The final countdown is Europe’s biggest hit, it reached number one in 26 countries and is probably one of the cheesiest songs of the 1980’s. The song’s lyrics are both apocalyptic and optimistic describing a trip into space and in a similar way today feels a bit like a trip into the unknown with the US election entering its final stage as Americans head to the polls later this morning. Well back on earth, price action yesterday has been a tale of two halves; European and US equities open sharply higher mimicking yesterday’s upbeat tone in Asia following news that the FBI had cleared Hilary Clinton of any wrongdoing. The positive tone continued in the early part of the session, but in the past few hours markets have traded sideways/lower reflecting a wait and see mode ahead of the election.
To mark my 1200th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2750 for my Platinum Service which includes 1/4 updated emails throughout the trading session. This offer is open to both new and existing members and if anyone is interested you can contact me on firstname.lastname@example.org for details.
For anyone following my Platinum Service it made 25 points yesterday and is now ahead by 336 points for November having made 1582 points 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 1900 points.
The Euro Stoxx 600 index jumped 1.5% after 11 consecutive days of losses with mining stocks leading the way meanwhile US equities are up between 2% and 2.4% and have effectively erased all their November losses.
After six days of consecutive declines the US Dollar (BBDXY) is up around 0.4% with JPY, the preeminent safe haven currency, the biggest G10 loser, down 1.36%. GBP has also come under pressure (-1%) on the back of speculation that the UK Government is preparing a first draft of a new bill to trigger article 50. The AUD has benefited from the boost in risk appetite as the VIX index dropped from 22.5 on Friday to 18.67 currently and commodities have also posted decent gains (see more below). The AUD has steadily risen through the overnight session, it is the best G10 performer against the USD (up 0.42%) and it is currently trading at 0.7710. Oil prices have also recovered a bit of loss ground, up between 1.2% and 1.7% with the move boosting the CAD (+0.2%), the only other G10 currency that has outperformed the USD.
As for Bonds, yesterday in the Asia session, 10y UST jumped about 5bps to 1.827% on the back of the FBI news and have pretty much traded sideways overnight. Meanwhile 10y Bund and 10y UK Gilts ticked a few bps higher at the open , up 2bps and 7bpsrespectively and have remained in a holding pattern since.
Looking at other commodities, iron ore has continued its ascendancy, up 3.7% to $67.4, steam coal also gained another 3% to $112 and Thermal coal jumped 7% to $275. In contrast gold is down 1.8% to $1281.
In other news, China’s FX reserves for October were published last night at $3.12tn from 3.17tn in September and slightly lower than 3.13tn expected. Given negative valuation effects of around $20/25bn, this does not suggest significant outflows unless the today’s trade balance for Oct turns out to be very large.
This morning on the economic front we already had the release of German Industrial Production which came in weak at -1.8% versus -0.5% expected. At 11.00 am we have the US NFIB Small Business Optimism. Finally at 3.00 pm we have the UK NIESR GDP Estimate and the US JOLTS Job Openings which of course is a huge favourite of Fed Chair Janet Yellen.
The Chicago Fed President Charles Evans who is a non-voter this year will speak in New York at 12.45 pm on US Economy and Monetary Policy.
Finally the US Presidential Election voting gets underway at 11.00 am until 11.00 pm with the exit poll’s released shortly after.
December S&P 500
Yesterday’s 50 Handle rally in the S&P again proves why I hate to go short the S&P for more than a few hours as the rally yesterday just wiped out all the previous two weeks move lower in a few hours as the market is betting that Clinton will now win the Electoral Vote. There are 538 seats and the winner needs 270 to become President. The key today is Florida which has 29 College votes and if Trump can win this key battle ground State then we could be in for a nervous few hours. I was very unlucky with my S&P call which just missed my 2131 sell level with a 2130.75 high print before trading nearly 10 handles lower overnight and I am still flat. The fact that the S&P took out the key 2110/2120 resistance level so easily just shows how short the market was going home on Friday evening. Today I will be a small buyer on any dip lower to 2113/2119 with a 2108 stop. My only interest in selling the S&P today is on a rally higher to 2138/2144 with a 2149 stop. If the market hits any of my buy/sell levels today I will still go flat this evening ahead of the election result. If Trump pulls off a major surprise later and wins then the US stock market will initially get crushed.
The Euro traded lower to my 1.1030 buy level yesterday afternoon before having rallying this morning to 1.1058. As I wanted to bank some points for yesterday’s trading I covered this position at 1.1040 and I am now flat. Today I will again look to buy the Euro on any dip lower to 1.0995/1.1035 with a 1.0965 stop. Again if my buy level gets hit I will still look to exit any position ahead of the Election result.
December Dollar Index
Still no change as I am a seller from 98.15/98.45 with the same 98.80 wider stop. If the Dollar can break and close below its major support level at 96.00, then we could say we have at least a temporary top in the market.
I am still flat the DAX which traded in a narrow to higher range after I posted yesterday morning. Today I will raise my buy level slightly to 10280/10340 with a 10235 tight stop. I still do not want to be short the DAX at this time and no matter what happens later today I will still go home flat the market this evening.
The sell-off in Sterling yesterday has helped the FTSE to trade higher. Unfortunately the FTSE just missed my buy level and I am still flat. Today I will now raise my buy level to 6710/6740 with a 6675 tight stop.
Dow Rolling Contract
As mentioned yesterday the move in the Dow back above its key resistance level from 17980/18050 was significant. Yesterday’s move higher saw the McClellan Oscillator improve from a reading of -180 on Friday to -54 yesterday as I have no doubt the Fed aggressively bought this market. The Fed do not want a Trump win as their jobs will be at risk and this is why I was so adamant in not going short the US stock market over the past 10 days fearing a huge rally ahead of the voting. Incredibly the Dow is only trading 400 points lower than its all-time high at 18663 while the Daily Sentiment Index slipped to 10% bulls. Generally when you get such a low reading the market can bounce between two-five days before selling resumes. Today I will raise my buy level to 18050/18110 with a 17990 stop. Naturally I still do not want to be short the Dow at this time. Again just like the other markets that I cover I will be flat this evening in case we get a surprise result.
No change as I am still a small buyer on any dip lower to 161.30/161.70 with the same 160.95 stop.
Gold Rolling Contract
Unfortunately Gold just missed my 1277 buy level with a 1277.50 low print before rallying overnight to a so far high print at 1285 and I am still flat. Today I will again be a buyer on any dip lower to 1269/1276 with a the same 1263 stop.
Silver Rolling Contract
My long 18.16 Silver position worked well with the market trading overnight to a 18.35 high which has enabled me to cover this position at my revised 18.31 T/P level and I am now flat. Today I will again look to buy the market on any dip lower to 17.85/18.15 with the same 17.45 stop.
Following the success of the NFP Live Trading Day and Education Session in London on September 2, Paul Wallace and I are bringing this event to Dublin for the December NFP day on Friday December 2nd. If anyone is interested in attending this event the details are on the following link: