Markets had more tell-tale signs of higher volatility as the day closed yesterday, with ‘Brexit’ polls and fears dogging Sterling while equity markets were on the defensive. GBP/USD had broken down through 1.4150 and shortly after I posted yesterday morning the German 10 Year Bund Yield finally and as expected crossed the Rubicon into negative territory. One UK press editorial is backing ‘Brexit’ while two more polls are showing intentions to vote to ‘leave’ in the ascendancy. However European Equity markets are opening in a more positive light this morning on the back of the 1% rise in the Nikkei.
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 new Platinum Service it made 193 points yesterday and is now ahead by 550 points for June. The previous three months saw gains of 1532, 2175, and 2265 points respectively. Since I started this service over 12 months ago it has averaged a monthly gain of 2200 points.
The late rally in the US markets helped limit any further damage to sentiment following the rocky trading session for European Equities. The Eurostoxx 50 closed down 1.92% while the FTSE after a few nasty down days closed another 2.01% lower yesterday and is now deeply oversold. Meanwhile both the Dow and S&P closed 0.33% and 0.18% lower respectively. The US markets were helped by a solid US Retail Sales Report for May, and a stronger than expected Industrial Production for the Euro-Zone in April and continued growth in the Zone’s Employment to 1.4% y/y. The May UK CPI Report was almost right on expectations as was core CPI that came in at 1.2% against the 1.3% expected.
After a strong April Retail Sales Report (+1.3%), markets were expecting a further 0.3% rise in May. However this result was somewhat better with a 0.5% rise and gives the Fed something to think about when they announce their latest Interest Rate decision at 7.00 pm this evening. The so-called retail sales ‘Control Group’ that feeds into consumption estimates in GDP, rose by a solid 0.4% against the expected 0.3% rise, with April also revised higher by 0.1%. Following this report the Atlanta Fed’s GDPNow estimate for Q2 was revised up to 2.8% from 2.5% from higher than expected consumption that was revised up to 3.9% from 3.5% before the Retail Sales Report.
All this points to signs of continued economic growth through the June Quarter and keeps the July 27 FOMC Meeting in the frame for the Fed to hike rates providing positive data prints continue, including a more growth-friendly June Payrolls Report as well as all the other event risk such as next week’s ‘Brexit Referendum’.
After opening the session in positive territory the US Treasury Yield reversed course during the New York trading session, ending the day somewhat higher.
This morning on the economic front we have UK Unemployment and Average Earnings at 9.30 am. This is followed at 10.00 am by Euro-Zone Trade Balance. At 1.30 pm we have US PPI and Empire Manufacturing, followed at 2.15 pm by Industrial Production. Next we have the FOMC rate decision at 7.00 pm where I expect the Fed to leave rates on hold. This is followed at 7.30 pm by the Yellen press conference. Finally just before the close at 9.00 pm we have the US Total Net TIC Flows.
June S&P 500
My S&P plan worked very well yesterday with the S&P trading at my 2070 buy level shortly after I posted yesterday morning before having a nice rally shortly after the US Markets opened which enabled me to cover this position at my 2077 T/P level and I am now flat. With the FOMC decision this evening I would expect the markets to trade in a narrow range to higher ahead of this release. I will use any dip lower to 2066/2072 to again buy the S&P with a 2061 stop. If I am taken long I will look to cut this position ahead of the FOMC Statement. I will still be a small seller on any rally higher to 2091/2097 with a 2102 stop. I will roll to the September Contract from tomorrow.
EUR/USD
The Euro traded lower to my 1.1215 buy level. I am still long and I will leave my stop unchanged at 1.1160. I will use any rally to cut this position ahead of the FOMC at 7.00 pm. Following the FOMC release I will look to buy the Euro on any dip lower to 1.1090/1.1135 with a 1.1055 tight stop. I still do not want to be short the Euro at this time.
September Dollar Index.
Finally overnight the Dollar traded higher to my 95.10 sell level. I am still short and I will leave my stop unchanged at 95.65. Just like the Euro above I will use any sell-off to cover this position ahead of the FOMC this evening and go flat.
June DAX
My DAX plan worked well yesterday as I deliberately waited as long as possible before posting yesterday morning in order to get a better buy level in the DAX. Shortly after I posted the DAX traded lower to my average buy level at 9520 before having a nice rally which enabled me to cover this position at my 9590 T/P level and I am now flat. There is no doubt the DAX is trying to make a low in front of 9500 after its 800 point fall over the past week. The Williams Index finally gave a buy level late yesterday and today I will again look to buy the market on any dip lower to 9520/9570 with a 9475 stop which is just below yesterday’s low print. Given how oversold the DAX is trading I do not want to be short the market at this time.
June FTSE
My FTSE plan also worked well yesterday with the market trading lower to my 5960 buy level shortly after I posted. Subsequently just before the European close I emailed my Platinum Members to exit this position at 5988 before the market got slammed again to a 5905 low print. Given how oversold the FTSE is trading coupled with the fact that the Williams Index also gave a buy signal this morning I have now bought the FTSE here at 5955. I will leave a stop at 5895 on this position as I look for this market to trade higher to at least 6000.
Dow Rolling Contract
Shortly after I posted yesterday morning the Dow stopped me out of my long 17740 position at 17675. Subsequently after the US Markets opened the Dow traded lower to my aggressive buy level at 17640 before having a nice rally overnight to a high so far at 17714 which enabled me to cover this position at 17690 and I am now flat. Today I will again use any dip lower to 17590/17650 to buy the market with a 17540 stop. I still do not want to be short the Dow at this time.
September BUND
My BUND plan worked well yesterday with the Bund finally trading at my 165.55 sell level before having a nice sell-off which enabled me to cover this position at 165.15 and I am now flat. Today I will again look to sell the Bund on any rally higher to 165.60/165.90 with a 166.25 tight stop. I will leave my buy level unchanged at 163.70/164.10 with the same 163.50 stop.
Gold Rolling Contract
No change as I refuse to chase this market higher and I will leave my buy level unchanged at 1257/1264 with a 1249 stop.
Silver Rolling Contract
No change as I am still a buyer on any dip lower to 16.90/17.20 with a 16.45 stop.
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