The US Dollar continued to march a little higher, the Bloomberg Spot Dollar Index closing up another 0.14%, with gains mostly against the Euro, the Yen, and Sterling, the latter from some self inflicted news. US data has been second tier and there was interest in a video released by President-elect Trump on his plans for the first 100 days in office. Withdrawing from the Trans Pacific Partnership (TPP) received front billing along with canceling job-killing restrictions on energy industries and also proposing that for each new regulation, two have to be abolished. No mention of the wall or deporting illegal immigrants in the video.
To mark my 1200th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2750 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 can you please contact me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it made 50 points yesterday and is now ahead by 1531 points for November having made 1582 points in October. The previous four months saw gains of 1142, 1782, 1682 and 2550 points respectively. Since I started this Platinum Service in June 2015 it has averaged a monthly gain of over 1900 points.
After rallying the day before on the prospect/possibility of a softer Brexit, Sterling has fallen back from 1.25 to 1.24 and below (it’s trading close to the figure this morning) after UK Brexit negotiator David Davis’ meeting with EU parliamentary negotiators. The news has been that the post Article 50 window might be as short as 14-15 months according to the EU, not two years. Watch this space. Meanwhile, the UK CBI industry survey was better than expected for November, orders among the highest level since early 2015 and selling prices moving up, the weaker Sterling playing a role in both.
While the US Dollar has been bid, the AUD/USD has made some modest net gains and trades close to 0.7440 this morning. RBA Chief Economist Chris Kent spoke last night on Australia’s economic transition across the States. For the economy overall, he reported that while their main economic forecasts were little changed, he again noted the upward revision to the terms of trade, commodity prices turning in his words from a “substantial headwind of recent years to a slight tail breeze providing some support to the growth of nominal demand”. They don’t expect mining investment or wages to head back up. (Iron ore prices bounced back overnight, up $4.56/t to $74.90; met coal spot prices off $0.50 to $299 and thermal coal up $1.20 to $106.30; Chinese Dalian iron ore futures rose 8.8% yesterday!)
Against the better terms of trade news, he balanced that with less upbeat reflections on the performance of the labour market, referencing the rise in part-time employment and rising underemployment. On wages he did say that their liaison program indicates some wage pressure, but would not like to see (published) wages growth “fall from here”, a reference to the new low in the wage price index. He also made mention of faster growth in population and housing in Victoria, mentioning the relatively higher cost of housing and longer commute times in Sydney compared to Melbourne.
This morning on the economic front we have German and Euro-Zone Manufacturing/Services PMI at 8.30 am and 9.00am respectively. With the US Markets closed tomorrow for Thanksgiving, we have a host of US economic releases. At 1.30 pm we have the Weekly Jobless Claims and Durable Goods Orders. Next at 2.00 pm we have the House Price Purchase Index and the FHFA House Price Index. This is followed at 2.45 pm by the Manufacturing Markit PMI and New Home Sales. Finally we have the University of Michigan Consumer Sentiment and the Fed Minutes from the November 1 FOMC Meeting at 3.00 pm and 7.00 pm respectively.
December S&P 500
My S&P plan worked well with the market trading lower to my 2194 average buy level on softer oil prices before reversing and rallying to a 2203 high ahead of the Chicago close. This rally enabled me to cover this long position at my revised 2197 T/P level and I am now flat. As mentioned yesterday, trading desks in the US will be lightly manned as most have finished for the week for the biggest holiday of the US calendar. I would expect trading to be again subdued with the ”buy the dip” again the preferred choice. The S&P has strong support from the previous summer high at 2188/2193 and today I will again look to buy the market on any dip lower to 2190/2196 with the same 2185 stop. Given the seasonality I still do not want to be short the S&P at this time.
EUR/USD
Just as I posted yesterday morning the Euro was trading at my 1.0620 buy level. Subsequently the Euro rallied to a 1.0659 high before selling off in the afternoon below 1.06. I am still long and I will leave my T/P level unchanged at 1.0645 which just missed overnight with a 1.0644 high print. If I manage to exit this position for a T/P, I will again look to buy the market on any subsequent dip lower to 1.0595/1.0625 with the same 1.0555 stop. Remember the single digit DSI reading implies that sooner rather than later the Euro is going to spike higher to reverse this oversold condition. Just look at what the US Bond Markets and German Bund have done over the past 48 hours after having similar DSI readings. I will leave my stop unchanged at 1.0555.
December Dollar Index
Unfortunately the Dollar just missed my 100.55 buy level with a 100.67 low print and I am still flat. Today I will leave my buy level unchanged at 100.25/100.55 with the same 99.90 stop. I will still look to sell the Dollar on any rally higher to 101.70/102.10 also with the same 102.50 stop.
December DAX
Yet again the DAX has traded in a narrow range as the market still cannot break its key 10800/10850 resistance level. I am still flat and today I will raise my buy level slightly to 10600/10660 with a 10550 tight stop. I still do not want to be short the DAX at this time especially if we can finally break the above resistance. A break and close over 10850 targets 11160 which is the next major resistance level.
December FTSE
The FTSE just missed my 6785 buy level late yesterday and I am still flat. Today I will now raise my buy level to 6775/6805 with a 6745 stop. I still do not want to be short the market at this time.
Dow Rolling Contract.
Since the Dow made new highs above 18863 following the Trump election victory, the market has traded in narrow ranges each day. Despite the small net gain for the US stock markets yesterday the McClellan Oscillator has again improved closing at +180 last night. If the MO continues to firm over the coming days then I will look to put on a short position. Today I will raise my buy level to 18880/18940 with the same 18820 stop. I will leave my sell level unchanged at 19120/19190 with the same 19250 stop. The Dow is now severely overbought but the market is likely to continue its slow crawl higher as more short positions get squeezed.
December BUND
The BUND rallied strongly yesterday as the market closed over strong support at 161.20/161.30. This level is key for the market going forward. Today I will be a small buyer on any dip lower to 160.80/161.20 with a 160.45 stop which is just below yesterday morning’s 160.49 low print. I still do not want to be short the Bund at this time.
Gold Rolling Contract
Gold traded lower to my 1207 buy level but unfortunately I emailed my Platinum Members to exit this position at 1209 as I was already long Silver, Euro and S&P and I am now flat. Overnight Gold traded higher to 1215.25 and today I will again look to buy the market on any dip lower to 1199/1206 with a 1192 tight stop.
Silver Rolling Contract
No change as I am still long Silver at 16.95 with the same 16.25 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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