Yesterday’s trading session was one of two halves. European stocks benefited from the perceived easing in trade tensions (the recent Mnuchin ‘’we’re sitting at the table and negotiating’’ comments) that sparked the over 600 point rally in the Dow for the previous session. The Eurostoxx 600 index rose 1.2%, the DAX up 1.56% and the FTSE up 1.62%. LME base metals also saw rises for most metals, the LMEX index up 0.39%. Interestingly, Dalian iron ore futures eased further yesterday, although Chinese steel rebar rose. Oil prices eased, while gold did too! It was a session of very little hard data with the release of the Euro-Zone confidence surveys for March that usually have little to no market impact and the Conference Board’s Consumer Confidence, both surveys for March, and both a little weaker than expected.
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For anyone following my Platinum Service it made 28 points yesterday and is now ahead by 1515 points for March, having made 2256 points in February, 879 points in January, 946 points in December, and 823 points in November Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points.
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Initially, the carryover risk-on mood was given some further kick along with US Commerce Secretary Wilbur Ross appearing on Fox News offering some comments that were soothing in effect to the market’s ears, Ross saying that ‘’we’re ending up with negotiated deals, not trade wars’’. But then there was a wire story that the US was looking to protect US tech sectors with curbs on China, the US said to be considering the use of an emergency law. This plays very much to the recent Trump Administration blocking of Broadcomm’s takeover of Qualcomm, so in that sense it is not new news, but it has been enough for investors to become defensive again. Further expulsion of Russian diplomats ‘’ this time from NATO’’ has also been announced. The Russian Rouble is down by 0.63% overnight, among the larger falls against the US, though we note that oil prices were also lower, WTI down 1.25% and Brent by 0.71%.
The Nasdaq has led the charge lower, sharply reversing its positive open and down by 2.93%. The negative sentiment gripped the wider market, the Dow and the S&P 500 off by 1.43% and 1.73% respectively. Bond yields are notably lower for longer tenors, the VIX back up at 23 and the AUD/USD taking the brunt as far as the FX majors are concerned, trading back down below 0.77 a few pips within sight of this year’s low.
The data had an inconsequential effect on markets, though the pull-back in the Euro-Zone overall Business Climate Indicator, and in Industrial and Services Confidence components does play to the growth momentum pullback in the preliminary Euro Zone PMIs last week. After the University Of Michigan Consumer Sentiment reading for March had surprised with yet another stellar reading last week, yesterday’s Conference Board’s Consumer Confidence measure eased back, though high. In fact it is still very high with the net Jobs Plentiful index increasing further signifying even better consumer perceptions of still rising job opportunities.
Finally, Atlanta Fed President Raphael Bostic who was speaking in an interview with the Wall Street Journal said that the Fed could soon face rising chances the economy grows faster than forecast and leads to a slightly faster pace of rate rises. He cited the uncertainty over how the economy would respond next year to tax cuts and increased government spending that could complicate monetary policy. He said that ‘’the risks are more to the upside now’’, though he does not see imminent inflation or overheating. He drew attention to the uncertainty of what the impact of fiscal policy will be, whether it simply boosts demand and thus inflation as opposed to lifting the economy’s productive capacity, that lift helping to contain inflation. ‘’The range of possibilities has broadened, at least in my mind. It could be that 2019 is going to be where more of the action is’’ Meanwhile the Nikkei closed down 1.34% at 21,031.
This morning on the Economic Front we had the German GFK Consumer Confidence which came in at 10.9 versus 10.7 expected. At 1.30 pm we have US GDP and Wholesale Inventories. Finally we have Pending Home Sales at 3.00 pm.
June S&P 500
Shortly after I posted I was stopped out of my short 2664 S&P position at my silly 2677 stop which was almost the high of the day in what turned out to be another dramatic trading session for US equities. Shortly after the US Markets open the S&P traded lower to my 2657 buy level with an initial 2652 low print before having a nice rally and this move higher enabled me to cover this position at my revised 2662 T/P level and I am now flat. Thankfully we had no second buy levels across in the Dow and S&P as the last 90 minutes was dramatic with the S&P trading to its 200 Day Moving Average at 2595 for a 85 Handle sell-off from its morning 2680 high print. The S&P is moving more in a couple of hours than it did in a month last year. If the S&P cannot get back above the 2625/2640 resistance area then there is a fair chance we are going lower to my 2520/2540 target price. Today I will be a small seller from 2632/2645 with a 2655 stop. I will be a small buyer on any dip lower to 2580/2593 with a 2573 stop. I will also be an aggressive buyer on any further dip lower to 2518/2538 with a 2508 stop.
EUR/USD
My Euro plan worked well with the Euro trading the whole of my buy range for an average long position at 1.2395. Subsequently the Euro rallied back above 1.2425 and this move higher enabled me to cover my long position at my revised 1.2410 T/P level and I am now flat. Holding the 1.2360 support level is key to the next move in the Euro. Today I will again look to buy the market from 1.2335/1.2365 with a tight 1.2310 stop. I still do not want to be short the Euro at this time.
June Dollar Index
Shortly after I posted the Dollar traded higher to my 88.75 T/P level on my latest 88.60 long position and I am now flat. The 150 point fall in Cable certainly helped the Dollar to rally yesterday. Today I will again look to buy the Dollar on any dip lower to 88.25/88.65 with a 87.85 stop.
June DAX
With both the NASDAQ and FTSE hitting my buy levels in the late sell-off in US equity markets I waited to buy the DAX which I did at 11840 before covering this position at my revised 11880 T.P level and I am now flat. The DAX continues to hold the key 11710/11765 support from where we bounced aggressively on Monday. Today I will again look to buy the DAX on any dip to this area with a 11660 stop.
June FTSE
Late in the New York session the FTSE traded lower to my 6840 buy level before rallying to my revised 6870 T/P level overnight and I am now flat. Until we got the late dramatic sell-off in US Markets the FTSE was the strongest Index yesterday helped by how oversold the market had gotten plus the renewed weakness in Sterling. I like the FTSE market and will continue to be a buyer on dips especially as we have such strong support at 6750 as mentioned in yesterday’s commentary. Today I will again look to buy the market on any dip lower to 6785/6830 with a 6745 stop.
Dow Rolling Contract
What a day with the Dow seeing a violent 738 point reversal yesterday after posting its largest one-day rally on Monday in over 10 years. This is crash behavior with violent rallies in between these massive sell-offs. Yesterday my Dow plan worked well with the market trading lower to my 24170 buy level before rallying to a rebound high at 24445 only to have this late dramatic 90 minute sell-off. This move higher saw me cover my long position too early at 24228 and I am now flat as thankfully we had no second buy levels in the Dow yesterday. As mentioned on Monday the Dow has huge support from 24350/24680 and today I will be a buyer in this area with a 24220 stop. Despite yesterday’s reversal I am not comfortable in being short the Dow especially as we are so near the February lows.
June NASDAQ
Unfortunately the NASDAQ just missed my 6875 sell level with a 6850 high print after I posted yesterday morning before the market got slammed for nearly 400 points in what turned out to be one of the weakest trading sessions for technology stocks in many years. Most stocks fell over 5% (Google) to 11% for Twitter. This move lower saw the market hit my 6670 average buy level before stopping me out of this position at 6620 and I am now flat. The next major support for the NASDAQ is from 6370/6440 and this level must hold or we could well see a move lower to at least 5500/5700. Given the significance of this support area I will be a buyer here with a 6325 stop.
June BUND
Incredibly the Yield on the Bund is back below 50 basis points as every dip continues to be bought. If the equity market rout continues then we can forget about many more rate hikes especially in the US. I am still flat the Bund and today I will now raise my buy level to 158.45/158.85 with a 158.15 stop.
Gold Rolling Contract
As I am back long Silver I will now lower my Gold buy level slightly to 1318/1328 with a 1311 stop.
Silver Rolling Contract
Silver traded lower to my 16.65 buy level. I am still long and will only add to this position on any further move lower to 16.25 with a 15.95 stop. I will also lower my T/P level to 16.85 and if my second buy level at 16.25 is filled I will then lower my T/P level to 16.60.
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