Yesterday was a quiet trading session with a number of European Markets closed for the Accession Day Public Holiday as the market goes on hold ahead of today’s important US Non – Farm Payrolls. The highlight yesterday was US Initial Jobless Claims, which although they ticked up to +274K which was higher that the +260K expected the trend in Claims still remains low. The Swiss Franc was the biggest underperformer against the US Dollar following comments of the SNB taking advantage of thin European trade to sell the currency.
To mark my 1050th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2500 for my Platinum Service 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 firstname.lastname@example.org for details.
For anyone following my Platinum Service it made 35 points yesterday and is now ahead by 45 points for May, having made 2175 points in April. The previous three months saw gains of 2265 points for both February and March following a record 3365 point gain in January.
Equities were broadly flat yesterday with the S&P500 closing down slightly by 0.1% and the Euro Stoxx unchanged. The oil market saw a little bit more price action with WTI closing 1.5% to $44.43 a barrel. Initial gains were much larger with WTI reaching a peak of $46 a barrel on reports that Fires in Canada may affect more than 1m barrels a day of capacity, while in related news US oil production is now at its lowest level since September 2014 at 8.83m barrels a day although this is still very elevated in historic terms. The boost to oil helped commodity-linked currencies, particularly the Canadian which was unchanged against a mostly higher US Dollar, with the EUR/USD falling 0.7% to just below 1.14 from its 1.1620 high print last Monday.
Major Sovereign Bond Yields were mostly 3-5 basis points lower with US Treasuries down another 3bps to 1.74%. While there does not appear a single catalyst for the moves, the rally in US Treasuries followed the partial retracement in the oil price and could also possibly reflect some positioning ahead of today’s all important US NFP data. In this regard the move lower in Yield is not suggestive of a market expecting a 200K NFP print at 1.30 pm.
Just after the markets closed last night we had comments from Fed Member and non voter Kaplan whose more dovish remarks on wanting to see more evidence of inflation firming and more job markets improvement ran counter to the more hawkish comments from San Francisco Fed President Williams the previous day. Kaplan also noted that the ‘Brexit’ Referendum in June was a consideration.
This morning on the economic front we have German Construction PMI and Retail PMI at 8.30 and and 9.10 respectively. This is followed at 1.30 pm by US NFP data where the consensus is for 200K jobs to be created. As mentioned above Treasury Yields are not suggestive of a market expecting a 200K NFP print where as usual I will be looking at the Average Earnings component which to me is the most important and where the consensus is for a hefty 0.3% increase. Finally at 8.00 pm we have US Consumer Credit.
June S&P 500
The S&P plan worked well yesterday with the S&P trading lower to my 2048 buy level shortly after the US Markets opened before having a nice spike to 2055 which enabled me to cover this position at my original 2054 T/P level and I am now flat. Interestingly as we await the NFP data the S&P is trading near the bottom of its Daily Bollinger Band and Williams Index. As mentioned all week the S&P has strong support at 2040 then 2030 and the big one at 2007/2010 which is where the 200 Day Moving Average comes in. Initially on any major sell-off from here I would expect the 2010 level to act as strong support as I would be an aggressive buyer at this level with a 2004 stop. For today I am as usual going to stay flat until we get the NFP data. If the market rallies I will be a seller from 2058/2064 with a 2069 stop. My only interest in buying the market is on a dip lower to 2029/2034 with a 2024 stop. If I am taken long and subsequently stopped out of this position as mentioned above I will be a very aggressive buyer in front of 2010 with a 2004 stop.
The Euro traded lower to my average buy level at 1.1405. I am still long but I want to be flat ahead of the NFP data and I will cut this position before the release. Subsequently if the Euro trades lower after we get the Payroll data I will be a buyer from 1.1320/1.1360 with a 1.1275 stop. I have no interest in selling the Euro at this time.
June Dollar Index
I am still flat the Dollar following its upside reversal last Monday when we were long at 92.00. Today I will leave my buy level unchanged at 92.60/92.90 with a 92.25 stop.
This morning the DAX traded lower to my 9790 buy level and as I am already long both the Dow and FTSE I emailed my Platinum Members to exit this position at 9810 before the DAX spiked higher to 9840 and I am now flat. So far the 9750/9800 area is holding the market and today I will again look to buy the DAX on any further dip lower to 9720/9780 with a 9675 tight stop. I still do not want to be short the DAX at this level as the price action is telling me to try and buy dips in the market.
The FTSE traded lower to my 6070 buy level but unfortunately has so far missed my 6100 T/P level and I am still long. Today I will leave my stop unchanged at 6010.
Dow Rolling Contract
Late in the New York session the Dow traded lower to my 17620 buy level. I am still long but I will use any rally ahead of 1.30 pm to exit this position as I want to be flat ahead of the NFP release. Following the Payroll data I will again look to buy the Dow on any subsequent dip lower to 17490/17560 with a 17430 stop. Given the weakness of the Dollar I still do not want to be short the Dow at this time.
In hindsight I should have exited my short 162.65 Bund position yesterday morning before getting stopped out of this position after lunch at 163.20 as I was not comfortable in being short. The only good part of being stopped was it was a good stop as the Bund subsequently traded higher to close over 163.80. Today I will now look to buy the Bund on any dip lower to 162.90/163.20 with a 162.55 stop.
Gold Rolling Contract
No change as I am still a buyer on any dip lower to 1250/1258 with the same 1243 stop.
Silver Rolling Contract
Thankfully Silver rallied to a high of 17.65 after I posted yesterday morning as this rally enabled me to cover my long 17.50 position from last Monday at my 17.60 T/P level as outlined earlier to my Platinum Members and I am now flat. Today I will again look to buy Silver on any dip lower to 16.70/17.10 with a 16.35 stop.