Brexit news dominates headlines this morning with the UK Supreme Court ruling Parliament must vote before the formal Brexit mechanism (article 50) can be activated. However, in positive news for Brexiters the court also ruled that the devolved Scottish, Welsh and N. Ireland assemblies do not get a vote on the process. UK Secretary of State for Exiting the EU David Davis said the government would present such legislation “within days” and activation of the formal Brexit processes by the end of March 2017 still looks likely. The pound did experience some intraday volatility, but ended the day down 0.3% and trades some 3.9% higher than its lows in early January at around 1.2514.
To mark my 1250th 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 75 points yesterday and is now ahead by 1358 points for January having made 1351 points in December, 1971 in November and 1582 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.
As for other currencies, it was a day of mild US Dollar strength with the DXY up 0.3%. The rise in the Dollar mostly reverses the falls seen after Trump’s Trade Secretary nominee Steven Mnuchin noted an “excessively strong dollar may have negative short-term implications on the economy”. What was not widely reported though was that Mnuchin’s comments were in response to a hypothetical question of a 25% rise in the dollar so no surprises there for the reversal. Most G10 currencies were weaker with the Euro down 0.33%, Yen down 1.02% and Aussie almost unchanged (down just 0.1%). The Kiwi and the Canadian Dollar outperformed, up 0.2% and 0.62% respectively.
Trump news flow continued yesterday afternoon with focus on protectionist policies and winding back regulations then on boosting infrastructure spending. In a meeting with the CEOs of major car manufacturers, President Trump tweeted “I want new plants to be built here for cars sold here” and vowed to cut regulations and taxes as an incentive, repeating his mantra of “buy American and hire American”. Trump also signed off on some executive orders to help advance the Dakota Access and Keystone XL Pipelines and to expedite environmental reviews for “high priority infrastructure projects”.
Solid European PMIs and a mostly positive company earnings season contributed to higher Bond Yields yesterday and this has continued into the European open so far this morning. US Treasury yields were up 7.4 bps to 2.47%, German Bunds up 4.5bps to 0.41% and UK Gilts up 3.5 bps to 1.40%.
Equities were mostly higher on the back of solid earnings from homebuilders and DuPont. The S&P500 rose 0.7% with the Dow Jones also up by 0.7% and building momentum for a second tilt at the physiological 20,000 mark – it currently sits at 19,934. The EuroStoxx was up 0.3% while the FTSE was unchanged on the back of the stronger pound. Dragging on the FTSE was a near 20% fall in BT Group on the back of “improper practices” in its Italian arm which saw a £530m write-down.
In commodities, oil was higher, up 1.2% to $53.38 (WTI) while Brent was also up 0.7% to $55.62. Comments by Iraq that it was progressing with its commitment to cut oil production supported. Australia’s key commodity prices were unchanged to higher with Iron ore up 1.9% to 82.9, Thermal coal up 0.1% to 83.8, while Coking coal was unchanged at $185.0.
This morning on the economic front we already had the release of Australian CPI which came in weaker at 0.5% versus 0.7% expected. This surprise CPI print has seen the Australian fall 0.75% against the US Dollar. At 9.00 am we have German IFO Business Climate and Current Assessment/Expectations. This is followed at 11.00 am by UK CBI Business Optimism and Total Orders/Selling Prices. Finally we have US Mortgage Applications and FHFA House Price Index at 12.00 pm and 3.00 pm respectively.
This afternoon at 4.00 pm the Bank of England Governor Carney is speaking in Wiesbaden, Germany.
March S&P 500
The S&P made a new all-time high at 2280.50 before selling off slightly to a low at 2274.50, before reversing this sell-off in the last hour to move higher again. As I was having a good day yesterday and wanted to protect these gains I emailed my Platinum Members to cancel their sell order in the S&P and I am still flat. For those members who did sell the S&P you were still able to make some points as the market sold off slightly into the Chicago close. My long term target is still 2300/2334 and I see no reason why we will not break higher especially if the Dow can finally break the 20K level. As the S&P is still in a bull trend further rises are always likely with the next target being 2291 and then 2300/2305. My only interest in selling the S&P is on a rally higher to 2297/2303 with a 2308 stop. With the S&P finally closing over the key 2270 resistance level we should see the market holding this area on any test lower and today I will now raise my buy level to 2266/2272 with a wider 2259 stop.
EUR/USD
The Euro tested the top of its Daily Bollinger Band and Williams Index on comments from Trade Secretary Nominee Steven Mnuchin before selling off late in the New York session and that has continued this morning with the Euro now trading at 1.0715. I am still flat the market and today I will lower my buy level slightly to 1.0645/1.0680 with a 1.0615 stop. I will leave my sell level unchanged at 1.0820/1.0860 with a 1.0890 stop.
March Dollar Index
My Dollar plan worked well yesterday with the market hitting my 99.95 buy level with a 99.86 low print before rallying. This rally enabled me to cover my long position at my revise 100.22 T/P level and I am now flat. Today I will again look to buy the Dollar on any dip lower to 99.70/100.00 with a 99.35 stop. Given how oversold the Dollar is trading I still do not want to be short the Dollar at this time.
March DAX
Unfortunately the DAX just missed my 11495 buy level with a 11515 low print before rallying over 150 points and I am still flat. Thankfully we had no sell levels in the DAX yesterday as anyone who shorted the market had to scramble to exit their position. This morning the DAX is trading over last week’s high at 11644 which is bullish and today I will now raise my buy level to 11590/11640 with a 11545 stop. I still do not want to be short the DAX at this time. Remember a break and close over the July 2015 high at 11810 is very bullish, targeting a further move higher to at least 12250.
March FTSE
I am still flat the FTSE as this morning the market tries to break its 10 year trendline at 7140. The 20% fall in BT shares yesterday certainly did not help the FTSE’s cause but if the other major Indices continue to rally it is hard not to see the FTSE follow suit. Today I will raise my buy level to 7030/7070 with a 6995 stop. I do not want to be short the FTSE today and will stand aside from any short positions as I want to see if we do get follow through is the US market when it opens this afternoon.
Dow Rolling Contract
Once again the Dow is very close to breaking the 20,000 level which to me is only a matter of time. Thankfully we had no sell levels yesterday and I am still flat. The McClellan Oscillator finally broke higher to close in positive territory with a +47 print. For these reasons I will now raise my buy level in the Dow to 19830/19890 with a 19780 stop. I still do not want to be short the Dow at this time.
March BUND
My Bund plan initially worked well but you had to be quick as after the Bund hit my 162.75 buy level before rallying to a high of 163.01. Subsequently the market got hit hard to the downside. I did not like the price action in the Bund and I emailed my Platinum Members to exit their long position at 162.90 and I am still flat. As I write this commentary the Bund is breaking last week’s low at 162.20 with the next support at the 161.40/161.75 area. I will be a buyer on any test of this level with a 161.10 stop.
Gold Rolling Contract
Early this morning Gold hit my 1203 buy level with a 1202.20 low print. As I am long Silver I emailed my Platinum Members to exit this position at 1204.50 and I am now flat. The rise in the Dollar over the past 14 hours has hit both Gold and Silver and today my only interest in buying Gold is on a further dip lower to 1186/1194 with a 1179 stop.
Silver Rolling Contract
My latest long 17.10 Silver position worked well yesterday with the market hitting my 17.30 T/P level. Subsequently Silver sold off and I re-bought the market again at 17.12. I will add to this position on any further move lower to 16.85 with a 16.60 stop.
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