US Consumer Confidence rose more than expected when released yesterday with the survey result coming in at 96.5 versus the predicted 93.5. This was largely due to better labour market conditions and cheaper fuel costs allowing some leeway in household budgets to splurge in the Christmas Holidays. Positive prior month revisions also helped markets to return to a positive lean, although Europe was already in the black from the outset, following on from a robust Asian performance in the face of Monday’s negativity. Mainland European Bourses closed 2% higher while the UK was 1% stronger. The US Markets also closed with an average 1% gain.
For anybody following my New Platinum Service it lost 35 points yesterday but is still ahead by 2000 points for December. The previous six months saw gains of 1510, 1600, 2833, 2195, 1810 and 3045 points respectively. If anyone is interested in my Platinum Service please click on the Membership Link on my tradernoble.com website for details.
West Texas Oil bounced by 3% yesterday thus reversing Monday’s losses. This should come as some slightly better news for Saudi Arabia at least, as data showed that the Kingdom’s net Foreign Assets had declined for the 10th month in a row as the Country’s finances continue to worsen. Saudi Arabia’s Finance Minister also noted that he expected to tap international bond markets in 2016 to help address deficits. Gold closed up less than 1% while Iron ore continues to recover and is now trading at $42.30/tonne, as it creeps back from its $38/tonne lows two weeks ago.
The Australian Dollar was the strongest performer yesterday rising 0.7% against the US Dollar. Both the Canadian and New Zealand Dollars registered mild gains whereas every other main currency was down with Sterling again the weakest.
The Sterling story is an interesting one and contrasts with lots of optimism some six months ago – indeed there was even a decent chance that the Bank of England could hike Interest Rates ahead of the Fed. However the UK’s recovery has slowed and adding to this is the uncertainty hovering of a possible exit from the EU. Short term Sterling pessimism is also driven by concerns that the recent and ongoing floods in the North of England will hamper growth with the full insurance costs to be discovered.
In other news US 10-year Treasuries sold off sharply with an almost 8bps widening to 2.31% since this time yesterday morning. As well as the expected moves from positive equity markets, the weakest 5 year Auction since 2009 would not have helped and this is in addition to a weak 2-year sale on Monday ahead of the 7-year Auction today.
This morning on the economic front we already had the release of Spanish CPI which came in very weak at -0.3% versus -0.1% expected. This is knocking the European Markets lower. At 12.00 pm we have US Mortgage Applications. Finally at 3.00 pm we have US Pending Home Sales followed by the 7-Year Note Auction at 6.00 pm.
March S&P 500
I am not having much look with my S&P calls at this time as yesterday after the market traded higher to my 2068.50 sell level, I was stopped out of this trade near the highs of the day at 2074 and I am now flat. Yesterday’s large move higher has left a large ‘Open Gap’ from Monday’s close at 2047.50 to yesterday’s Chicago day session low at 2061. Internally the move yesterday was strong with the McClellan Oscillator closing with a positive reading of 163. The S&P cash close at 2084 is technically strong as it closed above its previous resistance at 2075. However we still have negative divergence as the Dow has yet to break and close over its key resistance at 17750. Today I will move my buy level slightly higher to 2051/2057 with a 2046 stop. If I am taken long and subsequently stopped out of this trade I will use my 5 Handle Rule to go long again with a stop below whatever new low is printed. Given that we are still in the seasonally strongest time of the year I do not want to be short the S&P at this time especially with the Cash Market settling over the key 2075 previous resistance point.
EUR/USD
Th Euro traded lower after I posted yesterday morning with the market eventually hitting my 1.0930 average buy level. I am still long and today I will raise my stop on this position to 1.0890 which is just below yesterday’s low print. If I am stopped out of this position I will be a more aggressive buyer on any further dip lower to 1.0800/1.0840 with a 1.0770 stop. Remember as mentioned at length in yesterday’s commentary a break and close over 1.1070 tomorrow will be a Key Month Reversal and extremely bullish for the Euro going into 2016.
March Dollar Index
The Dollar traded higher to my 98.40 sell level shortly after I went long the EUR/USD. Given the fact that I was already long the Euro I emailed all my Platinum Members to exit their Dollar short position at 98.20 and I am now flat. Today I again look to go short the Dollar on any rally higher to 98.60/99.00 with a 99.30 stop.
March DAX
The DAX having opened higher this morning is selling off on the back of the weaker than expected Spanish CPI released at 8.00 am. I am still flat the DAX and today I will raise my buy level slightly to 10680/10730 with a 10640 stop. I still do not want to be short the DAX at this time especially with the market closed tomorrow for the New Years Holiday.
March FTSE
No change as I am still a small buyer on any dip lower to 6150/6180 with the same 6125 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
As mentioned above the Dow tested but so far failed to close above the key 17750 resistance level. If the US Dollar continues to weaken then it will be only a matter of time before the Dow starts to outperform the European Indices especially the DAX. I am still flat the Dow and today I will move my buy level higher to 17560/17620 with a 17510 stop.
March BUND
Unfortunately the BUND got hit hard shortly after I posted yesterday morning as it followed the US 10-year Treasuries lower. I am still flat the BUND and today I will lower my sell level to 158.45/158.85 with a 159.15 stop.
Gold Rolling Contract
Gold continues to trade heavy and today I will lower my buy level to 1050/1058 with a 1044 stop.
Silver Rolling Contract
No change as I am still long at 14.27 with the same 13.80 stop.
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