Weekly Fundamentals - 09 May 2016

 
THE WEEK AHEAD FUNDAMENTALLY - KEY DATA TO WATCH OUT FOR
 
 
In conclusion to our report last week we wrote:
"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."
 
Now let us see how we fared on our trade recommendations.
Buying risk as measured by the SP500 was a slightly bad call.
Selling gold proved to be a slightly good call.
Buying the USD against the YEN, CAN$ and the AUD was wrong in terms of both first two currencies and very correct against the AUD.
 
Overall I would rate last week as a slightly positive one due to the magnitude of the correct call in the AUD.
 
A very busy week in terms of data with most activity centred around the USD and GBP. There is no data for the AUD.
 
USD: The US$ Index rose sharply over the week.
We start on Wednesday with Crude Oil Inventories.
On Thursday we have the customary Unemployment Claims figure guesstimated to be 277,000 from 274,000.
Friday is a busy day.
We start with Core Retail Sales which excludes car sales. It is expected to make a meaningful rise from last month's 0.2% to 0.6%.
This is followed by Retail Sales which includes car sales and is expected to remain at -0.3%.
PPI follows and is also expected to rise from -0.1% to 0.3%.
Finally we have Consumer Sentiment thought to be 89.9 from 89.0.
COT data shows that large commercials continue to reduce their net short position in the US$ Index from -16,704 to -14,628. This continues to be a 52 week rolling extreme. We therefore alter our view slightly from BULLISH to VERY BULLISH.
 
EURO: The EURO fell sharply against the USD last week.
Only one item of note for the EURO which takes place on Monday with a series of Eurogroup Meetings.
Eurogroup meetings are usually held in Brussels and attended by the Eurogroup President, Finance Ministers from euro area member states, the Commissioner for economic and monetary affairs, and the President of the European Central Bank. They discuss a range of financial issues, such as euro support mechanisms and government finances. The meetings are closed to the press but officials usually talk with reporters throughout the day, and a formal statement covering meeting objectives may be released after the meetings have concluded.
COT data for the Euro shows that large commercials reduced their net long position substantially from +44,726 +27,558. This is now a 52 week low so we therefore alter our view from SLIGHTLY BEARISH to BEARISH.
 
GBP: The GBP fell meaningfully against the USD last week.
A busy week for the GBP.
We start on Wednesday with manufacturing Production expected to make a sizeable move from last month's -1.1% to 0.4%.
Thursday is the big day.
We begin with the BOE Inflation Report.
This is followed by the MPC Official bank rate Votes expected to be 0-0-9 meaning that all members voted to keep rates unchanged.
We then have the Monetary Policy Summary and finally the BOE Governor speaks.
COT shows that large commercials continue to decrease their net long position from +67,606 to +56,878. We therefore remain SLIGHTLY BULLISH.
 
YEN: The YEN rose against the USD last week.
There are only two noteworthy data points for the YEN this week.
On Sunday night we had the Monetary Policy Meeting Minutes.
On Wednesday we have the Current Account figure thought to be 1.90T from last month's 1.73T.
COT data shows that large commercials decreased their net short position from -67,685 to -65,495. This remains close to a 52 week extreme and so we therefore remain VERY BEARISH.
 
AUD: The AUD fell very sharply against the USD last week.
There is no data of note for the AUD this week.

COT data shows that large commercials decreased their net short position from -68,470 to -58,577. This is the first time in 11 weeks that the large commercials have reduced increased their net long position. We therefore alter our view slightly from SUPER BEARISH to VERY BEARISH.
 
CNY: Only one item for the CNY.
Next Saturday we have Industrial Production thought to fall from 6.8% to 6.5%.
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 continue to decrease their huge net long position from +124,858 to +100,650 last week. This is no longer close to the 52 week rolling high. We alter our view slightly from VERY BULLISH to BULLISH.
GOLD: Large commercials substantially increased their net short position from -240,108 to -294,901 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 approaching the 300,000 level and continues to be a 52 week rolling extreme we have to remain SUPER BEARISH.
SILVER: Large commercials very slightly decreased their net short position from -91,302 to -90,594. This is a 52 week extreme and we therefore remain SUPER BEARISH.
 
The gold:silver ratio narrowed from 72.53 to 74.64 indicating silver underperformance last week.
 
COPPER: Copper is an important metal as it is a leading indicator for many commodities. Large commercials decreased their net long from +10,176 to +8,264 last week. Large commercials generally carry a net neutral position. This is now a neutral position so we remain NEUTRAL.
US 30 YEAR BOND: Large commercials continue to decrease their net short position from -61,518 to -58,103 last week. We therefore alter our view from BEARISH to SLIGHTLY BEARISH.
CRUDE OIL: Large commercials marginally decreased their net short position from -325,075 to -315,207 last week. We remain NEUTRAL.
CAN$: Large commercials continue to increase their net short position from -25,684 to -30,745 last week. This is the 15th week in a row that the large commercials have increased their net short position and it has been at a 52 week rolling extreme for at least 10 weeks. We therefore alter our view from VERY BEARISH to SUPER BEARISH.
NZD: Large commercials increased their net short from -9,373 to -10,543 last week. This is a 52 week extreme. We therefore remain VERY BEARISH.
NASDAQ100: Large commercials substantially decreased their net short position from -42,786 to -10,428 last week. We therefore alter our view from NEUTRAL to SLIGHTLY BULLISH.
RUSSELL2000: Large commercials decreased their net long position from +52,260 to +49,674. 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 tells me otherwise I will remain repetitive.
Therefore my recommendations for next week are as follows:
Buy risk as measured by both the RUSSELL2000 and the NASDAQ100.
Sell gold and silver in large quantities.
Buy the USD especially against the YEN, CAN$, AUD and NZD.
 
I know I am beginning to sound like a stuck record. Better a stuck record, stick to my leading indicators then recommend trades that do not exist.
 
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Stay nimble. Good luck trading.

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