Yesterday morning markets in Asia had finished in a distinctly ‘risk off’ frame of mind, and that sentiment extended throughout the European and US trading sessions. US stocks closed with Indices averaging losses of 1% following on from the 2.5% loss in the German DAX. Treasury Yields are back at their lowest levels in over a month, while 10 Year German Bunds have dipped back below 10bps for the first time since April 2014 when they hit a record low of 0.074%.
To mark my 1000th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2500 for my Platinum Daily Commentary which includes 1/4 updated emails throughout the trading day. This offer is open to both new and existing members and if anyone is interested please email me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it made 225 points yesterday and is now ahead by 290 points for April, having made 2265 points in each of the previous two months and a record 3365 points in January. Since I started this service it has made over 22,000 points.
There was no obvious catalyst for yesterday’s sell-off, rather I would gauge that stock investors are retreating back into their shells ahead of the US first Quarter earnings season that kicks off in earnest next Monday with Alcoa the first company to report. The consensus is for earnings of S&P500 Companies to be on average 7.6% lower than the same Quarter of 2015.
In currencies USD/JPY has traded back below 110 for the first time since 31 October 2014. This was the day, recall, when the Bank of Japan surprised markets by raising the quantum of its QQE programme from Yen70trillion to Yen80trillion and which proved to be the inspiration for the run up above 120. The pressure is now on for them to do something similar on 28 April, amid deepening scepticism that can succeed and bearing in mind that the EUR/USD is currently trading some 4% stronger than the day before the ECB launched its cocktail of additional easing measures on 10 March.
BoJ Governor Kuroda hinted at more easing to come in Parliamentary comments yesterday, but he made no impression on markets in doing so. Neither – more than momentarily – did Chief Cabinet Secretary Suga who told the press he was watching FX level movements with a ‘sense of urgency’.
Market moves have come largely despite not because of incoming economic data, though downward revisions to Euro-Zone PMI’s relative to the ‘flash’ estimates did resonate somewhat in Europe. The Non-Manufacturing ISM Report did not show quite the uplift of its Manufacturing sector brethren from last Friday, but at 54.2 which was up from 53.4, it just exceeded expectations. The JOLTs (Job Openings) Report was a little softer than expected but remains at an extremely elevated level, while the ‘quit rate’ – beloved by Janet Yellen – rose to 2.1% from 2.0%. Against this , a wider than expected January Trade Deficit – in real as well as nominal terms – has the Atlanta Fed downgrading its ‘GDP Now’ estimate of first Quarter growth to 0.4% from 0.7% last Friday.
AUD/USD is the worst performing G10 currency of the past 24 hours, followed by Sterling where ‘Brexit’ concerns appear to moving back to the fore.
This morning markets are opening in positive territory following the better than expected China Caixin Services PMI data which printed 52.2 from 51.2 last month. Just after 7.00 am we had the release of German Industrial Production which came in a -0.5% versus -1.3% expected. However the continued weakness in USD/JPY has seen the Nikkei close lower at 15,715. The only other data of note due on either side of the Atlantic is the release of the March FOMC Minutes at 7.00 pm. Risk is that they do not come across as dovishly as the Post – Meeting Statement or Fed Chair Yellen’s subsequent speech.
June S&P 500
The S&P plan worked very well yesterday as after the market traded lower to my 2041 buy level the S&P had a nice rally which enabled me to cover this position at my 2047 T/P level. Subsequently I emailed all my Platinum Members to re-buy the S&P on any dip lower to 2038 which we did before the market again rallied which enabled us to cover this position at 2044 and I am now flat. I would expect the S&P to trade in a narrow range ahead of the FOMC Minutes and today I will again look to buy the market on any dip lower to 2035/2040 with a 2029 stop. My only interest in selling the market is still on a rally higher to 2062/2068 with a 2073 stop.
EUR/USD
Finally after a few close attempts over the past few trading sessions the Euro traded lower to my 1.1340 buy level before having a subsequent rally back over 1.14 which enabled me to cover this position at my 1.1380 T/P level and I am now flat. Today I will again look to buy the Euro on any dip lower to 1.1290/1.1330 with the same 1.1260 stop. I still do not want to be short the Euro at this time as I still believe the Euro will trade higher to at least 1.18/1.20 over the coming months.
June Dollar Index
No change as I am still a small seller on any rally higher to 95.25/95.60 with a 95.90 stop. Following last month’s downside Key Month Reversal I do not want to be long the Dollar at this time.
June DAX
My DAX plan also worked well yesterday. As I was already long both the FTSE and S&P I waited to buy the DAX to near the bottom of my buy range at 9590. Subsequently the market traded lower to 9550 before turning around and this rally higher enabled me to cover this position at my revised 9640 T/P level and I am now flat. Today I will again look to buy the DAX on any dip lower to 9490/9530 with a 9450 stop. Despite the negative price action I do not want to be short the DAX at this time.
June FTSE
My FTSE plan did not work out as just as I posted the FTSE got hit hard with the market quickly trading lower to my 6045 buy level before stopping me out of this position at 601. Subsequently I emailed my Platinum Members to re-buy the FTSE at 6005 before the market rallied which enabled me to cover this position at 6040 and I am now flat. I must say I am surprised how weak the market is considering the weakness of Sterling. Today I will again look to buy the market on any dip lower to 6000/6040 with a 5970 stop.
Dow Rolling Contract
My Dow plan also worked well yesterday with the market quickly trading lower to my 17590 buy level after I posted. Subsequently when the US markets opened the Dow traded back above 17700 which enabled me to cover this position at my 17640 T/P level and I am now flat. Worryingly for the Dow the McClellan Oscillator continues to weaken closing at -126 last night. This should not be happening with the stock market so close to all-time highs. Given the fact that we have the FOMC Minutes this evening I will again look to buy the Dow on any dip lower to 17550/17610 with the same 17495 stop. As shown despite all the negatively it is still difficult to be short the markets for more than a few hours before the market rebounds.
June BUND
My short 164.00 Bund position taken early yesterday morning did not work out as I was stopped right at the highs of the day at 164.40 and I am now flat. Today I will again look to sell the Bund on any rally higher to 164.60/164.90 with a 165.30 stop. The fact that Bund Yields are so near their all time high from April 2014 it would not surprise me if we break this level and trade into negative territory.
Gold Rolling Contract
I still do not trust this rally in Gold and as I do not have an edge in this market at this time while also not seeing a good risk/reward trade I am going to leave my buy level unchanged at 1191/1199 with a 1183 stop.
Silver Rolling Contract
The main Moving Averages for Silver come in around the 14.50/14.75 level and I would expect Silver to hold this area before rebounding. I am still flat and today I will move my buy level slightly higher to 14.65/14.90 with the same 14.20 stop.
If anyone is interested in attending my monthly talk in IG Index offices’s tomorrow evening at 6.00 pm you can register here
https://www.ig.com/uk/whats-driving-the-markets-today.html
Recent Comments