Yesterday was another trading session marked by generally limited moves in currencies – the Pound the exception – Bond Yields have been steady-to lower on net, equities down smalls with commodities mixed. Oil has given up some of the gains from earlier this week, iron ore and Chinese steel prices rose yesterday, as did base metals overnight, pretty much across the board in a solid session. After testing into the 0.78s yesterday, two way trade saw Aussie maintain a 78 handle overnight and this morning remains in yesterday afternoon’s range, the USD also hovering ahead of the CPI. There has also an earthquake/tremors in North Korea, an earthquake registering 2.9 on the Richter scale (the quake was 6.3 when the H-bomb was detonated last month) suggesting perhaps natural forces. The USGS could not say whether it was caused by natural forces or man-made.
To mark my 1450th 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 email me on email@example.com for details.
For anyone following my Platinum Service it made 22 points yesterday and is now ahead by 270 points for October, having made 447 points in September, 1560 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 1600 points.
US Treasury yields were somewhat higher in the wake of a higher than expected print on core Producer prices for September (0.4% vs 0.2% expected) ahead of CPI this afternoon, but then Bonds rallied again. That upstream domestically-produced goods inflation measure also came with a lower than expected reading on US Jobless Claims at 243K, back into its pre-Hurricane range.
Speaking yesterday was Fed Governors Powell and Brainard separately, Brainard on a panel with Draghi and Bernanke at the Peterson Institute in Washington. She noted that temporary factors have been at work holding back inflation of late, but they were last year pushing inflation up. She was downplaying the importance of the Phillips curve (wage vs unemployment). Draghi likewise spoke of some improvement in the European labour market and wages, but it has not been enough. He reiterated the ECB’s guidance on QE and interest rates. This had me wondering whether the market might be expecting too much in the way of tapering at the upcoming October 26 ECB meeting. Bernanke was suggesting that with low rates and trouble missing inflation targets, Central Banks target the price level not inflation, essentially keeping rates lower for longer to account for inflation misses.
Meanwhile Powell has been speaking, but on Emerging Markets and not saying much at all directly on US monetary policy. He of course is one of the candidates to replace Yellen. Speaking to reporters last night, White House Chief of Staff Kelly said that those interviewed were first round choices but that “we still have more to come”, decision timing “some time away”. Mnuchin said in a CNBC interview that it should happen within a month. Trump interviewed John Taylor Wednesday.
Back to the Pound. As the London market opened, Sterling was under some pressure as the currency focused back on the Brexit divorce bill/trade deal impasse, Barnier reporting. But it did a swift about turn on a report in German newspaper Handesblatt that Barnier may offer the UK a two year transition period to remain in the EU. Sterling has had a 1-1½ big figure range and is up a net 0.67% from yesterday morning.
This morning on the Economic Front we already had the release of German CPI which came in at +0.1% as expected. We have no other data from either the Euro-Zone or the UK. Markets then will be fixated on the US core CPI (the new payrolls in the importance stakes)which will be released at 1.30 pm. Headline CPI is expected to have risen 0.6% form gasoline prices. Core is forecast to rise 0.2% for the second month after a run of lower growth. What will the CPI say about the extent of recent “transitory” influences? And are there other hurricane effects beyond gasoline. Also at 1.30 pm we have US Retail Sales and this is followed at 2.00 pm by the US Budget Statement. Finally we have the University of Michigan Consumer Sentiment and Business Inventories at 3.00 pm.
Finally there’s another slew of central bank speakers today and over the weekend, 13 by my reckoning and including central bank heads Yellen, Kuroda, Zhou, and Patel on panels. Yellen is not speaking until 2.00 pm on Sunday.
December S&P 500
The markets traded in another sideways range with little or no movement ahead of the US CPI and Retail Sales at 1.30 pm. Meanwhile the CNN Greed & Fear Index has fallen to 77 from last week’s multi-year high of 95. The S&P did just miss my 2555 initial sell-off before selling off small and I am still flat. Given all the extreme sentiment reading as alluded by me over the past two weeks I will leave my sell level in the S&P unchanged from 2555/2562 with the same 2567 stop. Today I will now raise my buy level slightly to 2531/2537 with a 2526 stop. Again if I am taken long and subsequently stopped out of this position I will be a more aggressive buyer on any further dip lower to 2506/2514 with the same 2500 stop.
The Euro traded lower to my initial 1.1830 buy level before having a small 20 point rally. As I wanted to bank some points for yesterday’s trading session I covered this position at my revised 1.1843 T/P level and I am now flat. I would expect volatility to pick-up once we get the US CPI release and today I will again look to buy the Euro on any dip lower to 1.1755/1.1790 with a 1.1720 stop. I still do not want to be short the Euro at this time.
December Dollar Index
Finally the Dollar traded higher to my 93.05 sell level yesterday afternoon. Again as I want to continue with my theme of banking points when available I emailed my Platinum Members to exit this position at 92.96 or lower and I am now flat. Today I will again look to sell the Dollar on any rally higher to 93.35/93.75 with a 94.05 stop.
The sideways boring action continues for the DAX which has now been stuck with a 900 handle for nearly two weeks. I started trading the DAX in 1998 when volatility ceased on UK Interest Rates and I have never before seen such lack of action in the DAX which is traditionally one of the most volatile contracts to trade. Today I will raise my buy level slightly to 12845/12895 with a 12810 stop. I still do not want to be short the market at this time.
I would have thought the reversal in Sterling would have led to a sell-off in the FTSE but for once the market did not react to a move in the currency. I am still flat and today I will leave my buy level unchanged from 7425/7460 with the same 7395 stop.
Dow Rolling Contract
Frustratingly the Dow missed my 22890 sell level with a 22886 high print before having a nice 70 point sell-off and I am still flat. There is no point in me reiterating the extent of the extreme bullishness towards the Dow and the rest of the US Indices as we have to be patient for a sell extreme as this melt-up continues. The Dow has very strong resistance at 22950 and a break and close over here opens up the possibility of a further move higher to 23850. I would not bet against this move happening after we finally get an initial sell-off before the market re-groups for the ‘’Santa’’ rally. Today I will continue to be a seller from 22890/22965 with a 23020 same stop. I will continue to be a buyer on any dip lower to 22590/22660 with a 22530 stop.
Unfortunately the Bund also missed my 161.10 buy level with a 161.16 low print shortly after I posted and I am still flat. The Bund is back trading above 161.40 which is bullish and has to be respected. I am tempted to buy the market but will wait in case we get any surprises from the US CPI this afternoon. Therefore my buy level will only rise slightly to 160.90/161.25 with a 160.60 stop.
Gold Rolling Contract
I am still flat Gold. In light of ‘’Bitcoin’s’’ incredible near $1000 rally to an overnight high at 5800 from yesterday morning’s sub 4800 price level, I will now raise my sell level slightly in Gold to 1312/1320 with a 1326 stop. I will also raise my buy level to 1274/1281 with a 1268 stop.
Silver Rolling Contract
I am still flat Silver and today will raise my buy level also to 16.80/17.10 with a 16.55 tight stop.