A quiet past 24 hours, all things Sterling included even though we now have at least some idea of ‘’what happens next’’ on Brexit. Risk sentiment has been (very marginally) impaired from reports that a Trump-Xi meeting is looking unlikely before late April at the earliest. The US Dollar is weaker in DXY terms but this is largely on the back of the peeling back of the big New York afternoon Sterling gains on Wednesday, most of which occurred during our morning yesterday. The Euro closed unchanged at 1.1310. On Brexit, the motion that has won approvals in the House of Commons last night is the one proposed by the government itself and which now gives it the authority to request two things of the EU. One is a short extension of Article 50 (through no later than June) in the event that at the third time of asking (next week) Prime Minister May manages to secure parliamentary support for her Withdrawal Agreement. The second, if this fails, is that the government would seek a lengthier extension ‘’ to allow for the formulation of a new Brexit strategy’’ with an understanding this would likely mean the UK having to participate in EU elections scheduled for late May.
To mark my 1800th 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 To demonstrate this value, a monthly subscription over the same period would cost 4440 euro in total This offer represents a 38% discount and is open to both new and existing members. If anyone is interested in this offer can you please email me on bryan@tradernoblecom for details
For anyone following my Platinum Service it made 25 points yesterday and is now ahead by 450 points for March, having made 1013 points in February, 1671 points in January, 2803 points in December, 1541 points in November and 2094 points in October. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
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Sterling received a minor fillip on news of approval of the government’s motion, but ‘’cable’’ was up by no more than 20 pips and has now given back those gains and then some, hinting at a speculative market already long GBP and failing to find follow-through on the news.
My view is that there is still plenty of upside potential for GBP from here, but still just enough uncertainty around for there to be no rush to fully price in either a soft Brexit (and quite conceivably softer than implied by May’s own withdrawal agreement) or indeed no Brexit. This is in part since the tail risks of an eventual no-deal Brexit and/or a snap General Election, still cannot be completely eliminated.
On US-China trade talks, reports earlier in the day that a Trump-Xi meeting might not take place at least until late April, but which could be expanded to a full state visit rather than just a photo-op to sign a trade deal, were greeted with some disappointment. Since then, US Treasury Secretary Steve Mnuchin has been out on CNBC confirming that there will be no Trump-Xi meeting this month at least but that he is pleased with progress on trade talks.
More telling perhaps, have been reported comments from Trump’s former chief economic adviser Gary Cohn in a Freakonomics podcast, that the U.S. is ‘’desperate right now’’ for a trade pact with China as negotiators from both countries seek to reach a deal. ‘’The president needs a win,’’ Cohn said and that, ‘’The only big open issue right now that he could claim as a big win that he would hope would have a big impact on the stock market would be a Chinese resolution,’’ Cohn said of a trade agreement. ‘’Getting the trade deficit down will never say is easy, but of the issues on the table, that is relatively easier.’’
The US Indices closed basically flat across the board. However the Futures Market is indicating a higher open on Trade Optimism given the recent slowdown in China which forces them to reach an agreement with the US.
There were no top-tier data releases yesterday. US Home Sales for January were weaker than expected although the previous month was revised higher and there does look to be some underlying improvement here consistent with the recent fall in mortgage rates and a related pick-up in mortgage applications. Jobless Claims rose slightly more than expected to a 4-week week high, with the trend in the series suggesting a modestly weaker labour market over recent months.
The data, and indeed what other news there has been as per above, has had scant impact on either US equities or bonds, US indices closing little changed on the day while Treasury yields between 2 and 10 years are within half a basis point of where they were 24 hours ago. We are though seeing a little more steepening in the 10s/30s curve, with the long bond 3bps higher at 3.045% (and following what was a fairly poor 30-year auction on Wednesday).
This morning on the Economic Front we already had the release of German Wholesale Price Index which rose +0.3% versus -0.7% expected. At 10.00 am we have Euro-Zone CPI and this is followed at 12.30 pm by the New York Empire State Manufacturing Index. Next we have US Industrial Production and Capacity Utilisation at 1.15 pm Finally at 2.00 pm we have the JOLTS Job Openings and the University of Michigan Consumer Sentiment Index.
June S&P 500
The S&P traded in a narrow range yesterday with the market frustratingly missing my 2808 buy level with a 2808.50 low print before having a nice rally off this low and I am still flat. This morning the S&P is trading at 2819 on more optimism that we finally get a Trade Agreement between the US and China. As I mentioned yesterday, today is Quadruple Witching for the March Contracts and can be a difficult trading session. The S&P is due a pull-back having rallied over 100 Handles since last Friday but with the FOMC Meeting and Powell press conference next Wednesday, I would expect any sell-off to be reversed ahead of this key event next week. Today I will lower my buy level slightly to 2794/2804 with a 2786 stop. Meanwhile I will leave my 2836/2844 sell level unchanged with the same 2852 stop.
The boring action in the Euro continues and I am still flat. Today I will leave my 1.1230/1.1270 buy level unchanged with the same 1.1195 tight stop. Given the low DSI I still do not want to be short the Euro at this time.
June Dollar Index
I am still flat the Dollar and today I will also leave my 96.50/96.90 sell level unchanged with a 97.30 stop.
The DAX also missed my 11450/11510 buy level yesterday before having a late rally into the close and I am still flat. Today I will leave my buy range unchanged with the same 11395 stop. The March DAX expires this morning and we may see some volatility post this expiration and is another reason to leave my buy level from yesterday unchanged.
The FTSE is rallying on back of the Government vote to extend Article 50. I still believe we will have another Referendum. Today I will now raise my buy level to 7050/7090 with a 7015 stop.
Dow Rolling Contract
My Dow plan worked well yesterday with the market trading lower to my 25610 buy level with a 25609 low print. Subsequently the Dow rallied over 200 points to trade to an overnight high of 25823. Frustratingly in anticipation of my 2808 S&P buy level getting filled (incorrect as it turned out) I covered this long Dow position for a small gain at 25635 and I am still flat. Today I will again look to buy the Dow on any dip lower to 25450/25620 with a 25345 wider stop. Ahead of the weekend and the FOMC next week I do not want to be short the Dow at this time.
No change as I am still a seller on any further rally to 7360/7410 with the same 7465 stop. After rallying over 4% this week I still do not want to be long the NASDAQ at this time.
I am still flat the BUND and today I will raise my sell level slightly to 164.80/165.20 with a 165.55 stop.
Gold Rolling Contract
Gold fell short of my 1289 buy level with a 1292 low print before rallying back above 1300 this morning. Today I will now raise my buy level to 1283/1291 with a 1275 stop.
Silver Rolling Contract
After I posted yesterday Silver fell to a low of 15.13 before thankfully following Gold higher this morning. I am still long at 15.31 and today I will now lower my T/P level on this position to 15.41. I will also raise my stop to 14.93. If any of the above levels are hit I will be back with a new update for my Platinum Members.