Weekly Fundamentals - 23 April 2016

 
THE WEEK AHEAD FUNDAMENTALLY - KEY DATA TO WATCH OUT FOR
 
DUE TO TRAVEL COMMITMENTS THIS IS THE FIRST REPORT IN TWO WEEKS.
 
In conclusion to our report two weeks ago we wrote:
"More of the same.
We cannot alter our view until and unless COT tells us to do so.
Therefore our recommendations for next week are:
Buy the USD against the YEN, AUD and CAN$.
Sell GOLD.
Buy the SP500 and RUSSELL2000."
 
Now let us see how we fared on our trade recommendations.
Buying the USD against the YEN, AUD and CAN$ was mixed. A good performance against the YEN but bad against both the AUD and CAN$.
Selling gold was a very good idea.
Buying the SP500 and the RUSSELL2000 were both brilliant recommendations.
 
Overall a good two week period.
 
A quiet week in terms of data with most activity centred around the USD.
 
USD: The US$ Index rose sharply over the two week period on the week.
We start on Tuesday when we have Core Durable Goods Orders which is expected to rise sharply from -1.3% to +0.6%. This is followed by the Consumer Confidence figure thought to fall from 96.2 to 95.8.
On Wednesday we have the Crude Oil Inventories number and the more important FOMC Statement and the Fed Funds Rate decision which is expected to remain unchanged at 0.50%.
Thursday sees GDP which is estimated to fall from 1.4% to 0.7%.
We then have the customary Unemployment Claims number which is guesstimated to rise from 247,000 to 252,000.
COT data shows that large commercials reduced their net short position in the US$ Index from -21,646 to -18,690 over the two week period. This continues to be a 52 week rolling extreme. We therefore remain BULLISH.
 
EURO: The EURO fell sharply against the USD over the two week period.
There is only one item of note for the EURO this week.
On Monday we have the German Business Climate number which is expected to rise from 106.7 to 107.1.
COT data for the Euro shows that large commercials continue to reduce their net long position from +59,737 to +51,940 over the two week period. We therefore remain SLIGHTLY BEARISH.
 
GBP: The GBP rose against the USD over the two week period.
Only one item worth mentioning which is the GDP number on Wednesday thought to fall from 0.6% to 0.4%.

COT shows that large commercials increased their net long position from +70,900 to +71,019. We therefore remain SLIGHTLY BULLISH.
 
YEN: The YEN fell meaningfully against the USD over the two week period.
A busy week in terms of data.
On Wednesday we start with Household Spending which is expected to show a sizeable drop from +1.2% to -4.0%. This is followed by Tokyo Core CPI unchanged at -0.3%. We then have Retail Sales also expected to fall sharply from 0.4% to -1.4% and finally the BOJ Monetary Policy Statement.
On Thursday we have both the BOJ Outlook Report and the BOJ Press Conference.
COT data shows that large commercials increased their net short position from -69,057 to -76,829. This is now a 52 week extreme so we therefore alter our view from BEARISH to VERY BEARISH.
 
AUD: The AUD rose against the USD over the two week period.
One item for the AUD.
On Tuesday we have CPI which is expected to fall from 0.4% to 0.2%.
COT data shows that large commercials increased their net short position from -37,235 to -53,551. This is the ninth time in 52 weeks that they are net short and is now their biggest short position over the last year. We therefore alter our view from BEARISH to SUPER BEARISH.
 
CNY: One item for the CNY.
On Saturday week we have Manufacturing PMI.
There is no COT data for the CNY.
 
COT data of note on products we regularly comment on in our DAILY REPORTS and WEEKLY BONUS VIDEOS and for those products which show large commercials with extreme net positions.
 
S&P500: Large commercials increased their huge net long position of +165,048 to +181,396 over the two week period. This remains close to the 52 week rolling high. We therefore remain SUPER BULLISH.
GOLD: Large commercials significantly increased net short position from -207,245 to -240,121 over the two week period. Now that large commercials hold a net short position which is greater than 100,000 we are bearish, in fact as it is now greater than 200,000 and continues to be a 52 week rolling extreme we have to remain SUPER BEARISH.
SILVER: Large commercials significantly increased their net short position from -59,665 to -84,084. This is a 52 week extreme and we therefore alter our view from BEARISH to SUPER BEARISH.
 
The gold:silver ratio narrowed from 80.63 to 72.70 indicating silver significant outperformance for the two week period.
 
COPPER: Copper is an important metal as it is a leading indicator for many commodities. Large commercials increased their net long from +10,370 to +25,420 over the two week period. Large commercials generally carry a net neutral position. The fact that they now carrying a reasonable net long position means we remain SLIGHTLY BULLISH.
US 30 YEAR BOND: Large commercials decreased their net short position from -66,832 to -65,606 over the two week period. We therefore remain BEARISH.
CRUDE OIL: Large commercials increased their net short position from -287,827 to -325,778 over the two week period. We remain NEUTRAL.
CAN$: Large commercials continue to increase their net short position from -6,488 to -18,065 over the two week period. We remain VERY BEARISH.
NZD: Large commercials increased their net short from -2,793 to -5,959 over the two week period. This is now close to a 52 week extreme. We therefore remain BEARISH.
NASDAQ100: Large commercials continue to increase their net short position from -31,548 to -53,857 over the two week period. As this is not at an extreme we remain NEUTRAL.
RUSSELL2000: Large commercials slightly decreased their net long position from +65,747 to +57,339. This remains very close to the 52 week rolling extreme so we therefore remain BULLISH.

THOUGHTS FOR NEXT WEEK
I run the risk of sounding repetitive but only until COT data moves in the opposite direction I will remain repetitive.
Therefore my recommendations for next week are as follows:
Buy risk as measured by the SP500.
Sell gold.
Buy the USD especially against the YEN, CAN$ and AUD.
 
The COT for all of the recommendations are at extremes and in some cases multi-year extremes and my view is that they will remain so for a number of weeks making the above trades potentially above average earners.
 
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Stay nimble. Good luck trading.

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