The Global Equity rally that began last Friday has started to show signs of fatigue. Equity markets have had a mixed trading session yesterday, with most European Indices ending marginally lower while US Indices closed up between 1.4% and 2.25%, partly paying catch up from their long weekend break. Early, in the European session, news emerged from Doha that Russia, Saudi Arabia, Venezuela and Qatar agreed to freeze oil output at January levels as long as other producers also participate. Oil rose as speculation built of a potential deal, and equities also briefly enjoyed a pick up, but the rally quickly failed as it became apparent that the freezing news was merely symbolic while the chances of other important producers, namely Iran and Iraq, also look slim.
To mark my 1000th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2500 for my Platinum Daily Commentaries and ¼ updated emails throughout the trading day. This offer is open to both existing and new members and if anyone is interested please email me on bryan@tradernoble.com for details.
For anybody following my Platinum Service it made 100 points yesterday and is now ahead by 1595 points for February having made 3365 points in January. Since I started this service last June it has generated a return of over 18000 points.
As more details of the deal began to emerge, it was clear that the freeze in production comes from producers that are already producing at or close to their maximum while Iran and Iraq both publically stated their intention to increase their oil output. Talks are expected to continue in Tehran today/tomorrow, but scepticism remains that any meaningful agreement will be reached. The fact that talks are taking place is probably a positive sign, however, if these talks only serve to highlight tension between producers, then they may end up more uncertainty than any good.
In Currencies, Sterling got an initial boost from a ComRes BREXIT poll that revealed EU supporters in the lead at 49% versus the 41% who want to leave, but it later emerged that 42% of those polled say they could change their minds ahead of the vote. This news triggered a Sterling sell-off while a softer CPI Report did not help sentiment.
Soft US data also weighed on sentiment. The Empire State Manufacturing Index for February rose slightly to -16.6 from -19.4, well below the -10 expected. While the details of the Report were encouraging with Employment and New Orders improving, the soft data and disappointing oil news triggered a rise in the US Dollar against most currencies.
The Yen was the only outperformer against the US Dollar while commodity currencies were the worst performers due mainly to the sell-off in oil with Brent and WTI closing down 3.4% and 1.2% respectively.
Relative to last week’s moves, core global bond yields had a calm day with 10 year BUNDS rising 3bps to 0.26% while 10 year Treasuries traded in a narrow range closing at 1.77%.
Lastly, in Central Bank news, Philly Fed President Harker who is a non – voter, said he would be in favour of delaying further interest rate increases until inflation recovers from oil price induced weakness. Meanwhile Minneapolis President noted that ‘the biggest banks are still too big to fail and continue to pose a significant risk to our economy’.
Overnight Asian stock markets had a mixed trading session with Shanghai closing 1.1% higher while the Nikkei lost 1.4% to close just above 15800.
This morning on the economic front we have UK Jobless Claims at 9.30 am. This is followed at 1.30 pm by US PPI, Housing Starts and Building Permits. At 2.15 pm we have US Industrial Production. Finally at 7.00 pm the Fed will release its Minutes from the January 26/27 FOMC Meeting.
March S&P 500
The S&P plan worked very well for those who left their sell order on overnight as the market traded higher to my initial 1896 sell level with a 1897 high before falling 15 Handles. Unfortunately I moved my sell level higher to 1901 and I am still flat. This morning the S&P is trying to break higher but the market has a lot of overhead resistance to get through before one can assume that we bottomed last week for a second time at the 1800/1805 now major support level. Today I will again look to sell the S&P on any rally higher to 1903/1910 with a 1915 stop. Yesterday after the US markets opened the S&P sold off as expected as there was no way they were going to leave such a huge ‘Open Gap’ from last Friday’s close at 1858. However the sell-of stopped right in front of my 1870 buy level with a 1870.25 low print before trading higher for the rest of the session. Today I will again look to buy the S&P on any dip lower to 1869/1875 with a 1864 stop. If I am taken long and subsequently stopped out of this trade I will be a more aggressive buyer in front of 1858 with a 1852 stop.
EUR/USD
My Euro plan worked well with the Euro finally trading lower to my 1.1120 buy level overnight before having a subsequent rally which enabled me to cover this position at my 1.1160 T/P level as outlined earlier to my Platinum Members and I am now flat. So far the Euro is having difficulty in breaking the 1.11/1.1120 support level and today I will again look to buy the Euro on any dip lower to 1.1080/1.1110 with a 1.1055 stop. I still do not want to be short the Euro at this time despite the negative price action over the past week.
March Dollar Index.
The Dollar just missed my 97.10 sell level yesterday with a 97.02 high print and I am still flat. Today I will raise my sell level slightly to 97.20/97.50 with a 97.80 stop.
March DAX
My DAX plan worked well with the DAX finally trading lower to my 9080 buy level after the US markets sold-off . The DAX had a nice 120 point rally of my buy level but unfortunately as I was hit on both the Dow and DAX at the same time and expecting to be also hit on my S&P buy level (which never happened) I covered this long position too early at 9105 and I am now flat. Today I will leave my sell level the same at 9310/9350 with a 9390 stop. I will also look to buy the DAX on any dip lower to 9060/9110 with a tight 9025 stop.
March FTSE
The FTSE has been the strongest of the European Indices since the bottom was put in last Thursday morning. The price action is telling you not to be short and for this reason I will raise my buy level to 5785/5820 with a tight 5755 stop.
Dow Rolling Contract
My Dow plan also worked well yesterday with the Dow trading lower to my 16035 buy level. Unfortunately as mentioned above I covered this position too early at 16070 as I had expected to get hit on my S&P buy level and I am now flat which is frustrating when you see that the Dow has traded to a 16235 high print overnight. Today I will again look to buy the Dow on any dip lower to 16070/16125 with a 16020 stop which is just below yesterday’s low print. I do not want to be short the Dow at this time.
March BUND
No change as I am still a seller on any rally higher to 164.90/165.30 with the same 165.50 stop.
Gold Rolling Contract
The steam is definitely running out of the Gold market as we are making lower highs since last Thursday’s 1263 high print. I am still flat Gold and today I will leave my buy level unchanged at 1179/1187 with the same 1169 stop.
Silver Rolling Contract
No change as I am still a buyer on any dip lower to 14.70/15.00 with the same 14.45 stop.
Recent Comments