A late rally saw U.S. Equity Markets finished yesterday’s session with modest losses following the rout of the previous three trading sessions. Although the Dow closed lower by 0.50%, the NASDAQ 100 finished with a small 0.21% gain. All the action was in Bond Markets where the 10-Year closed at multi-year highs with a yield of 3.50%. The U.S. Bureau of Labour Statistics’ Producer Price Index (“PPI”) growth for May was better than anticipated, as it reported its second decline in two months. During the period, PPI numbers rose 10.8% on a year-over-year basis compared with the forecast of 10.9% growth and the month prior’s downwardly revised increase of 10.9%. On a month-over-month basis, the figure jumped 0.5% versus the projected 0.6% rise and April’s gain of 0.2%. So, while the figures were not far off from all-time highs – which were set two months ago – this could signal manufacturing costs may be easing. If this is the case, it could alleviate some concerns among Money Managers. However, the continued increase in manufacturing overhead still supports the Federal Reserve’s decision to tighten monetary policy, as a rising PPI indicates growing consumer costs… even if the rate of growth was lower than projected. Within the S&P 500, nine of the 11 sectors finished lower. European Markets closed lower. Italian economist Francesco Giavazzi, an adviser to Prime Minister Mario Draghi, questioned the plan behind raising interest rates, saying economic demand is not the issue. European Central Bank Governing Council member Peter Kazimir said the regional economy is likely to experience several quarters of weak growth due to high inflation. Germany’s final Consumer Price Index (“CPI”) growth for May was in line with the preliminary reading, as rising energy prices remained the primary driver. The Centre for European Economic Research’s Euro-Zone Economic Confidence Survey for June showed investor pessimism eased as they feel the situation can’t grow worse. The rout in the European Bond Markets has led to the ECB calling an Emergency Meeting to discuss this potential catastrophic event as the ECB hold trillions of Bonds that are carrying massive capital losses. The Bund closed at 1.77% last night which is 2.5% higher that where we were in December. It will be interesting to hear what detailed points they have to offer given how trapped the ECB is at this time. In Asia, Taiwan and U.S. Security Officials were said to be planning meetings later this month to discuss security cooperation and joint military drills. The People’s Bank of China encouraged the nation’s banks to increase loans for water-based infrastructure projects by roughly $119 billion. The Bank of Japan increased its purchase of five- to 10-year sovereign debt from $3.7 billion to $6 billion to stem the recent rise in bond yields. Chinese state-run media outlet China Securities Journal said the government in Beijing is preparing to support the economy with new targeted stimulus measures. Elsewhere, Oil fell 2% on news that India substantially increased its purchases of Russian oil, while Gold closed a further 0.75% lower on continued Dollar strength.
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For anyone following my Platinum Service it made 501 points yesterday and is now ahead by 1629 points for June after making 3651 points in May, having made 762 points in April, following a gain of 5883 points in March. The Platinum Service made an impressive 5324 points in February, after ending January with a gain of 3878 points, more than making up for December’s 932 points loss. 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
Equities
The S&P 500 closed 0.38% lower at a price of 3735.
The Dow Jones Industrial Average closed 151 points lower for a 0.5% loss at a price of 30,364.
The NASDAQ 100 closed 0.21% higher at a price of 11,311.
The Stoxx Europe 600 Index closed 1.1% lower.
This morning, the MSCI Asia Pacific Index fell 0.7%.
This morning, the Nikkei closed 1.13% lower at a price of 26,329
Currencies
The Bloomberg Dollar Spot Index closed 0.3% higher.
The Euro closed 0.1% lower at $1.0418.
The British Pound closed 1.5% lower at 1.1985.
The Japanese Yen fell 0.2% closing at $134.79.
Bonds
Germany’s 10-year yield closed 13 basis points higher at 1.77%.
Britain’s 10-year yield closed 8 basis points higher at 2.61%.
US 10 Year Treasury closed 13 basis points higher at 3.50%.
Commodities
West Texas Intermediate crude closed 2% lower at $118.51 a barrel.
Gold closed 0.75% lower at $1810.10 an ounce.
This morning on the Economic Front we have Euro-Zone Trade Balance and Industrial Production at 10.00 am. This is followed by U.S. MBA Mortgage Applications at 12.00 pm. Next, we have Retail Sales, New York Empire State Manufacturing Index and the Import/Export Price Index at 1.30 pm. Business Inventories and the NAHB Housing Market Index will be released at 3.00 pm. The ECB are holding an unscheduled Meeting today to discuss the Bond rout. President Lagarde is due to speak at 5.20 pm where I presume the results of the above meeting will be revealed. Finally, we have the FOMC Meeting at 7.00 pm where the Fed are expected to announce at least a 50-Basis Point increase, followed by a press conference with Fed Chair Powell at 7.30 pm.
Cash S&P 500
There is little doubt that we are witnessing Market History as never has the world faced inflation with so much Global Debt and high market valuations coming from the insane low policy rates pursued by the Central Banks over the past 15 years. The prospects of a total financial collapse is growing and it is no wonder that the ECB have called an Emergency Meeting today at the same time the Fed are meeting to discuss whether to raise rates by 75 basis points after the leak to the Wall Street Journal on Monday. There is no doubt in my opinion that sadly it is only a matter of time before we hear of Funds blowing up on the combination of the Crypto, Bond and Equity sell-off over the past five months. The S&P is on course to record its 10th losing week out of the last eleven, something that has never happened before. The acceleration lower in the S&P has seen the market fall 11% alone since Thursday. However, I am still seeing some positive divergences while the McClellan Oscillator again closed at -255 last night. Remember every time the MO prints -250 or higher it is only a matter of time before the market has a vicious rally. I am still long the S&P from Monday at 3785 with a now lower 3798 T/P level. I will leave my 3729 ‘’Closing Stop’’ unchanged. We made some nice points over the past 24 hours making it easier to hold on to my 3985 long position from Friday with again no stop for now. It promises to be another volatile session especially after the FOMC Statement is released at 7.00 pm. This will not be the end of the volatility as we still have the June Quarterly Future and Options Contracts expiring on Friday.
EUR/USD
The Euro has had a nice rally this morning off yesterday’s 1.0395 low print. I have used this rally to exit my 1.0455 long position here at 1.0488 as emailed earlier to my Platinum Members and I am now flat. A combination of the ECB Emergency Meeting and the FOMC Statement is guaranteed to see plenty of two-way price action. The Euro has support below from 1.0340/1.0390 where I will again be a buyer with a 1.0265 wider stop.
March Dollar Index
The Dollar traded higher to my second sell level at 105.10 for a now 104.75 average short position. Where possible I want to be flat ahead of today’s events and I will now raise my T/P level on this position to 104.60. I will now lower my stop on this position to 105.31.
Cash DAX
My DAX plan worked well with the market trading the whole of my buy range for a 13360 average long position before rallying to my 13428 revised T/P level and I am now flat. The DAX has support from 13100/13200 where I will be a small buyer with a 12995 wider stop. I still do not want to be short the DAX at this time
Cash FTSE
The FTSE traded lower to my 7180 buy level before rallying this morning to my 7220 T/P level and I am now flat. The FTSE has support from 7070/7130 where I will again be a buyer with a 6995 wider stop.
Dow Rolling Contract
The Dow saw plenty of two- way price action over the past 24 hours. Shortly after I posted the Dow traded lower to my 30550 buy level before rallying to my 30715 T/P level. Subsequently, I emailed my Platinum Members to buy the Dow again at 30320 before the market rallied this morning to my 30475 T/P level and I am now flat. The Dow is severely oversold after falling over 3000 points since Thursday. We have support below from 29900/30200 where I will again be a buyer with a 20695 wider ‘’Closing Stop’’ If I am taken long I will have a T/P level at 30510.
Cash NASDAQ 100
The NDX traded the whole of my second buy level for a 11275 average long position. As I had enough risk exposure on board I covered this position at 11315. The NDX has support from 11050/11200 where I will be a buyer with a wider 10895 stop. If I am taken long I will have a T/P level at 11480. Meanwhile I will leave my 14327 long position unchanged with the same 13400 exit level
September BUND
I have mentioned numerous times over the past few months on the mounting losses that the ECB is sitting on given the rout in Global Bond Markets over the past six months. We have obviously reached a crisis level given the fact that the ECB have called an Emergency Meeting this morning. With Italian Yields soaring above 4% these Central Banks are trapped. The Bund alone fell a further 300 points yesterday as thankfully we had no buy level and are still flat. I am going to stay flat today as I want to see what ‘’magic’’ the ECB comes out with later on.
Gold Rolling Contract
No Change. I am still long at 1832 with a now lower 1835 T/P level. I will leave my 1809 ‘’Closing Stop’’ unchanged.
Silver Rolling Contract
No Change. I am still long at 21.10 with a now lower 21.40 T/P level. I will add to this position at 20.50 while leaving my 19.95 stop unchanged.
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