have not sold the Dollar as yet. Today I will therefore raise my sell level to 96.75/97.05 with a 97.40 stop.
September DAX
The DAX traded higher to my 10,000 sell level before having a nice sell-off. However as I had so many open positions I emailed my Platinum Members to exit this position at 9970 and I am now flat. Today I will again look to sell the DAX on any rally higher to 10050/10100 with a 10130 stop. I do not want to be long the DAX at this time.
September FTSE
I am still flat the FTSE and today I will leave my sell level unchanged at 6690/6730 with the same 6775 stop. Remember the FTSE is now pushing the 6720 high from 2015 and this level should act as strong resistance given its 16% rally since its post ‘’Brexit’’ low print. I still do not want to be long the FTSE at this time.
Dow Rolling Contract
Finally the Dow hit my sell level at 18370. Given the fact that I do not want to be short the Dow today ahead of the Beige Book this evening I emailed my Platinum Members to exit this position at 18345 and I am now flat. Given how over extended the McClellan Oscillator is trading I do not want to be long the Dow at this time and today I will again look to sell the Dow on any rally higher to 18420/18480 with a 18530 stop.
September BUND
No change as I am still a small seller on any rally higher to 167.45/167.75 with a tight 168.05 stop. I still do not want to be long the Bund at this time.
Gold Rolling Contract
Gold got slammed today as warned by the Daily Sentiment Index reading for the precious metal. Gold eventually hit my average buy level at 1337. I am not comfortable in being long and I have now cut this position for a small loss at 1334 as outlined late last evening to my Platinum Members. Today my only interest in buying Gold is on a further dip lower to 1310/1318 with a 1298 stop. The 1300 should act as strong support on any further test lower.
Silver Rolling Contract
No change as I am still a buyer of Silver on any dip lower to 19.10/19.60 with a 18.70 stop. Remember Silver has very strong support at 18.00 and if I am taken long and subsequently stopped out of this position I will be a very aggressive buyer in front of 18.20 with a 17.50 stop.
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