Yesterday’s RBA Minutes with its dovish take and concerns about the activity side of the economy saw Australian Rates move to price in a rate cut in August from 59% to 63%. This helped weaken the Australian Dollar which closed below 0.75 in New York last night. Commodity prices have been mixed in yesterday’s quiet trading session, with Base Metals up 0.91%, Iron ore down 1.48% and Gold up 0.25%. Meanwhile the VIX Index fell 0.47 to close at 11.97 which is a new closing low for 2016.
To mark my 1100th issue of my Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2500 for my Platinum Service 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 please email me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it made 42 points yesterday and is now ahead by 1067 points for July having made 2550 points in June. Since I started this Platinum Service in June 2015 it has averaged a monthly gain of over 2200 points.
The big news event yesterday was the IMF downgrading its forecasts for UK and European growth in its latest WEO forecast update. This downgrade was sufficient to shave its global growth forecasts by 0.1% for this year and 2017 to 3.1% and 3.4% respectively despite no assumed impact on China, the US and Emerging Markets doing better. The Fund had been looking to revise up its global growth ahead of the ‘’Brexit’’ Referendum.
In Europe, the ZEW Investor Survey for Germany and the Euro-Zone was much weaker than expected in July, with the Current Situation and Expectations components much weaker than expected, reflecting ‘’Brexit’’ uncertainty. This saw a large sell-off in Sterling while the Euro also traded lower to just below 1.10.
The US Dollar has garnished some further support, aided by solid US Housing data for June that saw a modest re-pricing of the US Fed Funds Futures towards higher rates. There was also an article from noted Fed watcher Jon Hilsenrath of the Wall Street Journal suggesting the Fed is giving serious consideration to raising rates as early as September given relatively solid US Economic Reports, though not at next week’s FOMC Meeting. The Atlanta Fed’s GDPNow estimate for Q2 remained at 2.4% after the Housing Report.
This morning on the economic front from the Euro-Zone at 9.00 am we have the ECB Current Account. This is followed at 9.30 am by UK Average Earnings and Unemployment. We have no data of note scheduled from the US this afternoon.
September S&P 500
Yet again the S&P closed slightly in the red while the Dow again closed in positive territory on what has been the quietest trading week all year as all markets go on hold ahead of the ECB and Dragi press conference tomorrow. I am still flat the S&P and I am not going to change my parameters too much as I do not expect much change today especially with no US economic data due this afternoon. Therefore I will leave my buy level unchanged at 2138/2144 with a 2132 stop. I will also leave my sell level unchanged at 2173/2178 with a 2184 wider stop. This market is extremely over-bought and over-loved but until we get a sell extreme that lasts for more than a few days the buy the market on dips will continue to pay dividends.
EUR/USD
After the IMF and EU had downgraded their growth forecasts for Europe I emailed my Platinum Members to reduce their buy level in the Euro to 1.10 which subsequently got filled. As I want to continue with my theme of booking points when available I emailed them again to T/P at 1.1017 and I am still flat. Today I will again look to buy the Euro on any dip lower to 1.0940/1.0970 with a 1.0915 tight stop. Despite the negative price action I will only lower my sell level slightly to 1.1120/1.1160 with a 1.1195 stop.
September Dollar Index
The Dollar traded higher to my 97.00 sell level. I am still short and I will now lower my stop on this position slightly to 97.50.
September DAX
Shortly after the European Markets opened this morning the DAX got hit hard on the weaker ZEW Survey and the downgrade in growth from the IMF. The DAX traded lower to my 9925 average buy level before having a nice rally to 9980 which enabled me to cover this position at my revised T/P level at 9950 as emailed earlier to my Platinum Members and I am now flat. Today I will again look to buy the DAX on any dip lower to 9860/9920 with a 9815 stop as I would expect the market to rally on any initial sell-off ahead of the ECB tomorrow. For this reason I do not want to be short the DAX at this time.
September FTSE
The renewed weakness in Sterling is helping the FTSE at this time. I am still flat the market and today I will now raise my buy level to 6585/6615 with a 6555 stop. Given the weakness in Sterling I do not want to be short the FTSE at this time despite the IMF downgrading UK growth.
Dow Rolling Contract
The winning sequence for the Dow continues with the market closing up for the eighth consecutive trading day which is not far off its all-time winning run and now 14 of the past 16 trading sessions. Just like the S&P above it is very difficult to be short the Dow until we see a sell extreme that sticks even though as mentioned yesterday the Daily Sentiment Index reading for the Dow is over 87%. Today I will leave my sell level unchanged at 18670/18740 with the same 18795 stop. My only interest in buying the Dow is on a dip lower over the coming days to 18340/18400 with an 18270 stop.
September BUND
I am still flat the Bund and today I will again look to sell the market on any rally higher to 167.10/167.50 with a 167.80 stop. I still do not want to be long the Bund at this time.
Gold Rolling Contract
Gold continues to outperform Silver and I am still flat. I refuse to chase this market higher preferring to buy a dip to 1303/1314 with a 1295 stop.
Silver Rolling Contract
No change as I am still a buyer on any dip lower to 19.10/19.50 with the same 18.65 stop. Remember Silver should have very strong initial support on any test of the 18.00/18.30 area as this is the Double Top from March.
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