Late in the New York trading session the US House has passed the US tax reform bill. Legislation subsequently went to the Senate for passage and following a lengthy debate the Tax Bill was passed by 51 votes to 48 with the result coming in just before 6.00 am. The Bill was passed 227-203 in the House, all Democrats opposing along with 12 Republicans. The market expected the Senate vote to be successful after Senators Lee and Collins declared their intention to support the Bill. Lee and Collins had previously expressed reservations about certain aspects of the Bill, but their support gave the Republicans the required numbers to pass the Bill in the Senate.
To mark my 1500th 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 email me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it made 62 points yesterday and is now ahead by 813 points for December, having made 823 points in November and 657 points in October. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points.
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Markets yesterday saw Bond Yields move higher in Europe and in the US (and a mild steepening in the US to boot!) from a still super-strong German IFO Survey, a slightly hawkish tilt from two ECB lesser known central bankers Makuch (Slovakia) and Hansson (Estonia), and solid US Housing data. The USD remains listless and has not been able to rebuild strength lost after last week’s low CPI and despite still three Interest Rate hikes expected by the Fed for 2018.
World dairy prices were down 3.9% at the overnight global dairy auction but it’s barely touched the Kiwi, down from just over 0.70 to only just below. While there will be some passing interest in today’s slug of NZ trade/BoP/migration data, the real interest will be in tomorrow’s Q3 GDP report, with most economists looking for a somewhat better than expected print.
The AUD/USD is down modestly since yesterday afternoon, though trading in its recently familiar range at just over 0.7660. It has moved little since the news of the US House tax passage hit the screens. Likewise, the USD is not making any new moves to the topside, remaining listless as are US equities which closed lower after a mildly volatile trading session.
ECB member Makuch said Governing Council discussions were “shifting from asset purchases to possible future use of Interest Rates to regulate the economy”. He said that “economic expansion seems to be stable and very nice and inflation has gotten closer to our goal, though at a slow pace. ECB member Hansson said he expected the ECB to adjust their communication in the first half of 2018, gradually. As for the German IFO Survey, the headline Business Climate index in December was down four tenths to 117.2, it remains virtually at its highs in the history of the survey dating back to just after reunification. The Current Assessment component rose further, again a reflection of the German economy’s acceleration through this half. German 10y bund yields rose 7bps toward late November highs.
US Housing Starts and Permits for November were stronger than expected, coming on the back of a high print from a supercharged NAHB Housing Index earlier in the week to the highest levels since the 1990s, above pre-GFC levels. The Atlanta Fed nudged its estimate of GDPNow for Q4 back up to 3.3% after the housing data.
This morning on the Economic Front we already had the release of German PPI for November which came in at +0.1% versus +0.2% expected. At 9.00 am we have the ECB Current Account and this is followed at 11.00 am by UK CBI Total Reported Sales/Retailing. Finally we have US Existing Home Sales at 3.00 pm
March S&P 500
The one great aspect in relation to trading the S&P Futures Market is the fact that it almost always closes any ‘’Open Gap’s. It make take a day or two or even a few months but generally all of these ‘’Gaps’’ get filled. Last Friday after the S&P left a large ‘’Open Gap’’ from its 2682 closing price to Monday’s Chicago trading session low of 2692.50 the S&P fluctuated a lot yesterday on the various news reports in relation to the Tax Bill with the market trading to a low of 2680.50 and this move lower enabled me to cover my short 2688 position at my 2685 T/P level and I am now flat. With the TAX bill passing a couple of hours ago the market has traded higher but not dramatically given the fact that this news was already ‘’priced in’’. Today I will again look to sell the S&P on any further rally to 2696/2703 with the same 2708 stop. If I am taken short and subsequently stopped out of this position I will be a more aggressive seller on any further rally to 2710/2718 with a 2725 stop. The real support for the S&P is last Thursday’s 2651.75 print and my only interest in buying this market is on a dip lower to 2648/2656 with a 2642 stop.
EUR/USD
Unfortunately the Euro again missed my buy level before trading comfortably above 1.18 with little or no support coming from the passing of the Tax Bill so far for the US Dollar. Today I will again raise my buy level to 1.1740/1.1780 with a 1.1710 stop. I still do not want to be short the Euro at this time.
March Dollar Index
No change as my only interest in buying the Dollar is still on a dip lower to 92.45/92.80 with the same 92.15 stop.
March DAX
My DAX plan worked well with the market trading lower to my 13220 buy level before having a nice rally on the re-open of the Futures Market this morning. I did not like the price action yesterday and I covered this position at my revised 13227 T/P level and I am now flat. Today my only interest in buying the DAX is on a further dip lower to 13080/13140 with a 13040 stop. Despite my nervousness towards the DAX I still do not want to be short the market at this time.
March FTSE
My FTSE plan worked well with the market trading lower to my 7455 buy level overnight before rallying on the Senate Passing the Tax Bill to my 7480 T/P level and I am now flat. The FTSE has strong support at 7420 and today I will again be a buyer of the market on any dip lower to 7400/7435 with a 7370 stop.
Dow Rolling Contract
Any sell-off in the Dow over the past few days is being met by more and more buying. Internally the market was weak yesterday with the McClellan Oscillator reversing Monday’s gains to close barely in positive territory with a +6 print. As I have said countless times this is a worrying trend especially with all the US Indices close to all-time highs. Today I will lower my sell level slightly for the Dow to 24920/25020 with a 25125 stop. Despite the Dow being a buy on dips I do not want to be long the market at this time.
March NASDAQ
I am still flat the NASDAQ and today I will now lower my sell level slightly to 6575/6620 with a 6655 stop. For me to turn bearish of the NASDAQ I need to see a sell extreme that takes out the key 6250/6300 support level. Given the internal weakness of the market I still do not want to be a buyer of the NASDAQ at this time.
March BUND
My worries for being long the Bund certainly paid off yesterday with the Bund falling over 100 points from its early morning high following the release of the strong IFO Survey. Thankfully we had no buy levels yesterday. In light of yesterday’s bearish price action I will now lower my sell level to 162.95/163.35 with a 163.72 stop which is just above yesterday morning’s high print.
Gold Rolling Contract
No change as I am still a small buyer on any dip lower to 1244/1252 with the same 1238 stop.
Silver Rolling Contract
I am still long from yesterday morning at 16.15 with the same 16.45 T/P level. As mentioned yesterday I will only add to this position on any subsequent move lower to 15.80 with a 15.55 stop. If my second buy level is filled I will be back with anew update for my Platinum Members.
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