The US stock market rally has now extended to a third day, a tweet from US President Trump saying no more than ‘’talks with China are going very well’’ and news that the current discussions in Beijing have been extended into a third day, enough to keep risk sentiment supported. This in turn sees US bond yields higher (moved accentuated by a relatively poor 3-year Note auction) and has offered some support to the US dollar. Allied to the latter, the US NFIB Small Business Optimism survey did not drop back nearly as much as expected, while in Europe more poor data was revealed in the form of much softer than expected German Industrial Production and falls in whole range of EC Consumer, Business and Economic Confidence Surveys.
To mark my 1725th 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 email@example.com for detail
For anyone following my Platinum Service it was made 51 points yesterday and is now ahead by 611 points for January, having made 2803 points in December, 1541 points in November, 2094 points in October and 1279 points in September. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
I have a YouTube Channel which contains recent interviews I have given. This can be viewed by clicking HERE Please subscribe to this for new interview notification
A relatively quiet past 24 hours for currencies, AUD/USD spending most of its time since I posted yesterday between 0.7120 and 0.7170 (0.7156 now). The Canadian Dollar and Japanese Yen are the only two G10 currencies up against an otherwise stronger USD; CAD outperformance explained by oil (and ahead of what is confidently expected to be an unchanged rates decision from the Bank of Canada this afternoon). USD/JPY is in fact pretty close to unchanged.
Sterling is the weakest currency after the NZD, both off almost 0.5%, Sterling weakness is despite the UK parliament having passed – by 303 votes to 296 – a bill that prevents the government from raising taxes (and funding ‘’No deal’’ preparation spending) unless there is either a Brexit deal, a decision to extend Article 50 or Parliamentary approval of a ‘’No deal’’ Brexit. At the margin this reduces the likelihood of the UK crashing out of the EU without a deal, so is ostensibly GBP positive but the FX markets doesn’t as yet seem to care.
The weaker EUR/USD (-0.3%) and which is the main driver of the 0.25% rise in the DXY index, is best seen in the context of the renewed widening in US-German benchmark bond yields spreads so far this week, particularly at the shorter end where US 2s have risen by almost 10bp and German 2s by only about 2bps.
US equities closed with the major indices showing gains averaging just less than 1%; It was a fairly uniform picture across sectors, Real Estate and Communication Services currently showing the strongest gains, financials the only sector in the red within the S&P 500. Earlier, European stocks all ended in the green, the Eurostoxx 50 up 0.7%.
The further improved market risk tone has seen US Treasury yields progress higher led by the front end and where upward pressure culminated in a relatively weak first US Treasury auction of 2019, of 3-year notes. The sale produced the lowest bid-to-cover ratio since 2009 (2.44, vs. 2.59 at the prior December 11th – auction). The yield was 2.559% percent, slightly above the prevailing market rate for the new securities ahead of the auction.
2yr yields are currently +4bp at 2.581% and 10s +1.8bps at 2.714%. German 10 year yields earlier closed just 0.8bps higher at 0.223%.
Further advances from oil yesterday with both Brent and WTI blends currently up 2.3% (+$1.32 and $1.14 respectively) while base metals are mostly lower (e.g. aluminium -1% and copper -0.3%); iron ore holds recent gains however, up another 0.1% while gold has slipped by $4, probably symptomatic of the slightly stronger US dollar.
Economic Data Summary:
Germany November Industrial Production -1.9% m/m (0.3%E, -0.8%P revised from -0.5%); yr/yr WDA -4.7% (-0.8%E, 0.5%P revised from 1.6%)
Euro-Zone confidence indicators continued their year-long slide. While headline Consumer confidence was steady at -6.2 in Dec (after peaking at +1.4 in Jan 2018), Economic Confidence slipped to 107.3 from 109.5 (115.2 peak Dec 2017), Business Climate fell to 0.82 from 1.04 (peak1.62 Jan), Industrial Confidence slipped to 1.1 from 3.4 (peak 9.7 Jan and Services Confidence dropped to 12 from 13.4 (peak 16.9 Dec 2017). Industrial confidence the largest faller (presumably trade spat-related) with larger declines seen in France, Spain and Belgium.
US NFIB Small Business Optimism 104.4 (103.0E, 104.8P)
US JOLTS Job Openings 6.888mn are down from an upward revised 7.131mn in October and 7.050mn. expected
This morning on the Economic Front we have Euro-Zone Unemployment at 10.00 am. This is followed by US MBA Mortgage Applications at 12.00 pm. Next we have the Bank of Canada Rate decision at 3.00 pm. Finally at 7.00 pm we have the FOMC Minutes from the December Meeting.
Speaking wise the Fed’s Bostic, Evans and Rosengren are speaking at 1.20 pm, 2.00 pm and 4.30 pm respectively while at 3.00 pm it is the turn of Bank of England Governor Carney who is participating in an online Q&A session.
March S&P 500
Yesterday was a frustrating trading session with the S&P initialing spiking to an intra-day high of 2581 before falling over 30 Handles. Finally overnight the S&P did trade higher to my 2584 sell level before having a small sell-off and I covered this position earlier this morning at 2581 and I am now flat. The McClellan Oscillator closed at a severely overbought +340 last night. As a result we should soon see a decent correction considering that the S&P has now rallied over 250 Handles off the December 26, 2018 low in just two weeks. Today I will again look to sell the S&P on any further rally to 2595/2615 with a wider 2628 stop. The 50 Day Moving Average comes in at 2640 and if I am stopped out of any short position I will be an aggressive seller in front of 2638 with a 2655 stop. Given the volatility I have to use a larger sell range with a small stake size. I will still look to buy the S&P on any dip lower to 2528/2540 with a 2518 stop. Again if I am taken long and subsequently stopped out this position I will be a more aggressive buyer from 2487/2502 with a 2478 stop.
The Euro continues to hold the 1.1400 support area and I am still flat. Today I will now raise my buy level 1.1370/1.1410 with a 1.1335 stop. I still do not want to be short the Euro at this time.
March Dollar Index
I am still flat the Dollar and today I will now lower my sell level to 95.80/96.20 with a 96.55 stop.
Despite the weaker than expected Euro-Zone and German Economic Data yesterday the DAX rallied soon after I posted yesterday to a hit a high so far today at a price of 10945 which is 600 points higher than where we were on Monday. The DAX has strong resistance from 10995/11065 and today I will be a seller on any rally to this area with a tight 11110 stop. My only interest in buying the DAX is on a dip lower to 10680/10750 with a 10620 stop.
The FTSE has rallied nearly 2% in the last 24 hours and I am still flat. There is no doubt that the 4.5% yield has attracted some meaningful buying in this market. Remember this is the highest yield for the FTSE in over 30 years. Today I will now raise my buy level to 6740/6790 with a 6685 stop.
Dow Rolling Contract
Thankfully we had no sell levels in the Dow yesterday which continued its impressive rally off its December 26 low at 21700 to currently trade at 23850 this morning. I am not going to chase the Dow higher especially with the MO extremely overbought and today I will leave my 23290/23430 buy range unchanged with the same 23150 stop.
Overnight the NASDAQ finally traded higher to my 6600 sell level before selling off to my revised 6585 T/P level and I am now flat. Today I will again look to sell the market on any rally higher to 6610/6670 with a 6715 stop. My only interest in buying the market is still on a move lower to 6340/6390 with the same 6285 stop.
The BUND just missed my sell range yesterday before having a small sell-off and I am still flat. Today I will now raise my sell level slightly to 164.10/164.50 with a 164.85 stop.
Gold Rolling Contract
No Change as I am still a buyer on any dip lower to 1257/1267 with a 1249 stop.
Silver Rolling Contract
As I wanted to bank some points for yesterday’s trading session I emailed my Platinum Member before the New York close to exit any 15.60 long position at 15.66 and I am still flat. Silver has now rallied over $2 since its early December low and is due a pull back. Today I will again look to buy the market on any dip lower to 14.95/15.35 with a 14.60 stop.