U.S. Equities approached all-time highs on optimism that President Donald Trump will de-escalate his trade war with China, adding to gains sparked by the ECB’s signal it is ready to cut interest rates if warranted. Treasuries and oil rallied. The S&P 500 trimmed a rally that topped 1.4% at its height as markets digested news that the Trump administration explored demoting Federal Reserve Chairman Jerome Powell in February. Stocks had jumped within 1% of its all-time high after Trump tweeted earlier that he will meet with Chinese President Xi Jinping at the Group of 20 summit next week. Trade tensions have weighed on stocks since Trump escalated his trade war in early May. European Central Bank President Mario Draghi said that officials are ready with stimulus if needed, adding to expectations for easier monetary policies. Central banks in Australia, Russia, India and Chile have recently loosened policy. The Reserve Bank of Australia said Tuesday that further easing is more likely than not.
To mark my 1850th 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 To demonstrate this value, a monthly subscription over the same period would cost 4440 euro in total This offer represents a 38% discount and is open to both new and existing members. If anyone is interested in this offer can you please email me on bryan@tradernoble.com for details
For anyone following my Platinum Service it made 50 points yesterday and is now ahead by 788 points for June, having made 1722 points in May, 955 points in April, 1027 points in March, 1013 points in February and 1671 points in January. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
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Equities
Stocks and bonds rallied around the world after Mario Draghi said the European Central Bank is ready with stimulus if needed, adding to expectations for easier monetary policies. At the same time, economic data showed investor confidence in Germany’s economic outlook worsened dramatically in June, adding to expectations of ECB support. The S&P 500 Index closed 1% higher at 2920, while the Nasdaq Composite Index gained 1.4% and the Dow Jones Industrial Average increased 1.4%. The Stoxx Europe 600 jumped 1.7%, the biggest increase since January. The MSCI Emerging Market Index rose 1.5%. The MSCI Asia Pacific Index gained 0.6%, the first increase in five trading sessions.
Currencies
Here is a summary of the main changes in F.X. Markets:
The Bloomberg Dollar Spot Index fell less than 0.1%, the first drop in three days.
The Euro eased 0.2% to $1.1196. Elsewhere, the Japanese Yen briefly weakened after a magnitude 6.8 earthquake struck off the northwest coast of Japan, triggering a tsunami advisory, before closing 0.1% higher at 108.42 per dollar.
The British Pound rose 0.2% to $1.256O, rebounding from its $1.2510 year-to-date low on Monday.
The MSCI Emerging Markets Currency Index rose 0.5%, the first increase in five trading sessions.
Bonds
The Fed is widely expected to strike a more dovish tone with its decision at the end of it’s two-day meeting Wednesday. The yield on the benchmark 10-year Treasury approached 2% before the notes pared gains. German 10-year yields tumbled further below zero. European sovereign bonds leaped, led by Italian and Greek notes. France’s 10-year yield fell to 0% for the first time, with the country set to join the list of European nations with benchmark debt that have negative rates. The yield on 10-year Treasuries dropped 4 basis points to 2.06%, while Germany’s 10-year yield fell 8 basis points to negative 0.32% having hit an intra-day low of -35 basis points.
Commodities
Oil surged to its biggest gain in five months as OPEC and its allies moved closer to a meeting to extend supply cuts while the Draghi’s comments raised hopes for increased demand. West Texas Intermediate surged 4.1% to $54.08 a barrel. Gold rose 0.5% to $1,346 an ounce, the first increase in three days. Bitcoin dropped after a four-day surge.
This morning on the Economic Front we already had the release of German PPI which came in weaker than the +0.1% expected with a fall of 0.1%. At 9.00 am we have Euro-Zone Current Account and this is followed at 9.30 am by UK CPI, PPI and the Retail Price Index. Next we have Euro-Zone Construction Output at 10.00 am, and UK CBI Industrial Trends at 11.00 am. At 12.30 pm we have US MBA Mortgage Applications followed by Canadian CPI at 1.30 pm. Finally at 7.00 pm we have the FOMC Statement and Powell Press Conference at 7.30 pm.
Meanwhile the ECB Conference continues in Portugal with Juncker, Lautenschlager, Coeure and Dragi all speaking at 9.30am, 10.00 am, 1.30 pm and 3.00 pm respectively
June S&P 500
Shortly after I posted yesterday morning Equity Indices were selling off before we got the dramatic news from Dragi about a potential rate cut next month. Frustratingly the S&P missed my 2883 buy level with a 2884.50 low print before rallying to a high of 2931. Thankfully we had no sell levels in any of the US Indices yesterday as yet again anyone shorting these markets are getting slammed. It was only two weeks ago on June 3 that the S&P was trading at a price of 2728. I have been consistent in my opinion that we will see new highs before we see a more meaningful sell-off either late in the Summer or in Q4. I still hold this view as my long-term target level of 3050/3100 draws closer. I would expect the S&P to trade sideways ahead of the 7.00 pm rate announcement. If we do not get the anticipated rate cut then we will have a quick sell-off before rebounding ahead of the Powell press conference 30 minutes later. Today I will move my buy level higher to 2888/2902 with a 2879 stop. I will also be a small seller on any further rally to 2945/2960 with a 2967 stop.
EUR/USD
The Euro has now closed below the key 1.1220 area thus telling me to look to set up a short position. Today I will be a small seller from 1.1230/1.1270 with a 1.1305 stop.
September Dollar Index
Late yesterday the Dollar traded higher to my 97.20 sell level. I am still short and I will now raise my T/P level on this position to 97.00 with a now lower 97.55 tight stop.
June DAX
My DAX pan worked well with the market trading lower to my 12010 buy level with a 11985 low. In what turned out to be one of the most dramatic upside Key Day Reversals in many months where the DAX rose 350 points on the Dragi potential Rate Cut announcement, the first opportunity to exit this long position was at 12100 and I am now flat. Thankfully we have had no sell levels in the DAX over the past few weeks. The Market is now in the middle of the key 12250/12400 resistance zone and a break and close over here for a few days opens up the possibility of a move higher to at least 13000. Today I will again look to buy the market on any dip lower to 12200/12270 with a 12135 stop.
June FTSE
Yesterday’s move higher saw me wait to go short the FTSE until the top of my sell range at 7445. I am still short with a now higher 7485 stop. I will now raise my T/P level on this position to 7420 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
Dow Rolling Contract
Frustratingly the Dow just missed my 26030 buy level by 20 points before rallying to a high of 26530 as yet again anyone foolishly enough in trying to sell this market gets slammed. I know the Economic Data is awful across most of the Western World but these markets are still controlled by the Trump tweets and Central Banks who will do everything in their power to prevent the inevitable crash. In my opinion the US has been in a mild recession for most of the last six months and a couple of rate cuts will not prevent this recession from getting worse. Today I will now raise my buy level to 26160/26310 with a 26070 tight stop.
June NASDAQ
I am still flat the NASDAQ and today I will now raise my buy level to 7510/7570 with a 7465 stop.
September BUND
My Bund plan did not work well with the market trading higher to my 172.20 sell level before quickly stopping me out of this position at 172.65 and I am now flat. With the Bund trading at a yield of -0.32% we are still some way below the equivalent yield in the Swiss Bond Market which closed at -0.75% last night. When will this madness stop as anyone buying a 10 year bund to the value of 1 million is losing 3200 Euro per year if they keep it to maturity. With the Bund severely overbought I will again look to be a seller from 172.90/173.30 with a 173.65 stop.
Gold Rolling Contract
Gold again reversed after testing the 1355/1360 short term resistance level and I am still flat. Ahead of the FOMC this evening I am going to stay flat and wait to see what happens in Gold before making my next recommendation.
Silver Rolling Contract
Silver finally traded higher to my 15.00 T/P level on my latest 14.95 long position and I am now flat. Today I will be a small buyer on any dip lower to 14.30/14.70 with a 13.95 stop.
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