Weekly Fundamentals - 30 April 2016

 
THE WEEK AHEAD FUNDAMENTALLY - KEY DATA TO WATCH OUT FOR
 
 
In conclusion to our report last week we wrote:
"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."
 
Now let us see how we fared on our trade recommendations.
Buying risk as measured by the SP500 was a bad call.
Selling gold proved to be horrendous.
Buying the USD against the YEN, CAN$ and the AUD was wrong in terms of both first two currencies and correct against the AUD.
 
Overall a very bad week.
 
A very busy week in terms of data with most activity centred around the USD as it is the first week on the month and hence the first Friday of the month so we have the key NonFarm Payroll figure.
 
USD: The US$ Index fell sharply over the week.
We start on Monday with Manufacturing PMI expected to fall slightly from last month's 51.8 to 51.6.
On Wednesday we have a slew of data starting with ADP NonFarm Employment Change which excludes both farm and government workers. This is expected to rise to 205,000 from 200,000. This is followed by Non Manufacturing PMI thought to rise from 54.5 to 54.9. Finally we have Crude Oil Inventories.
On Thursday we have the customary Unemployment Claims numbers estimated to be 261,000 from 257,000.
Friday is the big day. We start with Average Hourly Earnings static at 0.3%. We the have the NonFarm Employment figure expected to fall from 215,000 to 206,000 and finally the Unemployment Rate also expected to remain unchanged at 5.0%.
COT data shows that large commercials continue to reduce their net short position in the US$ Index from -18,690 to -16,704. This continues to be a 52 week rolling extreme. We therefore remain BULLISH.
 
EURO: The EURO rose sharply against the USD last week.
Only one item of note for the EURO which takes place on Monday when the ECB President speaks.

COT data for the Euro shows that large commercials continue to reduce their net long position from +51,940 to +44,726. We therefore remain SLIGHTLY BEARISH.
 
GBP: The GBP rose against the USD last week.
Three items for the GDP, all PMI related.
On Tuesday we have Manufacturing PMI expected to rise slightly from 51 to 51.3.
On Wednesday we have Construction PMI expected to fall very slightly from 54.2 to 54.1.
Finally on Thursday we have Services PMI also expected to fall very slightly from 53.7 to 53.6.
COT shows that large commercials slightly decreased their net long position from +71,019 to +67,606. We therefore remain SLIGHTLY BULLISH.
 
 
YEN: The YEN rose meaningfully against the USD last week.
There is no data for the YEN this week.
COT data shows that large commercials decreased their net short position from -76,829 to -67,685. This remains close to a 52 week extreme and so we therefore remain VERY BEARISH.
 
AUD: The AUD fell against the USD last week.
A busy week for the AUD.
We start on Monday with Building Approvals expected to fall sharply from 3.1% to -1.8%.
On Tuesday we have both the Cash rate which is the interest rate charged on overnight loans between financial intermediaries and is expected to remain unchanged at 2.0%. This is followed by the RBA Rate Statement.
On Wednesday we have both Retail Sales thought to rise from 0.0% to 0.3% and the Trade Balance which is expected to show a reduction in the deficit from -3.41B to -2.95B.
Finally on Thursday we have the RBA Monetary Policy Statement.
COT data shows that large commercials continue to increase their net short position from -53,551 to -68,470. This is the tenth time in 52 weeks that they are net short and is now their biggest short position over the last year. We therefore remain SUPER BEARISH.
 
CNY: Only one item for the CNY.
On Monday we have Manufacturing PMI thought to rise from 49.7 to 49.7 indicating contraction but at a reduced rate.
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 decreased their huge net long position from +181,396 to +124,858 last week. This remains close to the 52 week rolling high. We alter our view slightly from SUPER BULLISH to VERY BULLISH.
GOLD: Large commercials very marginally decreased net short position from -240,121 to -240,108 last week. 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 continue to increase their net short position from -84,084 to -91,302. This is a 52 week extreme and we therefore remain SUPER BEARISH.
 
The gold:silver ratio narrowed from 72.70 to 72.53 indicating marginal silver outperformance last week.
 
COPPER: Copper is an important metal as it is a leading indicator for many commodities. Large commercials decreased their net long from +25,420 to +10,176 last week. Large commercials generally carry a net neutral position. This is now a neutral position so we alter our view from SLIGHTLY BULLISH to NEUTRAL.
US 30 YEAR BOND: Large commercials decreased their net short position from -65,606 to -61,518 last week. We therefore remain BEARISH.
CRUDE OIL: Large commercials marginally decreased their net short position from -325,778 to -325,075 last week. We remain NEUTRAL.
CAN$: Large commercials continue to increase their net short position from -18,065 to -25,684 last week. We remain VERY BEARISH.
NZD: Large commercials significantly increased their net short from -5,959 to -9,373 last week. This is a 52 week extreme. We therefore alter our view from BEARISH to VERY BEARISH.
NASDAQ100: Large commercials decreased their net short position from -53,857 to -42,786 last week. As this is not at an extreme we remain NEUTRAL.
RUSSELL2000: Large commercials decreased their net long position from +57,339 to +52,260. This remains very close to the 52 week rolling extreme so we therefore remain BULLISH.

THOUGHTS FOR NEXT WEEK
 Similarly to last 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 and silver.
Buy the USD especially against the YEN, CAN$, AUD and NZD.
 
 Again just as last week my parting comment is that 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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