In the lead up to President Trump’s joint session address tonight in Washington (Wednesday 2.00 am GMT is the scheduled time), the US Treasury yields have started the week moving back up, but without too much conviction. The US Dollar is not breaking decisively to the topside. It’s frankly very difficult to know what markets expect from the joint session address, but expectations of an address with some reassuring and guiding details of the fiscal stance, from tax policies, and infrastructure might have been an ambitious hope. Perhaps the market is expecting a little more now. We can only bide our time till tomorrow and beyond. And you never know with this President whether even his promises, such as “something special” that he has promised health insurers, will be matched with the required detail.

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For anyone following my Platinum Service it finished flat yesterday as none of my calls got hit on what turned out to be one of the quietest trading sessions for the year to-date and is still ahead by 1419 points for February having made 1734 points in January, 1351 in December, 1971 in November and 1582 in October. The previous four months saw gains of 1142, 1782, 1682 and 2550 points respectively. Since I started this Platinum Service in June 2015 it has averaged a monthly gain of over 1800 points.

President Trump is saying that there is going to be a “massive” boost to the military, but even here, will the impact of this boost on the budget bottom line – in the order of a 10% defence boost – be totally neutralised by ambitious cuts elsewhere? According to Administration officials, the defence boost will be come with offsetting budget cuts, but not apparently to entitlement programs (two thirds of the Budget). This means cuts among discretionary spending programmes will be required to the tune of an ambitious 10%, a big number.

Treasury Secretary Mnuchin has been saying in an interview on Fox News that the Budget will be constructed on a 2.4% growth forecast, not the 3% aspiration, the Budget being set to lay the foundations to create that growth. There is also talk that tax policies are waiting for further investigation of health care spending. Trump has been re-mentioning infrastructure, telling Governors in a meeting overnight that “we’re going to start spending on infrastructure, big”.

There are still lots of uncertainties about policies and processes. It still has a strong pro-growth tilt and intention, but the details are all important.

US Treasury yields are back up by around 5 bps along the curve. I also note that pricing for the March 15 FOMC Meeting has been pushing up over recent days, Fed funds pricing now up to 50% and OIS even higher at 57%. The USD DXY and the Bloomberg Spot Dollar Index are little changed overall.

Economic Data was mixed with Durable Goods Orders not too different from market expectations – taking in the Jan figures and revisions. The Atlanta Fed’s GDPNow estimate for Q1 was ticked higher from 2.4% to 2.5% as a result. Pending Home Sales were not as upbeat as recent new home sales have been, analysts speaking that US realtors speaking of stock shortages still.

Dallas Fed President Kaplan (a voter this year) has been talking late yesterday and speaking still with a hawkish leaning but without nominating March for a hike. Instead, he repeated his view that he would prefer the Fed to move “sooner rather than later,” but without explicitly calling for a rate increase next month. “We want to guard against a situation where we get behind the curve” on inflation, he said.

This morning on the economic front we have Euro-Zone CPI at 10.00 am, and this is followed at 1.30 pm by US GDP, Trade Balance and Wholesale Inventories. Next we have the Chicago Purchasing Manager Survey at 2.45 pm. Finally we have the Conference Board Consumer Confidence and the Richmond Fed Manufacturing Index at 3.00 pm.

March S&P 500

The S&P just missed my 2357 buy level before rallying strongly and I am still flat as await Trump’s Tax proposals early tomorrow morning in his address to Congress. Incredibly for the whole month of February the S&P has only closed lower on two days. Although the S&P is severely overbought and holding long positions is risky we still have no sell signal as yet. The S&P has strong important long term trend line resistance at 2395/2400 and it is always possible that we could spike to this area on Trump overnight before selling off. The S&P continues to have good support from 2351/2357 and today I will again be a buyer in this area with a 2345 stop. Below here the S&P has strong support at 2339 which is a nine month trend line support. Today I do not think a lot will happen ahead of Trump who is not speaking until 2.00 am tomorrow which is frustrating. However I will be a reasonable seller into his speech on any rally higher to 2393/2403 with a wider 2410 stop.


Basically all markets stopped trading yesterday with very narrow ranges across all asset classes. I am still flat the Euro and today I will leave my buy level unchanged at 1.0520/1.0550 with the same 1.0485 stop which is just below last week’s 1.0493 low print.

March Dollar Index

No change as I am still a seller in the Dollar on any rally higher to 101.50/101.90 with a 102.25 stop. Remember the Dollar needs to break and close over 102.45 for the market to trade higher. However the real resistance level is at the January 3 high at 103.82 and it will take a break and close over this level to negate January’s Downside Key Month Reversal.

March DAX

The DAX is back with the mantra of trying to stop as many traders how of a position as possible before trading in the opposite direction as we discovered to our cost on Friday. Unfortunately I tried to be too clever with my 11775 buy level as the market just missed with a 11788 low print before spending the rest of the trading session trading higher and I am still flat. After last week’s sharp move lower the outlook is negative and today I will be a small seller from 11910/11960 with a 12005 stop. My only interest in buying the DAX is still on a sip lower to 11710/11765 with a 11665 stop.

March FTSE

The FTSE continues to struggle to break the January all-time high at 7292 despite the weaker Sterling. I am still flat the market and I will continue to leave my sell level unchanged at 7285/7315 with the same 7335 tight stop. The FTSE has strong 8 month trend line support at 7135 and today I will look to buy the FTSE on any unexpected dip lower to 7125/7160 with a 7095 stop.

Dow Rolling Contract

The Dow’s new closing high streak has now stretched to 12 consecutive days from February 9 through yesterday, February 27. If the Index closes higher today, it will match the 13-day streak that occurred at the start of January 1987 as I mentioned in yesterday’s commentary. The Daily Sentiment Index has now risen to 92% stock bulls, meaning just 8% of traders think the stock market will decline in the coming weeks, an extreme that has not been reached in over three years. In addition, Market Vane’s Bullish Consensus of newsletters has been at 69% every day since last Tuesday. The last time the survey recorded this level of optimism was on May 14-15, 2013. The advance concluded on May 22, 2013, which is four-and-a-half days after the sentiment extreme was reached, before the S&P declined 127 points (71/2%) over the next month to a low on June 24, 2013. I am not trying to scare anyone but I am just showing why this move is not sustainable in my opinion especially with the McClellan Oscillator again just closing barley in positive territory with a +25 print last night. The current S&P 500 PE ratio is at 26.60 which is the fourth highest level since 1880. This move will soon end with either a downside Key Day Reversal or a massive sell extreme. As I have said I am not looking for a crash yet only a decent correction before a rebound ahead of the real sell-off which I expect to happen either late this year or early in 2018. I am still flat the Dow and today I will continue to scale into a short position on any move higher to 20870/20940 with the same 21110 stop. I still do not want to be long the Dow at this time.

March BUND

Earlier this morning the Bund rallied to my revised 166.15 sell level. I am now short and I will only add into this position on any move higher to 166.40 with a 166.65 tight stop. I will also be a small buyer on any dip lower to 165.35/165.60 with a 165.10 stop.

Gold Rolling Contract

Gold has strong resistance at 1260/1265 which was tested yesterday before the market traded lower with some follow through to the downside this morning. Today I will lower my buy level slightly to 1235/1243 with a 1229 stop.

Silver Rolling Contract

No change as I am still long from yesterday morning at 18.38 with the same 17.90 tight stop.