Markets are now on high alert due to the potential destruction of much of this year’s Florida citrus crop as Storm Irma threatens to make landfall in southern Florida this weekend. Orange juice futures closed limit up in Chicago and one investment analyst is suggesting a damage bill from Irma that could top $130bn. Insurance stocks has been hit particularly hard, contributing to a fall of +/- 1% in the main US Indices. The immediate relevance of this for markets is that the US Federal Emergency Management Agency (FEMA) has said it will run out of money by Friday and so be unable to dole out cash related to Irma or the emergency aid required in Texas and other states as a result of Hurricane Harvey.
To mark my 1400th 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 can you please contact me on bryan@tradernoble.com for details.
For anyone following my Platinum Service it made 36 points yesterday and is now ahead by 188 points for September, having made 1560 points in August, 1096 in July, 1023 in June, 1076 in May, 1375 in April, 1335 in March, 1481 in February and 1734 in January. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1700 points.
Senate Republicans are to bring a bill to the Senate this afternoon to fund FEMA and say it will attach a debt limit bill to the proposed legislation. If it succeeds – though it will have to then pass in the House – it could then go some way to reversing one current source of downward pressure on the US Dollar via ever falling US Bond Yields which at 10 years have now dropped to their lowest level since November 11th last year. This is why AUD/USD has poked its nose back above 80 cents overnight (high of 0.8022, 0.7984 as I write). The NZD has for the first time in a while outperformed the AUD, helped in part by a positive result for the latest Global Dairy Trade auction (+0.3%). The kiwi has even pipped the yen to the top of the G10 leader board, though Gold continues to be the more obvious beneficiary of safe haven concerns related to North Korea than fiat currencies.
That said, there are so many moving parts to the US yields story at the moment there is no guarantee that other influences, including further scaling back of Fed tightening expectations, won’t continue to keep the US Dollar pressured in coming days and weeks. Yesterday, we have had Minneapolis Fed President Neel Kashkari saying that Fed rate hikes to date may have done real harm to the economy and Fed Board member Lael Brainard remarking that not only should the Fed be cautious about tightening policy further until the Fed is confident inflation is back on track, but also that the Fed would be comfortable with inflation moving modestly above target for a time. Brainard acknowledged the easing in financial conditions, but then said that Fed policy should not be the first line of defence against the build-up of financial imbalances.
The doves are in the ascendency as the moment and it’s futile to fight them, albeit I think the picture could look quite different by the time the FOMC convenes for its last meeting of the year in December.
This morning on the Economic Front we already had the release of German Factory Orders which came in very weak with a -0.7% print versus +0.2% expected. This is followed at 1.30 pm by US Trade Balance and at 2.45 pm by the Services PMI. Finally we have the ISM Non-Manufacturing Composite at 3.00 pm and the Fed Beige Book at 7.00 pm.
September S&P 500
The US Markets certainly opened with a bang after the return of traders to their desks following the Labour Day Weekend with the S&P at one stage trading to a 2444 low print before spending the rest of the day trading sideways to higher in to the Chicago close. In times of extreme volatility that we have witnessed over the past few weeks my updated emails are key. Yesterday after the Dow had hit my initial buy level, the S&P also traded lower to my 2464 buy level and subsequently I emailed my Platinum Members to exit any long position for a breakeven and go flat. After I sent that email the S&P held up for the following 40 minutes before accelerating lower and I am still flat. As I mentioned in yesterday’s commentary the S&P has massive support from 2385/2430 and it will take a break and close below here for me to turn bearish. I am conscious that we are in the weakest trading month of the year and if the market is going to break lower then this is the month to do it. The fact that the US is facing its second major hurricane this weekend is another negative as this promises to be one of the strongest hurricanes on record. As shown by the way the S&P bounce off yesterday’s 2444 low print, short positions are still risky. This will change if we break last week’s 2421 low print. Today I will be a buyer on any dip lower to 2439/2445 with a 2434 stop. The S&P has a small ‘’Open Gap’’ from 2471/2473 and today I will be a small seller on any rally higher to 2470/2476 with a 2481 stop.
EUR/USD
The Euro continues to trade sideways but is still in a bull trend and I am still flat. Today I will move my buy level slightly higher to 1.1800/1.1845 with a 1.1765 stop. I will also raise my sell level to 1.2020/1.2060 with a 1.2090 stop which is just above the recent 1.2070 high print.
September Dollar Index
The Dollar sold off to my 92.20 buy level. As so many of my calls hit at or near the same time I emailed my Platinum Members to exit this position at 92.32 and I am still flat. I am surprised that the Dollar sold off again especially given the negative Daily Sentiment Index reading for the Dollar. The Dollar has very strong support at last week’s 91.50 low print. This level must hold or else we could see a further acceleration to the downside. Today I will again look to buy the Dollar on any dip lower to 91.45/91.80 with a 91.15 stop.
September DAX
My DAX plan worked well with the market trading lower to my 12055 buy level before bouncing and I used this rally to exit this position at my revised 12078 T/P level and I am now flat. The DAX is at a critical juncture with key support at 12000. If the DAX breaks and closes below here we could well see an acceleration lower to test the recent 11868 August low. Today I will again look to buy the DAX on any dip lower to 11960/12010 with an 11920 stop. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer in front of 11875 with an 11825 stop.
September FTSE
After the FTSE traded lower to my initial 7380 buy level I emailed my Platinum Members to only add to this position at 7350 which was subsequently filled. I am now long at 7365 with the same 7325 stop which is close to been executed as I post this commentary. If I am stopped out of this trade I will again look to buy the market from 7245/7285 with a 7215 stop.I will now lower my T/P level on this position to 7370.
Dow Rolling Contract
After the Dow traded lower to my initial 21855 buy level the market subsequently hit an initial 21798 low print before rallying back above 21850. After this rally I emailed my Platinum Members to exit this position for a small loss at 21840 and I am still flat. Subsequently the Dow tested its key 21700 support before rallying into the close. This 21700 is key for the short-term movement of the market as a break and close below here opens up the possibility of a quick move lower to the main 21500 support level. Today I will look to buy the Dow on any dip lower to 21670/21720 with a 21630 stop. I still do not want to be short the Dow at this time especially with the US Dollar so weak.
December BUND
Thankfully I made a mistake with my December levels yesterday as I said the December Bund was trading with an 11 point premium when in fact it has a 290 point discount. After some of my members pointed this out I said to cancel any order in the Bund and I am still flat. I am sorry for any confusion caused. With the BUND rolling at such a huge discount to the September Contract it is very difficult to be short even though Bund yields are near record lows. The Bund has strong support at 162.00 and today I will be a buyer on any dip lower to 161.80/162.15 with a 161.50 stop. I cannot believe I am saying this but I do not want to be short the Bund at this time.
Gold Rolling Contract
Gold just missed my 1323 buy level with a 1326 low print before rallying strongly on the back of the weaker equity markets. I am still not going to chase this market higher and I will leave my buy level unchanged from 1317/1324 with a 1311 stop.
Silver Rolling Contract
Just after I posted yesterday morning Silver traded lower to my 17.80 buy level before rallying to my revised 17.96 T/P level and I am now flat. Today I will again look to buy Silver on any dip lower to 17.50/17.80 with a 17.20 stop.
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