The impact on markets just after I posted early yesterday morning of President Xi’s comments, in particular the references to reducing car import tariffs and protecting intellectual property rights of foreign entities, was accentuated offshore. Seeing is believing of course, especially on the latter, but for now the market chooses to believe that Xi’s words will prove to be more than mere platitudes in coming months. They prompted President Trump to tweet ‘’very thankful for President Xi of China’s kind words on tariffs and automobile barriers’’ also, his enlightenment on intellectual property and technology transfers. We will make great progress together!’’
To mark my 1550th 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 firstname.lastname@example.org for details.
For anyone following my Platinum Service it made 140 points yesterday and is now ahead by 961 points for April, having made 1760 points in March, 2256 points in February, 879 points in January, 946 points in December, and 823 points in November 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 stocks closed with gains of close to 2%, US bond yields are about 2bps higher on average and the three dollar-bloc commodity currencies (AUD, NZD and CAD) are vying for top spot on the G10- FX leader board with gains of between 0.75% and 0.9%. Predictably, the risk sensitive Japanese Yen sits at the bottom (thus AUD/JPY is 1.25% up on this time yesterday). The AUD evidently came to no harm following Monday’s NAB Business Survey, which showed both business conditions and confidence pulling back, though in the case of conditions from record February levels. They still remain well above average (and in trend terms, in all five states). We will have more on the latter from RBA Governor Phil Lowe when he speaks later this morning from Perth.
Commodity prices are mostly higher (platinum one exception) led by oil with both Brent and WTI crude prices up over $2 or 3.5%, Brent is trading close to $71, a new post-2014 cycle high. As well as drawing support from the perceived reduced threat to global growth of a US-China trade war, gains have also come off the back of source reports that Saudi Arabia wants to get oil up to $80 a barrel to support its fiscal spending programme and ahead of the float of its state energy giant Aramco.
Elsewhere in currencies the EUR has experienced a round trip up and down. It shot up 50 pips after the ECB’s Ewald Nowotny, the Austrian Central Bank Governor and a known hawk, indicated that he would prefer Interest Rates to move sooner than mid-2019 (the current consensus) and potentially at 20 bps increments. Following these comments an ECB spokesperson emailed a statement that ‘’Governor Nowotny’s views are his own, they do not represent the view of the Governing Council’’. A sharp rebuke it has to be said, and which saw EUR give up all the earlier gains, though it has since pulled back up.
Sterling also caught a bid from central bank commentary, in this case the BoE’s Ian McCafferty who told Reuters there was some modest upside risk to the wages and inflation outlook and that the ‘’Bank should not dally when it comes to tightening policy modestly’’. A rate hike in May is priced at around a 90% probability. I still expect one to be delivered.
US data yesterday saw PPI coming in above expectations in both headline and core terms (to 3.0% and 2.7% y/y respectively) and which at the margin implies some upside risk to CPI this afternoon. The NFIB small business optimism survey slipped to a still elevated 104.7 from 107.6.
This morning on the Economic Front we have UK Trade Balance, Industrial Production and the NIESR GDP Estimate all to be released at 9.30 am. This is followed by US CPI at 1.30 pm. Finally we have the Minutes from last Month’s FOMC Meeting at 7.00 pm, which should be of limited interest given we had new Fed projections and a Powell press conference.
June S&P 500
My S&P plan worked well yesterday with the market trading higher to my 2655 sell level before having a nice sell-off which enabled me to cover this short position at my 2648 T/P level and I am now flat. The S&P did subsequently trade to a low at 2637 before rebounding into the close as yet again traders bought the dip as the S&P continues to build cushion above its 200 Day Moving Average which comes in well below here at 2595. Today I will now raise my buy level to 2610/2622 with a 2603 stop. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer on any further dip lower to 2586/2596 with a 2579 stop. The next resistance level for the S&P is from 2678/2690 and today I will be a seller on any rally to this area with a 2697 tight stop.
The Euro just missed my 1.2270 buy level with a 1.2302 low print before again rallying as expected into the New York close. Today I will now raise my buy level slightly to 1.2255/1.2290 with a 1.2225 stop. 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 now lower my sell level to 89.90/90.20 with a 90.55 stop. If the Dollar can break and close below 89.00 we could see a move to new lows below 87.80 on this move before we see a more sustained rally.
The DAX continue s to be a buy on dips as thankfully we have had no sell levels in this market for the last six weeks. The break and close over 12150/12200 is constructive for the bulls and this level should lead to a decent rally on any subsequent test. Today I will now raise my buy level to 12120/12190 with a 12075 stop. I still do not want to be short the market at this time.
The FTSE closed above strong resistance at 7145. This means that the 7090/7130 area should now act as good support. Today I will move my buy level to this area with a 7060 tight stop. The next resistance area is from 7250/7285 and I will be a small seller here with a 7315 stop.
Dow Rolling Contract
A lot of traders follow the Dow Theory which gave a sell signal with Monday’s late sell-off in the market. As tends to happen anytime we look like we are going to break lower the market does the opposite and rebounds and is one of the reasons why I hate to sell the market for any length of time. Today I will now raise my buy level to 23850/24050 with a 23680 wider stop. The Dow’s next resistance level is just above here at 24500 from where we topped yesterday and if the market can build value above here we should see a further move higher to at least 25000.
I am still flat the market and today I will now raise my buy level to 6450/6510 with a 6390 stop. Remember a break and close over 6675/6775 is a buy signal for 6975 and possibly 7125/7175.
I am still flat the Bund and today I will now raise my buy level slightly to 158.25/158.60 with a 157.95 tight stop. I still do not want to be short the Bund at this time.
Gold Rolling Contract
I am still flat Gold and today I will again raise my buy level to 1317/1325 with a 1310 stop.
Silver Rolling Contract
Silver traded above 16.70 before having a small sell-off into the close. As mentioned yesterday with the Managed Money Accounts having a record short position it is in my opinion only a matter of time before Silver breaks out to the upside. For this to happen we need to see Silver break and close over 17.00 for at least two trading sessions. Today I will now raise my buy level to 16.20/16.50 with a 15.90 stop.