And yes, it was still all about oil with another classic short squeeze, this time seemingly triggered by comments from the Iraqi Oil Minister speaking at a conference in Kuwait saying that Saudi Arabia and Russia are now more flexible about cooperating to cut output. Whether you believe it or not, the cooperation on supply that is, West Texas Intermediate and Brent closed up 4-5% with share markets and other risk assets rising in tandem. For now, the $30 mark is deemed to have been something of a trading support for benchmark oil prices ahead of further substantial news on supply fundamentals in the weeks and months ahead that’s changed little in recent weeks.
To mark my 1000th issue of tradernoble Daily Market Commentary I am offering a special 2 year rate of Euro 2500 for my Platinum Service which includes all my Premium Daily Commentaries and 1/5 updated emails throughout the trading session. This offer is open to both existing and new members and if anyone is interested please email me on bryan@tradernoble.com for details.
For anybody following my Platinum Service it made 130 points yesterday and is now ahead by 3125 points for January. Since I started this Platinum Service last June it has generated a return of over 17500 points.
Speaking of supply in the oil market shortly after the US Markets closed the American Petroleum Institute (API) reported that Crude Oil Inventories had huge build of 11.4 million Barrels in the week. This knocked Oil for 3% and thus the equity markets fell in tandem.
Yesterday the Eurostoxx 600 index closed up a net 0.87%, having been down as much as 2% earlier in the session having opened lower after Chinese stocks dropped 6.42% yesterday. The S&P 500 and the Dow closed 1.4/1.75% higher, while in currencies the CAD sits atop the FX leader board this morning, up 1.1%, with the AUD not far behind, up 0.87% trading just north of 70 US cents.
The LMEX base metals index rose 2.52%, copper up 2.76%, nickel up 1.4%, and zinc up 4.95%, Gold rose 1.54% to $1120.60 amid some softness in the US dollar yesterday with the Bloomberg spot DXY index closing 0.3% lower.There was a minor hiccup for the NZD yesterday after Fitch changed NZ’s Sovereign rating outlook from positive to stable from lower export prices and growth prospects, affirming NZ’s AA rating.
It’s not been a massive day as far as data releases are concerned. US house prices rose further according to both the official FHFA and Case-Shiller indexes, though there was in surprise from the Conference Board’s measure of Consumer Confidence for January from Expectations rising from 96.3 to 98.1 despite heightened market volatility. A sign perhaps of consumers seeing the plunge in oil prices from their own perspective of filling up the gas tank. Whether true or not, this measure of confidence tends to follow labour market trends more closely and consumers’ perceptions of job availability changed little in January according the Jobs Plentiful/Hard to Get Component.
Shortly after the US stock markets closed Apple reported its Q4 Earnings with the EPS coming in at $3.28 versus $3.23 expected. However revenue was lower at a still huge $75.9 billion versus $76.6bn expected. However the sales drop was the first since 2003 on the slowdown in iPhone Sales.
Overnight the Shanghai closed 0.5% lower while the Nikkei closed over 2% higher.
This morning on the economic front we already had the release of German GFK Consumer Confidence which came in at 9.4 versus 9.3 expected. At 12.00 pm we have the US MBA Mortgage Applications. This is followed at 3.00 pm by US New Home Sales. Finally at 7.00 pm we have the FOMC Statement release but there is nor press conference scheduled with Fed Chair Yellen following the Meeting.
March S&P 500
The volatility in the S&P shows no signs of slowing down as the market rallied over 50 Handles after I posted yesterday morning thus reversing the 50 Handle sell-off from the previous 24 hours. Unfortunately I covered my long 1854 S&P position way too early at my 1862 T/P level and I am still flat. On the back of both Apple and the API the S&P is leaving another Gap to the downside and with the FOMC this evening I certainly would not be short the S&P here as I fancy the market to rally ahead of the Statement release. Therefore I will look to buy the S&P from 1874/1879 with a 1869 stop. If I am taken long I will exit this position ahead of the FOMC at 7.00 pm as I want to be flat ahead of the announcement. The S&P has strong resistance from 1905/1912 and I will be a seller in this area with a 1918 stop.
EUR/USD
My Euro plan worked well yesterday with the Euro trading lower to my 1.0820 buy level shortly before lunch. Subsequently the Euro has traded as high as 1.0882 overnight which enabled me to T/P on this position at my 1.0835 T/P level and I am now flat. I still believe the US Dollar is due a massive correction as the strong Dollar is killing the Emerging market currencies. For example the Dollar has risen over 50% against 20 of its major trading partners and in 9 of these currencies by over 100% in the past 12 months. This is not sustainable and if anyone has Dollar assets I would certainly look to hedge at least 50% of their exposure at these levels. Today I will again look to buy the Euro on any dip lower to 1.0790/1.0830 with a 1.0755 stop.
March Dollar Index.
No change as I am still a seller on any rally higher to 99.60/99.90 with a 100.30 stop. Remember a break and close over 101 is very bullish and will only add to the EM woes as mentioned above.
March DAX
Following the significant two Key Day Reversals in the DAX to the downside off the key 10100/10200 resistance level the DAX yesterday had a Key Day Reversal to the upside following another volatile trading session. I am still flat the DAX and today I will raise my buy level to 9600/9670 with a 9540 stop which is just below yesterday morning’s low print. I still do not want to be short the DAX at this time.
March FTSE
Yesterday the FTSE also had a Key Day Reversal to the upside following a large move higher after the sell-off overnight. Unfortunately the FTSE just missed my 5710 buy level by a few points before having this huge rally and I am still flat. Today I will raise my buy level to 5770/5810 with a 5735 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
Just like the FTSE above the Dow also missed my 15710 buy level by just 20 points after I posted yesterday morning which is frustrating when you see the Dow trade over 450 points higher on what was another huge Key Day Reversal to the upside. It is amazing what affect a small move in oil can have on stock markets at this time. The Dow is trading lower this morning on the back of the API data and the Apple Earnings Report but with the FOMC this evening I would not be short this market. Interestingly after a serious of negative closings the McClellan Oscillator closed in positive territory last night with a +20 print. For these reasons I have bought the Dow this morning in small size at 16055 with a 15990 stop.
March BUND
My short 161.95 BUND position worked well yesterday as following the rally in equities the BUND sold off which enabled me to cover this position at my 161.60 T/P level as outlined earlier to my Platinum Members. This morning with the BUND opening over 162 I have decided to go short again at 162.05 with a tight 162.35 stop.
Gold Rolling Contract
I am still flat Gold and today given that we have the FOMC later I will leave my buy level unchanged at 1096/1104 with a 1089 stop.
Silver Rolling Contract
No change as I am still long at 14.30. Today I will raise my stop on this position to 13.95.
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