U.S. Treasuries slipped, pushing Bond Yields higher, after a surprisingly strong Employment Report cemented market expectations for the Federal Reserve to pause after three straight Interest Rate cuts. A weak manufacturing report helped limit the day’s losses. Traders trimmed bets on further 2019 Fed easing after the labour report showed the U.S. added 128,000 jobs in October, exceeding the consensus forecast for an 85,000 increase. Shorter maturities led declines Friday, pushing the yield curve flatter. The solid employment report comes after U.S. policy makers on Wednesday lowered rates, as expected, for the third straight meeting and hinted at a pause. The strength of Friday’s jobs data reinforces that message, though a continued deterioration in the global economy will likely keep yields capped. Fed Vice Chairman Richard Clarida on Friday said the economy and the Central Bank’s policy are “in a good place.” This helped Equity markets with both the S&P and NASDAQ closing at new all-time highs. Commerce Secretary Wilbur Ross expressed optimism the U.S. would reach a “Phase One” trade deal with China this month and said licenses would be coming “very shortly” for American companies to sell components to Huawei Technologies Co. Trump told reporters Sunday a trade deal, if completed, will be signed somewhere in the U.S., with a new venue being sought in the wake of the Chile APEC summit being cancelled.
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For anyone following my Platinum Service it was flat on Friday on the first trading session for November having made 1649 points in October, 1620 points in September, 2387 points in August, 1153 points in July, 1346 points in June,1722 points in May, 955 points in April and 1027 points in March. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
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The S&P 500 Index rose 1% on Friday to close at a new record high of 3066.
The VIX fell 7% to close near year-to-date lows of 12.30.
The Dow Jones rose 303 points for a 1.1% gain to close at 27347.
Here is a summary of the main Changes in F.X. Markets:
The Japanese Yen was flat at 108.23 per dollar.
The offshore Yuan held at 7.0388 per dollar.
The Euro bought $1.1169.
The Pound was steady at $1.2935.
The yield on 10-year Treasuries gained two basis points to 1.71% on Friday.
The German Bund closed flat at -0.41%
Gold added 0.1% on Friday to $1,514.34 an ounce.
West Texas Intermediate crude on Friday gained 3.7% to $56.20 a barrel.
This morning on the Economic Front we have German, Euro-Zone and UK Markit Manufacturing PMI at 8.55 am, 9.00 am and 9.30 am respectively. This is followed at 10.00 by Euro-Zone Sentix Investor Confidence at 10.00 am. Finally, we have ISM New York Business Confidence and Factory Orders at 2.45 pm and 3.00 pm respectively.
December S&P 500
Unfortunately the S&P just missed my initial 3032 buy level before rallying to close 30 Handles higher at 3066 and I am still flat. With the Dow closing just shy of its July 16 high the negative divergence between the main Indices looks like ending and made lead to a blow-off top in the U.S Indexes before we finally get the long -awaited crash. The S&P is now severely overbought with resistance from 3082/3095 where I will be a seller with a 3103 stop. I will also raise my buy level to 3040/3050 with a 3029 stop.
I am still flat the Euro which again just missed my buy level after the release of the stronger than expected NFP data. It is interesting that the Dollar weakened on these numbers and as a result I will now raise my buy level to 1.1100/1.1140 with a higher 1.1065 stop.
December Dollar Index
I am still flat the Dollar and today I will now lower my sell level to 97.45/97.85 with a lower 98.15 stop.
The DAX is struggling to follow the US Indices higher which is no surprise given the renewed strength in the Euro. I am still flat and today I will raise my buy level to 12800/12880 with a 12730 stop. The DAX has strong resistance from 13110/13180 and I will be a seller on any rally to this area with a 13235 tight stop.
Frustratingly the FTSE just missed my initial 7225 buy level by a few points to current trade at 7290 as I go to press. Today I will raise my buy level slightly to 7210/7250 with a 7170 stop. I still do not want to be short the market at this time.
Dow Rolling Contract
The Dow closed 300 points higher on Friday as the market hit a three- month high. Internally the market is not as strong as shown by the McClellan Oscillator which only closed with a reading of +50. This should not be happening with stock market at or close to all-time highs. Financials ended the week at their highest level since early 2018 and are also nearing a new record. Momentum in the Dow is slowing despite last week’s gains and we may see a further move higher above the July 16 high of 27398 when the Cash Markets open this afternoon. Be careful of a blow-off top which can quickly be reversed and it is why I am watching the VIX closely. Lat week’s Commitment of Traders Report showed that large Speculators in VIX Futures, the CBOE Volatility Index, are net-short 187.948 Contracts, which is a new record extreme. Speculators are certain that market volatility will remain low. Any sign of weakness in the stock market will catch these large Speculators in the wrong position at the wrong time. Today I will be a small seller from 27490/27640 with a 27705 stop. I no longer want to be long the Dow at this time.
No Change as I am still a seller on any further rally to 8240/8300 with an 8355 stop.
The BUND traded in a narrow range on Friday and I am still flat. I will now lower my buy level slightly to 170.60/171.00 with a 170.25 stop.
Gold Rolling Contract
Gold continues to lack direction as the market holds the key 1459 September low. I am still flat and today I will raise my buy level to 1485/1495 with a 1478 stop.
Silver Rolling Contract
I am still flat Silver and I will leave my 17.40/17.80 buy level unchanged with the same 17.15 tight stop. If I am taken long I will have a T/P level at 18.05.