It was a pretty measured past 24 hours for markets, the Pound showing more stability (for now anyway), up around 0.5% from yesterday morning’s levels in the wake of a story on legal advice to the UK Government that the UK Parliament will vote on the terms of exit (wasn’t that always likely to happen?) if not triggering Article 50. (There still seems to be some ambiguity over whether triggering will/should require such approval.) Also, the UK September CPI came in stronger than expected , but not from a weaker Sterling according to the UK Statistical Office.
To mark my 1200th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2750 for my Platinum Members 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 can you please contact me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it made 75 points yesterday and is now ahead by 860 points for October having made 1142 points in September. The previous three months saw gains of 1782, 1682 and 2550 points respectively. Since I started this Platinum Service in June 2015 it has averaged a monthly gain over of 1900 points.
The NZD also caught a bid tone after a 1.4% price rise from the Global Dairy auction and yesterday’s somewhat higher than expected CPI. The US Dollar has been listless, with Bond markets catching a bid tone from a somewhat underwhelming US core CPI and choppy oil markets that were also softer for a time.
Ahead of this morning’s welter of Chinese GDP and activity data, the AUD is trading almost bang on where it was yesterday afternoon, at 0.7665. Governor Lowe’s speech yesterday attracted a lot of wire coverage as you’d expect, but with only a half hint at best that next week’s CPI might put the November meeting in play for a potential easing. He centred on several current aspects to the evolving economy story, one being the recent commodity price resilience and signs the terms of trade might be bottoming, previously a big headwind. Elsewhere, he described the labour market as “mixed”, pointing out the still evident labour market slack and the much more common element of low wage rises that received a big airplay in his address. Housing is not as contained as the Bank might have hoped, it seems.
I note in the AU commodity context that now steaming coal prices are accelerating, Newcastle December futures for example up another $4.50/t yesterday to $98. That’s now more than doubled the low from earlier this year. Met coal (at $227.75 and iron ore at $58.41/t were both virtually steady. Base metals have been mixed yesterday while the VIX index eased 1.15 to 15.06 with the equities higher, if off their intra-day peaks.
US headline CPI was right in line with expectations at 0.3%/1.5% (up from 0.2%/1.1%) but core CPI missed by a tenth, the annual rate easing to 2.2% from 2.3%. The US NAHB Housing index for October was high at 63, exactly as expected, easing from 65. US bond yields have eased, 2s down to 0.80 (-1.2bps) and 10s down 2bps to 1.75%. The probability of a Dec Fed hike eased to just under 70%.
This morning on the economic front we have Chinese Industrial Production, Retail Sales and GDP. This is followed at 9.30 am by UK Jobless Claims, Average Earnings and Unemployment. At 10.00 am we have Euro-Zone Construction Output. Next we have US MBA Mortgage Applications at 12.00 pm, followed by Housing Starts and Building Permits at 1.30 pm. Finally at 7.00 pm the Federal Reserve will release its latest Beige Book.
The Fed’s Williams will speak in New Jersey at 1.45 pm while the UK Chancellor Hammond will testify to the Treasury Committee at 2.15 pm.
Finally the third and last Presidential Debate between Clinton and Trump takes place early tomorrow morning at 2.00 am Irish Time.
December S&P 500
Thankfully we had no sell levels across any of our equity Indices yesterday as the markets had a strong opening followed by a small dip, then a rally, followed by another small sell-off into the close. Despite the late sell-off the S&P still closed almost 0.5% higher. As mentioned in an email to my Platinum Members yesterday afternoon, the Central Banks are manipulating all prices making it so difficult to be short the market despite all my technical signals on a ‘’Sell’’. The Fed will continue to prop this market up until we get the US Election out of the way next month and then we will see. If by some chance Trump is elected then we could have an initial ‘’Brexit’’ type sell-off. I am still flat the S&P and today I will now move my buy level higher to 2122/2128 with a 2116 stop which is just above the key 2114 support level. Given the continued Central Bank manipulation I still do not want to be short the market at this time.
EUR/USD
On what was a very quiet currency trading session, the Euro having hit my 1.0975 buy level before rallying to trade at 1.0995 for nearly two hours before a late sell-off. As I want to continue with my theme of banking points when available I emailed my Platinum Members to exit this long position at 1.0995 and i am now flat. The Euro is still oversold on all my measures and for this reason I will again look to buy the market on any dip lower to 1.0940/1.0980 with a 1.0895 stop which is just below the post-Brexit low at 1.0910.
December Dollar Index
The Dollar traded higher to my 97.95 sell level and just like the Euro above, given the lack of volatility I covered this short position at my revised 97.75 T/P level and I am still flat. Today I will again look to sell the Dollar on any rally higher to 98.10/98.40 with a 98.70 stop.
December DAX
I am still flat the DAX which again traded in a narrow range during yesterday’s trading session. Today I will raise my buy level to 10410/10455 with a 10350 stop. I still do not want to be short the DAX at this time.
December FTSE
The FTSE rallied yesterday on the back of the stronger CPI data. I am still flat and today I will raise my buy level to 6900/6930 with a 6865 stop. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer on any dip lower to 6800/6830 with a 6765 stop.
Dow Rolling Contract
No change as I am still a buyer on ay dip lower to 17970/18040 with a 17920 stop. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer on any further dip lower to 17820/17890 with the same 17770 stop. Given how close we are to two major support levels I do not want to be short the Dow at this time.
December BUND
My Bund plan worked well as shortly after the European Markets opened the Bund was trading at my 163.35 buy level with a 163.30 low print before having a subsequent rally which enabled me to cover this position at my 163.70 T/P level and I am now flat. I still like the Bund at these levels especially given how oversold the market is trading having made a double bottom at 162.81 on Monday to go with the 162.60 spike low in September. Today I will again look to buy the Bund on any dip lower to 163.10/163.50 with a 162.75 stop.
Gold Rolling Contract
Since Gold bottomed last week at 1242 it has traded in a narrow range without rallying too hard. I am still flat Gold and today I will again look to buy the market on any dip lower to 1246/1253 with the same 1239 stop.
Silver Rolling Contract
No change as I am still long at 17.85 with the same 16.95 stop.
Following the success of the NFP Live Trading Day and Education Session in London on September 2, Paul Wallace and I are bringing this event to Dublin for the December NFP day on Friday December 2nd. If anyone is interested in attending this event the details are on the following link:
https://www.eventbrite.com/e/live-nfp-trading-day-dublin-tickets-28159689389
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