In the FX space, most of the price action of the past 24 hours took place during APAC time in the aftermath of the announcement during the night that President Trump had called for a list of $200bn of Chinese imports to be subject to an additional 10% tariff. He said he was taking the action because China had increased tariffs on US exports and has no intention of changing its unfair practices related to the acquisition of American intellectual property and technology. Unsurprisingly, the Chinese responded in forceful terms, noting that if the US loses its sense and publishes a list, China will have to take comprehensive quantitative and qualitative measures and retaliate forcefully.
To mark my 1600th 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 181 points yesterday and is now ahead by 363 points for June, having made 1927 points in May, 1657 points in April, 1760 points in March, 2256 points in February, 879 points in January and 946 points in December. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
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Those statements were the catalyst for Asian equity markets and the AUD to head south in a classic risk-off reaction, the AUD breaking down through the previous low for the year of 0.7412, through the figure and reaching a low of 0.7347 during the London session, also losing traction on the crosses. The Shanghai stock market was down 4.8% intra-session but managed to claw its way back to a net fall for the day of 3.78%. The AUD has inched its way back up to around 0.7380 as US stocks close down but above intra-session lows.
The Dow has still closed down 287 points, a decline of 1.15%, the S&P 500 by 0.40% and the Eurostoxx 600 by 0.70%. As the AUD was under pressure so were Dalian iron ore and steel rebar futures yesterday along with base metals, the LMEX index ending its overnight session down 1.83%. All base metals on the LME took a sizeable hit, lower by 1-2%. Oil and gold are also lower as were US soft commodities, including soybeans that were down 2.20%, though even in that market the close was well above its intra-day lows.
To be frank, much of the reaction looks to be catch up to price action in Asia yesterday, rather than another full-blown new round of market risk aversion. The Administration’s Trade Advisor Peter Navarro has been on the wires saying that the phone lines are open for further discussion with Chinese officials, but that Trump’s actions are a necessary defence of the ‘’crown jewels’’ of the US economy and that the Chinese have under-estimated Trump’s resolve to secure change in Chinese trade practices.
ECB President Mario Draghi was speaking at the ECB Forum on Central Banking yesterday morning, opening a session on price and wage setting. Less than a week on, the market can hardly be surprised with his comments that ‘’we will remain patient in determining the timing of the first rate rise and will take a gradual approach to adjusting policy thereafter’’. He also repeated that ‘’the downside risks to the outlook come from three main sources’’. ‘’the threat of increased global protectionism prompted by the imposition of steel and aluminium tariffs by the U.S.; rising oil prices triggered by geopolitical risks in the Middle East; and the possibility for persistent heightened financial market volatility’’.
What he also served up though was a relatively positive assessment of the Euro-Zone, saying that the economy is hitting its speed limit, capacity utilization stands above its long-term average in the Euro area and in all large economies, and that the current upswing is ‘’job-rich’’,’ but investment has been slow to rise. After all, the ECB did announce last week an end to QE for this year and signal they are thinking of the first move in rates in the second half of next year, not out of keeping with market pricing.
This morning on the Economic Front we have the UK CBI Industrial Trends Survey and this is followed at 12.00 pm by US MBA Mortgage Applications. Finally we have US Trade at 1.30 pm and Existing Home Sales at 3.00 pm.
The ECB Conference finishes this afternoon in Portugal. This morning the ECB’s Lautenschlager and Coeure are speaking while this afternoon it is the turn of Fed Chairman Powell and the Bank of Japan Governor Kuroda. Finally ECB President Dragi will close the Conference with another speech.
September S&P 500
The idea of buying such a huge ‘’Down Gap’’ in the S&P worked perfectly yesterday with the S&P rallying over 30 Handles off its early morning low. This move higher enabled me to cover my long 2738 position at 2745 and I am still flat. The S&P has good support from 2752/2760 and today I will be a buyer in this area with a tight 2745 stop. I still believe that the S&P will have one more test of the key 2820/2840 resistance area before the market finally puts in a more meaningful top.
EUR/USD
My Euro plan worked well with the market trading lower to my 1.1535 buy level before rallying 50 points. As I wanted to bank a decent profit across all markets yesterday I covered this position at my revised 1.1550 T/P level as emailed to my Platinum Members and I am now flat. Today I will again look to buy the Euro on any dip lower to 1.1500/1.1540 with a 1.1470 stop. Again 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 1.1410/1.1450 with a 1.1360 wider stop. This second buy level is where we have the 500 Day, 200 and 100 Week Moving Averages. I still do not want to be short the Euro at this time.
September Dollar Index
The Dollar also traded higher to my 94.90 sell level. As I had so many positions yesterday I covered this short position at my revised 94.85 T/P level and I am now flat. Today I will again look to sell the Dollar on any further rally higher to 95.00/95.40 with a 95.70 stop.
September DAX
The DAX just missed my buy level before having a late rally into the European close and this rally has continued this morning with the market opening higher after a brutal 600 point sell-off since the post ECB Meeting high last Thursday afternoon. I am still flat the market and today I will now raise my buy level to 12550/12625 with a 12495 tight stop. Despite the aggressive sell-off over the past few days I still do not want to be short the market at this time.
September FTSE
My average long 7505 FTSE position from early yesterday morning worked well with the market rallying to my 7520 T/P level with a high this morning of 7600. This rally higher was helped by the continued sell-off in Sterling which hit a new low for the year below 1.3150. Given the huge discount that the September Contract trades versus the Cash FTSE it is very difficult to be short this market as your timing has to be spot on. Remember the September Contract and Cash FTSE have to converge by the expiry of the September Contract in mid-September. Today I will again look to buy the market on any dip lower to 7520/7565 with a 7485 stop.
Dow Rolling Contract
The Dow has had its worst losing streak since March 2017 as the market got hit for another 400 points yesterday before recovering 100 of these losses into the close. I was long yesterday at 24650 and with the market trading below 24600 when I posted you should have been in a better position to buy the market before we rallied to an initial rebound high at 24740 before rallying another 100 points overnight. I covered my long position at 24685 and I am still flat. Worryingly we had a second Hindenburg Omen on Monday after the first one last week meaning we have a confirmed Hindenburg Omen on the clock. This signal is valid for the next three months opening up the possibility of a major sell-off over the coming months. We have only had one stock market crash that did not have a registered HO so this signal is important. However with the Russell 2000 at or near all-time highs and the NASDAQ close by I do not think that this major sell-off will start any time soon. The Dow has good support from 24510/24670 and today I will be a buyer on any dip to this area with a 24440 stop. Resistance comes in at 24950 and a break and close above this area is a buy signal for 25250/25350, 25500, 25700 and possibly as high as 25800/25900.
September NASDAQ
Late in US trading session the NASDAQ traded higher to my initial 7250 sell level. As I did not want to be short overnight I emailed my Platinum Members to exit any short position at 7244 and I am still flat. It is a strange market with the Dow on a large losing streak while the NASDAQ trades close to its all-time high. Today I will again look to sell this market on any move higher to 7320/7370 with a 7405 tight stop. I still do not want to be long the NASDAQ at this time.
September BUND
The Bund just missed my buy level before rallying and I am still flat. Today I will lower my buy level slightly to 160.40/160.80 with a 160.10 stop. I will also lower my sell level to 162.10/162.50 with a 162.85 stop.
Gold Rolling Contract
My Gold plan worked well with the market trading lower to my 1271 buy level before rallying above 1277 and this move higher enabled me to cover this position at my revised 1274.50 T/P level and I am now flat. Gold is on track for its worse run in many months as one long position after another gets stopped out. Gold must hold 1260 or we could well see a quick move lower to at least 1230/1240. Today I will again look to buy the market from 1258/1266 with a 1251 stop.
Silver Rolling Contract
Silver traded lower to my 16.30 buy level. I am still long with a lower 16.45 T/P level. I will now raise my stop on this position to 15.85 and if either of these levels are hit I will be aback with an new update for my Platinum Members.
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