It has been a risk on past 24 hours with US equities leading the gains within developed markets. A better than expected January US Retail Sales print has been one supporting factor despite downward revisions to what was already a soft December number. The US Dollar is broadly softer with Sterling the big mover amid speculation Prime Minister May has secured some EU concessions ahead of her Brexit deal vote this afternoon. US Treasury yields are 1bps higher along the curve and both antipodean currencies have enjoyed a small uplift given the overnight improvement in sentiment.
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 140 points yesterday and is now ahead by 382 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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US equities started the week on a positive tone boosted by a better than expected January US Retail Sales print ahead of the opening bell. The Core Control reading came at +1.1% m/m against +0.6% expected, nevertheless the December reading was revised lower to -2.3% against an initially reported -1.7% m/m. The data suggest the Q4 GDP print is likely to be revised lower and more importantly it suggests subdued US Consumption in Q1 which is likely to weigh on Q1 GDP calculations. So after a tax induced boost in 2018, the US consumer is showing signs of cautiousness in 2019.
That being said, gains in US equities were led by the IT sector with the NASDAQ closing up 2.02% compared to 1.47% by the S&P 500 and 0.7% for the Dow. News that Nvidia agreed to buy a competitor boosted Semiconductors while the lag in the Dow reflected the 5.67% decline in Boeing shares following news of another 737 Max crash on Sunday.
Earlier in the session, European equities closed higher notwithstanding weaker than expected German Industrial Production figures for January ( -0.8% m/m against +0.5% expected).Worth noting however that Industrial Production did beat expectations for France (+1.3% m/m), Italy (+1.7% m/m) and Spain (2.4%)
The improvement in risk sentiment has seen the US Dollar ease up a little over the course of the past 24 hours with the DXY and BBDXY indices down 0.07% and 0.12% respectively. The Pound has been the big mover within G10 in what has been a pretty volatile couple of days amid conflicting Brexit news. Yesterday during the morning session rumours were circling around over the possibility PM May could resign amid lack of support for her Brexit deal within her Conservative Party and no concessions from the EU. But overnight, the PM fortunes appear to have turned a corner amid speculation she may have managed to secure some concessions from the EU. Importantly as well, after some hearsay that a vote on her deal could be withdrawn, the government confirmed that the vote will go ahead this afternoon and it also confirmed plans for a vote on avoiding a no-deal Brexit on Wednesday and another on Thursday to decide on whether to extend the Article 50 deadline will still take place.
Late last night the BBC reported senior members of the Brexit-supporting European Research Group of MPs had been summoned to see the Chief Whip and later on we also had confirmation PM May was getting on a plane to Strasbourg for last minute talks with the EU’s Juncker, a possible sign that progress had been made in the negotiations ahead of the vote in parliament. It has been announced this morning that Prime Minister May has secured ‘’Legally Binding’’ changes to the Brexit deal. The PM said changes meant the Irish Backstop which is the insurance policy designed to avoid a hard border in Ireland, could not ‘’become permanent’’
This is a big breakthrough for as we wait for the vote to see whether she can get her deal over the line. Sterling is likely to remain volatile over the next few days, that said I still have a bias for GBP to end higher mainly because I believe Parliament is opposed to a no-deal crash out Brexit which should put a floor under the Pound. If PM May gets her deal through (less likely outcome) this would be very positive for the pound, but an extension and avoidance of a hard Brexit should still be good news for Sterling.
After toying with a move below 70c on Friday afternoon, AUD has been enjoying a small recovery with the improvement in risk appetite the main supporting factor, AUD now trades at 0.7070, close to its overnight high of 0.7081 . Meanwhile The Euro is a touch higher at 1.1260.
In other news, President Trump released the government’s plans for a $4.7tn federal budget in 2020, including an increase in funding for the military and $8.6bn for his US-Mexico border wall. The plans have set up the stage for another battle with Democrats given they have explicitly said that they will not support more further funding for the wall.
This morning on the Economic Front we have UK Industrial/Manufacturing Production, Index of Services, Trade Balance and GDP which will all be released at 9.30 am. At 10.00 am we have the US NFIB Business Optimism. This is followed at 12.30 pm by CPI. Finally the Fed’s Brainard speaks at 1.45 pm.
March S&P 500
The beauty of my Platinum Service is my updated emails which gives me the time to change prices or take profits early if I am not happy with a position that gets executed. Yesterday it was clear that the S&P did not want to go lower and as a result I emailed my Platinum Members to raise any sell level in the S&P to a price of 2777. Subsequently the S&P only sold off small and I emailed them again to exit any short position at 2774.50 and I am now flat. The S&P has now rallied 70 Handles since the 2722 low at 7.00 pm last Friday thus reversing almost all of last week’s losses in a short period. As long as the Central Banks continue with their present policy the US Equity Markets will continue to be a buy on dips as they have been for most of the past 10 years. Today I will now raise my buy level to 2769/2778 with a 2761 stop. There is every chance that the S&P can trade back to 2845/2860 and potentially 2870/2890 over the coming weeks. As a result I no longer want to be short the market at this time.
I am still flat the Euro and today I will now raise my buy level to 1.1180/1.1220 with a higher 1.1145 stop. Interestingly the Daily Sentiment Index for the Euro closed at just 10% bulls last Friday.
March Dollar Index
I am still flat the Dollar as the market struggles to break the key 97.40/97.80 resistance level. I will now lower my sell level to this area with a 98.15 tight stop.
Even with the Dow initially 300 points lower from last Friday the DAX never came close to my buy level yesterday and I am still flat. Today I will now raise my buy level to 11445/11505 with a 11385 stop. I still do not want to be short the DAX at this time.
My FTSE plan worked well with the market trading lower to my 7110 buy level before rallying to an overnight high at 7167. I used this rally to exit this long position at my revised 7125 T/P level and I am now flat. With Sterling rallying over 1% the FTSE is under pressure this morning trading at 7090 despite the large move higher in the US Indices. Today I will again look to buy the FTSE on any further dip to 7010/7060 with a 6970 stop. Despite the strong Pound I still do not want to be short the FTSE at this time.
Dow Rolling Contract
My Dow plan worked well with the Market trading lower to my 25240 buy level shortly after the US Markets opened before rallying to my 25340 T/P level and I am now flat. Incredibly the Dow has reached a high this morning of 25765 as yet again anyone trying to stay short and of the US Indices has got slammed. Today I will again look to buy the Dow on any dip lower to 25390/25550 with a 25295 stop.
The NASDAQ never came close to my buy level with the market rallying over 2% yesterday. Today I will raise my buy level to 7085/7135 with a 7045 tight stop.
I am still flat the Bund and today I will now lower my sell level to 164.70/165.10 with a lower 165.45 stop. I still do not want to be long the Bund at this time.
Gold Rolling Contract
Gold just missed my 1288 buy level before rallying as the US Dollar weakened and I am still flat. Today I will lower my buy level slightly to 1275/1285 with a 1267 stop.
Silver Rolling Contract
I am still flat Silver and today I will now raise my buy level to 1495/15.25 with a higher 14.65 stop.