Nervousness ahead of today’s CPI saw U.S. Equity Markets close lower yesterday, led by the 0.92% fall in the S&P 500. Earnings and recessions fears gripped Wall Street as a deepening Treasury yield-curve inversion, a strengthening Dollar, and potentially high inflation figures stalled the American Equity Market.. The Bureau of Labour Statistics releases June’s Consumer Price Index this afternoon and Producer Price Index data tomorrow. And there is a growing sentiment that June’s inflation metrics will show no relief for those who are looking for signs that inflation has peaked. Last night, White House Press Secretary Karine Jean-Pierre said that inflation growth is likely to remain “highly elevated.” Wall Street’s uneasiness is only amplified by a strengthening Dollar that is at relative parity with the Euro. Morgan Stanley strategist Mike Wilson said that for every percentage-point increase in the Dollar year over year, earnings-per-share growth takes a 0.5% hit… With big banks poised to unofficially kick off the second-quarter earnings season later this week, a surging Dollar presents a major headwind for equities… ServiceNow CEO Bill McDermott summarized the current feeling on Wall Street during an appearance on CNBC’s Mad Money. He said that the mood is not great and many are feeling the macro crosswinds that seem to only be getting stronger. Within the S&P 500, all 11 sectors finished lower. European Markets closed higher. Germany’s ZEW Economic Sentiment Index fell to its lowest level since the Euro-Zone debt crisis in 2011. Investors remain uneasy as calls for more aggressive rate hikes are paired with falling European growth forecasts. During the monthly Eurogroup meeting, EU executive Valdis Dombrovskis shared an updated economic forecast that portrayed slower growth and higher inflation. Energy pressures continued to mount for European countries. In Asia, Markets fell, driven by growing concerns about more COVID-19 lockdowns in China as Shanghai battles new variants. A weakening Japanese Yen combined with higher-than-expected Producer Prices spurred weak investor sentiment. Greater uncertainty in global energy markets has only intensified investors’ concerns that supply-chain delays and persistent inflation will prove to be sticky. Elsewhere, Oil fell 8% as demand weakens, while Copper got crushed for a further 5% on future weakening growth.
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For anyone following my Platinum Service it made 295 points yesterday and is now ahead by 1080 points for July after closing June with a gain of 3371 points June, while 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 0.92% lower at a price of 3819.
The Dow Jones Industrial Average closed 192 points lower for a 0.62% loss at a price of 30,981.
The NASDAQ 100 closed 0.97% lower at a price of 11,744.
The Stoxx Europe 600 Index closed 0.4% lower.
This morning, the MSCI Asia Pacific Index rose 0.8%.
This morning, the Nikkei closed 0.54% higher at a price of 26,478.
Currencies
The Bloomberg Dollar Spot Index closed 0.3% lower.
The Euro closed 0.1% lower at $1.0039.
The British Pound closed 0.1% lower at 1.1879.
The Japanese Yen 4ose 0.3% closing at $136.82.
Bonds
Germany’s 10-year yield closed 12 basis points lower at 1.13%.
Britain’s 10-year yield closed 11 basis points lower at 2.07%.
US 10 Year Treasury closed 1 basis points higher at 2.97%.
Commodities
West Texas Intermediate crude closed 8.02% lower at $94.95 a barrel.
Gold closed 0.49% lower at $1724.10 an ounce.
This morning on the Economic Front we already had the release of final German CPI for May which rose 7.6% as expected and U.K. May Monthly GDP which printed +0.5% versus 0.00% expected. At 10.00 am we have Euro-Zone Industrial Production, followed by U.S. MBA Mortgage Applications at 12.00 pm. Next, we have CPI where the consensus is for a 0.6% rise, to give a yoy rate of 8.8%. Finally, we have a 30-Year Bond Auction at 6.00 pm and the Fed’s Beige Book at 7.00 pm.
Cash S&P 500
The S&P was trading in a narrow range until a sell-programme was triggered in the last hour of trading, driving the S&P to a low of 3801, before seeing a small rally off this low into the close. It was an odd sell-off as there was hardly any volume associated with it. There is a lot of fear associated with this afternoon’s CPI print. Energy prices supposedly making up more than 100% of the inflation growth print. However, since the May CPI, Oil is trading 20% lower so perhaps any strong number will be bought as traders view inflation to then be in the rear-view mirror. After we see CPI today, we have PPI tomorrow and Retail Sales on Friday leading to more volatility. The good news is that the May lows have held so far. Yesterday’s late sell-off saw my 3810 buy level triggered, before rallying overnight to my 3825 T/P level as emailed to my Platinum Members and I am now flat. Charts are telling me not to sell the market given how oversold the signals are. We have not had a decent Bear Market rally since the last two weeks in March and one is overdue. The S&P has support from 3785/3805 where I will again be a buyer with a 3769 ‘’Closing Stop’’. I still do not want to be short the S&P at this time.
EUR/USD
No Change. I am still long at 100.55 with the same 101.20 T/P level. Meanwhile, I will leave 99.75 ‘’Closing Stop’’ unchanged. If any of the above levels are hit I will be back with a new update for my Platinum Members.
March Dollar Index
The Dollar traded in a narrow range over the past 24 hours and I am still flat. We have resistance from 108.40/109.10 where I will an aggressive seller with the same 109.75 stop.
Cash DAX
Frustrating, the DAX missed my 12650 buy level by three points before having a nice 200 point rally and I am now flat. Despite the Euro threatening to break parity with the Dollar, the DAX has had a nice rally off last week’s 2022 low of 12350. Today I will raise my buy level to 12620/12690 with a higher 12535 stop.
Cash FTSE
The FTSE again traded in a narrow range and I am still flat. I will now raise my buy level to 7050/7110 with a higher 6985 stop.
Dow Rolling Contract
Unfortunately, the late sell-off in the Dow saw the market miss my 30850 buy level by a few points before the Dow rallied to sit at 31070 this morning. The technicals continue to scream caution on any short position and is the main reason why I have not been a seller of the American Indexes over the past few weeks. At the same time Fund Managers and traders are short and under exposed meaning a vicious short-term rally can occur in the blink of an eye. The 10-year Treasury Chart looks like a defined Head & Shoulders with a target level of 2%. If true, the Fed can basically stop after July’s rate hike if Yields keep dropping ahead of the Autumn Meetings. The falling Euro is giving the ECB a major headache as sentiment is on the floor. I would not be surprised to see intervention in the Euro as the crushed Euro is not the sort of price stability that the ECB is tasked with. Today, I will continue to be a buyer of the Dow from 30550/30850 with the same 30395 ‘’Closing Stop’’. Interestingly, the McClellan Oscillator still closed positive last night (+4).
Cash NASDAQ 100
My long 11840 NDX position worked well as the market had a nice rally after the Cash Markets opened to my 11950 T/P level before falling 200 points. The NDX has support from 11620/11770 where I will again be a buyer with a 11495 stop. If I am taken long I will have a T/P level at 11930. Lower Treasury Yields should support the NDX in Q3 and is the main reason why I continue to hold my April long position at 14327. I will leave my exit level unchanged at 12900 on this position.
September BUND
Bund Yields have fallen from a high of 1.84% to yesterday’s 1.09% low print in just two weeks. This is an incredible move, implying that the market is telling the ECB that we will only have a few rate hikes before triggering a major recession. Yesterday’s move higher saw the whole of my sell range hit for a 152.70 average short position. The Bund is selling off as I go to press. As I want to be flat ahead of CPI, I have now exited this position here at 152.35. Today, I will again be a seller on any further rally to 153.10/153.80 with a 154.45 ‘’Closing Stop’’. I no longer want to be long the Bund at this time.
Gold Rolling Contract
No Change. Gold has support from 1695/1710 where I will be an aggressive buyer with a 1683 ‘’Closing Stop’’.
Silver Rolling Contract
No Change. I am still long at 19.40 with the same 20.10 T/P level. Meanwhile, I will leave my 18.35 stop unchanged.
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