Caution remains the main theme in markets with equities softer on both sides of the Atlantic weighed down by the energy and materials sectors amid softer oil and metal prices. Ahead of US CPI this afternoon the US Dollar and longer dated US Treasury yields are lower while solid EU GDP data has helped European currencies outperform. Meanwhile a Central Bank Heads panel discussion on forward guidance left us none the wiser on the outlook for monetary policy.
To mark my 1475th 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 made 175 points yesterday and is now ahead by 478 points for November, having made 657 points in October, 447 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.
Oil prices fell just under 2% yesterday after the International Energy Agency said that recent price gains were unlikely to be sustained amid warning that the supply surge from US shale fields will be bigger than anything the oil and natural gas industry has ever seen. Metal prices were also softer with copper off 1.8%, aluminium -0.9% and zinc -2.3%. Iron ore was one exception up 1.6% to $63.2. Yesterday’s softer than expected activity readings from China seemingly weighed on commodities overnight.
EUR is the strongest currency over the past 24hrs, jumping from 1.1670 to just over the 1.18 mark, before settling just under the figure. Solid EU GDP data releases were the main trigger for the jump in the euro. German Q3 GDP powered on to +0.8% q/q or 2.8% y/y in revised data. Q1 was revised up to +0.7% from +0.9%. The Economics Ministry said investments and exports led the gains, despite the stronger EUR at the time. Italian GDP was also a little higher at +0.5% q/q and 1.8% y/y from 1.5% y/y. At the Same time German inflation remain fairly benign at 1.5% y/y.
Sterling also managed to outperform the US Dollar despite underwhelming UK CPI data. UK CPI for October came in at 3% y/y versus a 3.1% consensus, with core inflation also unchanged at 2.7%. Cable dropped to an intra-day of 1.3076 following the data release, but Euro strength and broad base USD softness now sees the pair at 1.3161.
AUD and NZD did not benefit as much from the weakness in the USD with softness in commodity prices one hindering factor for the antipodean currencies. After a very strong NAB business survey, the softness in China’s activity readings capped the AUD gains. The pair traded to a high of 0.7650 before heading south again following the move lower in oil prices. AUD traded to a low of 0.7613 and although it now trades at 0.7633, it still looks vulnerable to the downside. Meanwhile, despite the lack of new news, NZD has been the G10 underperformer over the past 24r, down -0.28%. The pair traded to a low of 0.6845, but in the last few hours with the US Dollar heading south the kiwi has recovered some ground and now trades at 0.6883.
EU data effectively overwhelmed US data releases yesterday. NFIB small business optimism did rise in October, but not as much as expected and ultimately a disappointing bounce post the hurricane impact. US PPI inflation did print higher than expected even after excluding food and energy components, but only met expectations after excluding other volatile components.
The ECB-organised Central Bank Conference of communications did not provide much new news for markets, despite two hours or so of Draghi, Carney, Yellen and Kuroda in panel discussions. There seemed to be some back-patting in terms of recent policy pronouncements (Yellen on balance sheet) though also some acknowledgment that so many voices can be confusing to the public. Meanwhile Draghi said that forward guidance had become a full policy instrument (as opposed to protective rather than proactive when it was first used).
Lastly the White house is said to be considering the nomination of Mohamed El-Erian for Federal Reserve Vice Chairman. There is a range of candidates under consideration and this time apparently the selection focus will be on monetary policy experience for the post.
This morning on the Economic Front we have UK Unemployment and Average Earnings at 9.30 am. This is followed by US CPI, Retail Sales and Empire Manufacturing at 1.30 pm. Finally we have Business Inventories at 1.30 pm.
December S&P 500
My S&P plan again worked well as the 2563/2570 now major support level again proved its value with the S&P trading the whole of my 2567/2573 buy range with a 2564.50 low print which had me long at an average rate of 2570 before the market rallied to my 2578 T/P level and I am now flat. Yesterday’s huge gains across all the US Indices that I cover made up for the many points that I left on the table on Monday. There is no doubt that the more attempts that the S&P has at testing last week’s 2563.50 low print will eventually see this level broken. Today I will again be a buyer of the S&P but at a lower price level of 2558/2566 with a 2553 stop. Given how close we are to this major support line I do not want to be short the market at this time, but a break and close below 2560 will see me look to set up a short position.
EUR/USD
Now you know why I am so reluctant to go short the Euro. Despite most technical analysts calling the Euro to fall based on the small recent Head & Shoulders the Euro rallied strongly today and in the process the break of 1.1760 saw most short positions run to the sidelines. I think yesterday’s move higher could be significant and today I will now move my buy level higher to 1.1695/1.1745 with a 1.1660 stop. As long as the Euro can hold the 1.1640 level then we should soon see a move higher to 1.1910, 1.2090/1.2200 and possibly 1.2690/1.2990 over the coming weeks/months.
December Dollar Index
Unfortunately as mentioned yesterday the Dollar has sold off without me being able to get a short position on board and I am now flat. The fact that the Dollar broke and closed below 94.00 could be significant. Today I will now lower my sell level to 94.20/94.55 with a 94.90 stop.
December DAX
Following the stronger than expected German GDP data the DAX performed reasonably well despite the jitters in the US Market coupled with the stronger Euro. Today I will lower my sell level slightly to 13180/13240 with a 13285 stop. Meanwhile I will not chase this market higher and I will leave my buy level unchanged from 12870/12930 with the same 12825 stop.
December FTSE
No change as I am still a buyer on any dip lower to 7315/7345 with the same 7280 stop.
Dow Rolling Contract
My Dow plan worked really well with the market trading the whole of my 23280/23350 buy range with a 23273 low print thus having me long at an average rate of 23315. Subsequently the market rallied hard to my 23390 T/P level and I am now flat. As mentioned yesterday the 23120/23200 is key for the Dow going forward as a break and close below here could well see the Dow accelerate to the downside. Today I will again be a buyer on any dip lower to 23190/23275 with a 23130 stop. Given how close we are to major support I do not want to be short the market at this time.
December NASDAQ
The weakness in Apple hindered the NASDAQ after the market traded lower to my 6275 buy level. For this reason I emailed my Platinum Members to exit any long position at my revised 6295 T/P level and I am now flat. The NASDAQ has strong support at 6240 and today I will again look to buy the market on any dip lower to 6225/6260 with a 6190 tight stop.
December BUND
Hopefully you saw that my Bund sell level had the wrong big figure on it by the time you got to read yesterday’s commentary which should have read 162.75/163.10 and not 100 points lower. When I realised my mistake the Bund was trading at 162.12 and I emailed my Platinum Members to this change. I am still flat the Bund which subsequently rallied small on the back of the weaker equity market thus ignoring the stronger than expected German GDP data. Today I will raise my sell level slightly to 162.95/163.35 with a 163.65 stop.
Gold Rolling Contract
Gold continues to trade in a narrow range that has prevailed for most of the past three months. I still do not trust this market and today I will only raise my buy level to 1255/1263 with a 1249 tight stop.
Silver Rolling Contract
Unfortunately Silver just missed my 16.80 buy level with a 16.87 low print and I am still flat. Today I will now raise my buy level to 16.65/16.90 with a 16.35 stop. If I am taken long I will have a T/P level at 17.10.
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