West Texas Intermediate Oil fell over 5% yesterday on top of its 6% fall on Monday with Brent declining in tandem, sentiment not helped by BP’s Earnings results. The fall in oil really hit stock markets on both sides of the Atlantic with European stocks declining 2% while the Dow and S&P closed 1.8% and 1.87% lower respectively thus reversing most of last Friday’s huge gains. US Treasury Yields joined in with 10 Year Treasury Yields down 9 bps to 1.86%, while the market pricing for Fed Funds at the end of this down another hefty 6bps to 0.53%, implying little more than a 50% chance of one rate hike by year’s end.
To mark my 1000th issue of Tradernoble Daily 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 day. 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 170 points yesterday and is now ahead by 310 points for February having made 3365 points in January. Since I started this Platinum Service last June it has generated a return of over 17500 points.
In Currencies Sterling continued its recent rise in the wake of proposals being put to the UK from the EC to forestall the risk of ‘Brexit’ ahead of an EU Summit on 18-19 February. Cable ( USD/GBP)rallied over 1.44 on this news while EUR/GBP is back trading at .7560 after last week’s spike above 0.77.
We had no economic data of note from either the Euro-Zone or the US yesterday while 60 points of yesterday’s Dow fall came on the back of Goldman Sachs falling 5% to just over $151 per share on continued worries about their earnings reported last month.
Overnight initially the Futures Markets in the S&P got hit hard after the American Petroleum Institute (API) reported that Crude Oil Inventories had another huge build of 3.8 million Barrels which initially knocked both WTI and the S&P. However they have since rebounded strongly.
In other news which certainly affected the European Markets was unscheduled comments from the ECB’s Mersch who said do not assume that the ECB will increase stimulus at it upcoming March 10 meeting.
This morning on the economic front we have German, Euro-Zone and UK Markit Services/Composite PMI at 8.55 am, 9.00 am and 9.30 am respectively. This is followed at 10.00 am by Euro-Zone Retail Sales. At 1.15 pm we have the US ADP Employment Change and this number will be closely watched by the markets for any clues ahead of this Friday’s Non-Farm Payrolls Report. At 2.45 pm we have the US Markit Services/Composite PMI. Finally at 3.00 pm we have the ISM Non-Manufacturing.
March S&P 500
Already this morning the S&P has traded in a 18 Handle range from a low of 1885.50 to a recent rebound high so far at 1903.50. This S&P still has a ‘Open Gap’ from 1879/1892 from last Friday’s huge move higher while yesterday the S&P left another large ‘Open Gap’ from Monday’s close at 1929 to yesterday’s Chicago high print at 1910. I would expect yesterday’s Gap to be filled sooner rather than later especially with the McClellan Oscillator still closing in positive territory at +61 from Monday’s close at +168. Most of my indicators are still on a buy despite yesterday’s 2% fall and with the NFP data due on Friday I would not chase this market lower from here.
Yesterday my S&P plan worked well as shortly after I posted the S&P traded lower to my 1910 buy level before having a nice 10 Handle rally which enabled me to cover this position at my 1917 T/P level as outlined earlier to my Platinum Members and I am now flat. Today I will continue with my strategy of buying dips especially if the S&P can hold above the key 1888 support level mentioned yesterday. However for the S&P to regain its upward momentum it needs to break and close over 1916. Today I will look to buy the market on any dip lower to 1889/1895 with a 1883 stop. Again if I am taken long and subsequently stopped out of this position I will use my 5 Handle Rule to go long again with a stop below whatever new low is printed. I do not want to be short the market at this time especially as in my opinion Oil does not look comfortable in trading below $30.
EUR/USD
No change as I am still a buyer on any dip lower to 1.0840/1.0870 with the same 1.0795 stop. I still do not want to be short the Euro at this time especially after reading Mersch’s comments yesterday.
March Dollar Index
No change as I am still a seller on any rally higher to 99.45/99.75 with a 100.05 stop.
March DAX
My DAX plan worked well yesterday but you have to quick to take profit or otherwise it just evaporates. Yesterday after I posted the DAX traded lower to my 9605 buy level before having a quick 70 point rally which enabled me to T/P on this position at 9640 as emailed earlier to my Platinum Members and I am still flat. The DAX is really underperforming the other major Indices with the market only trading 200+ points above its key 9250/9300 support level which was tested two weeks ago. Certainly the comments from ECB’s Mersch yesterday did not help sentiment Today I will again look to buy the DAX on any dip lower to 9370/9430 with a 9325 stop. If I am taken long and subsequently stopped out I will be a more aggressive buyer in front of 9280 with a 9210 stop.
March FTSE
My FTSE plan did not work out yesterday as shortly after I posted the FTSE traded lower to my 5895 buy level before stopping me out at my revised stop at 5855 and I am now flat. As mentioned in Monday’s commentary the FTSE has very strong support from 5600/5750 which I just cannot see getting broken at this time. Today I will again look to buy the market from 5770/5810 with a 5745 stop.
Dow Rolling Contract
My Dow plan also worked well yesterday morning but just like the other markets above you have to quick to take profit. Yesterday after I posted the Dow traded lower to my 16265 buy level before rebounding to a 16340 high print which enabled me to cover this position at my 16310 T/P level as outlined in an email to my Platinum Members and I am now flat. Incredibly the Dow traded down to a 16045 low print overnight before rebounding 200 points this morning. Today I will again look to buy the Dow from 16090/16160 with a 16030 stop which is just below the overnight low print. Given the fact that the MO is in positive territory I do not want to be short the market at this time.
March BUND
My BUND plan worked well yesterday with the BUND hitting my 163.64 sell level after the equity markets were slammed. Subsequently the BUND traded lower which enabled me to T/P on this position at 163.44. This morning with the BUND opening higher I have gone short again at 163.70 with a 164.10 stop. I will also be a small buyer on any dip lower to 162.50/162.90 with a tight 162.30 stop.
Gold Rolling Contract
No change as I am still a buyer on any dip lower to 1106/1114 with the same 1099 stop.
Silver Rolling Contract
No change as I am still long at 14.30 with the same 13.95 stop. I will look to T/P on this position at 14.60.
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