Brexit has continued to dominate the markets’ attention in the past 24 hours, with a new deal yesterday then the vote on that deal in the House of Commons last night. A vote on the revised further 11th hour deal nutted out between Prime Minister May and Juncker has been lost in the Commons by a resounding 242-391. PM May announced to the Commons that she will proceed with a vote this evening on whether to leave on 29 March without a deal. The news is that PM May has told the Commons that this will be a ‘free vote’ for Tory MPs, allowing Conservatives, including cabinet ministers to vote against the government and not be sacked or forced to resign. That vote seems certain to go against the government as well. In other words, there is a majority in Parliament that will wish to avoid a ‘no deal’ crash out Brexit deal.
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 43 points yesterday and is now ahead by 425 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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That will be followed by a vote on Thursday to extend Article 50 (assuming this also finds a majority in favour of an extension – as I expect), likely of some comfort to Sterling. That is very likely to be supportive of Sterling. It is still a fast moving environment, political pressure at understandable extreme levels.
In the immediate aftermath of the vote, Sterling has been whippy but not finding new direction. After rallying yesterday by two big figures on the prospect of a deal, most of those gains were reversed yesterday as it became clearer that it would not be approved by Parliament.
Sterling this morning is opening higher at 1.3135 from last night’s 1.3060 close while EUR/GBP is opening at 0.8600. The other main mover in Currencies was the Euro which has rallied to just shy of 1.13 where it also sits this morning.
US Consumer Inflation
An important support has come from yet another softer than expected reading on US consumer inflation. February Headline CPI rose by 0.2% as expected, taking annual CPI down to 1.5% from 1.6% from base effects, but core CPI rose by a softer than expected 0.1%, the market expecting another monthly rise of 0.2% that would have seen annual core steady at 2.2%.
Instead annual core CPI was 2.1%,a tenth less than expected, further supporting bond and relative valuations of other asset classes such as stocks. The US 2 year Treasury has rallied by 2.46bps to 2.4506%, 10s by a somewhat larger 3.60bps to 2.6033%, within sight of the 2.50% early-year low so far this year.
The S&P500 and the Nasdaq closed higher (by 0.4-0.5%), but the Dow is lagging, owing in part to further attrition in Boeing’s share price, along with some softness in other big board names. Boeing’s shares are down by a further 6% on news in the past 24 hours of further countries grounding the 737-8 Max aircraft involved in the Ethiopian plane crash. Some other main board stocks such as 3M, JPM, Nike, Coca-Cola, and Caterpillar are also languishing, to a much more limited extent.
Released earlier than expected, the US NFIB Small Business Optimism Index for February showed something of a recovery after the ructions from the government shutdown at the start of the year. The headline Index rose marginally to 101.7 from 101.2 (102.5), also coming after the equity market volatility at the end of last year had dented small business confidence.
The weaker US Dollar saw both Gold and Silver rally after last week’s sell-off with Gold trading higher at 1304 this morning. Meanwhile both WTI and Brent ended the day 1% higher.
This morning on the Economic Front we have Euro-Zone Industrial Production at 10.00 am and this is followed at 11.00 by US MBA Mortgage Applications. Next we have both PPI and Durable Goods Orders at 12.30 pm. Finally at 2.00 pm we have Construction Spending.
March S&P 500
Unfortunately the S&P just missed my 2778 buy level before rallying to a high of 2798 before having a small sell-off into the close and I am still flat. As long as the S&P can hold the 2750/2760 support area I will continue to be a buyer on dips. The next resistance level for the S&P is the February high at 2816 ahead of 2845/2860 with a potential move to 2870/2880 still a runner. Today I will leave my 2768/2778 buy level unchanged with the same 2761 stop. I still do not want to be short the S&P at this time.
The Euro rallied as expected with the market again just missing my 1.1220 buy level before moving higher. I am still flat and today I will raise my buy level slightly to 1.1190/1.1235 with a 1.1155 stop. The Euro has resistance from 1.1370/1.1410 and I will be a small seller in this area with a 1.1440 stop.
March Dollar Index
No Change as I am still a seller on any rally higher to 97.40/97.80 with the same 98.15 tight stop.
The DAX was weak for most of yesterday. This weakness in the DAX saw the market trade lower to my 11505 buy level before rallying small. As I had lower buy levels in the other Indices I covered this long position at my revised 11516 T/P level and I am now flat. The DAX has strong support from 11360/11425 and today I will be a buyer on any dip to this area with a 11310 tight stop. Despite the weakness in the market yesterday I still do not want to be short the DAX at this time.
Unfortunately the FTSE just missed my buy level yesterday before turning around and rallying on the weakness in Sterling I am still flat and today I will now raise my buy level to 7050/7090 with a higher 7015 stop.
Dow Rolling Contract
The near 15% fall in Boeing Shares since Monday is having a huge effect on the Dow with the market trading heavy all-day yesterday. This move lower saw the Dow hit my 25545 buy level before having a small rally back above 25600. This move higher enabled me to cover this position at my revised 25565 T/P level and I am now flat. As long as the Dow can hold the 25200/25300 support area then the Dow should bounce. Today I will be a small buyer from 25240/25410 with a 25125 stop which is just below its 200 Day Moving Average which comes in at 25140 this morning.
I am still flat the NASDAQ and today I will now raise my buy level to 7110/7150 with a 7070 stop.
Just before the close last night the Bund traded higher to my 164.70 sell level before opening slightly lower this morning. I used this weakness to cover my position at 164.58 as emailed to my Platinum Members and I am now flat. Today I will again look to sell the Bund on any further rally to 164.95/165.35 with a 165.65 stop.
Gold Rolling Contract
I am still flat Gold with the market recovering well from its recent 1281 low print. Today I will raise my buy level to 1285/1294 with a 1277 stop.
Silver Rolling Contract
Silver just missed my buy level before rallying and I am still flat. Today I will raise my buy level to 14.95/15.35 with a 14.60 stop. If I am taken long I will have a T/P level at 15.55.