US equities have started 2018 on a positive note with technology shares leading the way. Core global Bond Yields are higher with 10y UST up 5.8bps to 2.457% and the US Dollar has started the new year in the same way it ended 2017, weaker across the board. The NASDAQ closed above the 7000 mark for the first time ever, climbing 1.50% on the day and highlighting the currently insatiable demand for technology shares. S&P500 closed at +0.83% and DJ was +0.42%. Early in Europe, major regional equity Indices started 2018 in negative territory with insurance stocks, and consumer and luxury goods companies weighed dragging the Indices lower.
To mark my 1500th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2750 for my Platinum Service which includes 1 to 4 updated emails throughout the trading day This offer is open to both new and existing members and if anyone is interested in this offer can you please email me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it made 50 points yesterday on the first trading session of 2018, having made 946 points in December, 823 points in November and 657 points in October. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points.
I have a YouTube Channel which contains recent interviews I have given. This can be viewed by clicking HERE. Please subscribe to this for new interview notifications.
The move higher in core Bond Yields started in Europe with solid final PMIs serving as a reminder that the all is well in the Euro-Zone economy. But expectations of heavy investment grade issuance during January appear to have been the main driver for the steepening of the curves. According to Bloomberg IG issuance totalled $7.35b, including $2.2b from Berkshire Hathaway Energy.
US Dollar weakness remains the big theme in currencies with BBDXY recording its fifth consecutive day of negative returns. The USD has begun 2018 weaker against all G10 and most EM currencies with the South African Rand the notable underperformer.
Euro strength has been one factor behind the recent USD weakness with the Euro recording its fifth consecutive day of gains. The pair currently trades at 1.2057, after reaching an intra-day high of 1.2081 and is up 0.35% over the past 24 hours. Although final European PMI’s came in line with expectations (Eurozone manufacturing at 60.6), the readings suggest a solid expansion remains on the cards for the European economy.
Meanwhile the Norwegian Kroner (+0.96%) and Sterling (+0.69%) have the led the gains in G10. Norway’s December manufacturing PMI beat expectation (57.8 vs 57 exp.) supporting NOK while Sterling’s gains came notwithstanding a disappointing manufacturing PMI reading for December ( 56.3 vs 57.9 exp.). Instead, Sterling gains appear to have been driven by a sell-off in UK Gilts with the 10y rate climbing 9.70bps, partly unwinding the end of the year rally. Cable now trades at 1.3597, after briefly trading at 1.3600, its highest level since late September.
Amid a broadly weaker USD, the AUD has consolidated gains achieved after yesterday’s better than expected China Caixin Manufacturing PMI (51.5 vs 50.7 exp.). Before the PMI release, the Aussie briefly traded to an intraday low of 0.7795, then overnight it reached a high of 0.7845 and now it has settled at 0.7831. NZD on the other hand is little changed, currently trading at 0.7110, up 0.06% over the past 24 hours.
In spite of the soft USD environment, the start of 2018 for commodities has been mixed. Iron ore and steam coal are up around 2%, Gold is up 0.63% and at $1,315 an ounce, it now trades at its highest level in 15 weeks. But on the other end of the spectrum Brent and copper are down 0.42% and 0.62% respectively, not a big deal at this stage after recording gains over 5% in December.
In other news, South Korea has opened the door to North Korea and it has offered to meet to discuss the Winter Olympics and Kim Jong’s nuclear programme, an overture that could clash with U.S. efforts to isolate Pyongyang.
This morning on the Economic Front we have German Unemployment at 8.55 am and this is followed by UK Construction PMI at 9.30 am. Next we have US Construction Spending and ISM Manufacturing at 3.00 pm. Finally at 7.00 pm we have the FOMC Minutes from the December Meeting.
March S&P 500
My S&P plan worked well as the market reversed all of Friday’s loses to trade higher to my 2688 sell level before selling off to my 2683 T/P level and I am now flat. There is no doubt that equity markets are continuing the theme of 2017 where traders bought every dip. The late sell-off on Friday looked to be meaningful especially as we had a large Downside Key Day Reversal but yesterday the market just took off after the Futures markets re-opened on Sunday evening with the S&P leaving a large ‘’Open Gap’’ from Friday’s Chicago close at 2668.25 to yesterday afternoon’s Chicago low at 2681. The S&P has resistance at Friday’s all-time high at 2698.25 ahead of the next resistance at 2706 and then 2713. Today I will again look to sell the S&P on any move higher to 2705/2712 with a 2718 stop. The fact that the S&P closed over 2680 is bullish and I will now move my buy level higher to 2675/2681 with a 2670 stop.
EUR/USD
I am still flat the Euro which continues to follow my roadmap by trading higher with the Euro within touching distance of the 2017 high at 1.2092. Today I will now move my buy level higher to 1.1950/1.1990 with a 1.1920 stop. I still do not want to be short the Euro at this time.
March Dollar Index
The Dollar eventually traded lower to my second buy level at 91.50 to add to my 92.00 buy level from late Friday. Thus I am long at an average rate of 91.75 with the same 91.20 stop. I am nervous with this position and today I will leave my T/P level unchanged at 91.80. If either of the above scenarios plays out I will be back with a new update for my Platinum Members.
March DAX
Frustratingly the DAX just missed my 12730 buy level with a 12733 low print before following the NASDAQ higher to rally by 150 points and I am still flat. As I mentioned yesterday the 12700 support level is key as break and close below here for a few days could well signal the end of the 8 year bull market for the DAX. With this in mind I will now raise my buy level slightly to 12690/12750 with a 12640 stop.
March FTSE
I am still flat the market and today I will now raise my buy level to 7510/7545 with a 7480 stop. The continued strength in Sterling is weighing on the FTSE even though we are trading near all-time highs. However I still do not want to be short the market at this time.
Dow Rolling Contract
In contrast to both the S&P and NASDAQ yesterday the Dow struggled which was a surprise especially when you see how weak the US Dollar is trading. I am still flat the Dow and today I will now raise my buy level to 24610/24680 with a 24550 stop. The Dow has strong resistance at the psychological barrier of 25000 and today I will be a small seller on any rally higher to 25050/25120 with a 25180 stop.
March NASDAQ
In hindsight I should have held on to Friday’s late buy level at 6400 as the market rallied strongly yesterday to close at a new all-time high over 6500. Given how overbought the US Indices are trading I am not comfortable in chasing this market higher and today I will only raise my buy level to 6395/6445 with a 6360 tight stop.
March BUND
The BUND tried to rally after the market re-opened yesterday morning before running into more selling following the stronger than expected PMI data across the Euro-Zone. I am still flat the BUND and today I will be a small buyer on any further dip lower to 160.40/160.80 with a 160.10 stop. Given how oversold the BUND is trading I do not want to be short the market at this time.
Gold Rolling Contract
Gold started off the New-Year on the front foot after its huge rally off the December low of 1236 to currently trade at 1317. Gold is now overbought having had only one negative trading session in the past three weeks. Although the market is overbought the downside is likely to be limited and as a result I will now raise my buy level to 1294/1301 with a 1288 stop.
Silver Rolling Contract
Silver has strong resistance from 17.35/17.70 and a break and close above here could well be a long term buy signal after months of sideways to lower price action. I am still flat and reluctant to chase this overbought market and as a result will only raise my buy level slightly to 16.70/17.00 with a 16.40 stop.
Recent Comments