U.S. Equity Markets closed higher yesterday following a volatile trading session, with the NASDAQ 100 again leading the gains at +1.55%. Markets rallied for the second straight day, and third out of four, following better-than-feared earnings from streaming-services giant Netflix (NFLX). The company reported subscriber losses that were below Wall Street’s estimates while saying it expects to gain new subscribers next quarter. This came on the back of Tuesday’s investor sentiment data from Bank of America that showed expectations for global economic growth and corporate profits were near all-time lows. Netflix’s numbers led Wall Street to speculate expectations for quarterly earnings may prove overly pessimistic. Within the S&P 500 , seven of the 11 sectors finished higher. European Markets closed mixed. Russian President Vladimir Putin threatened to reduce natural gas flows to Europe due to slow progress on equipment maintenance. This led the European Union to call for member countries to reduce usage until March while also preparing for a total shutoff. On the positive front, investors speculated that the European Central Bank will increase interest rates by 0.5% at this afternnon’s policy meeting. This would be higher than the originally anticipated 0.25% bump. Rising sovereign bond yields would help to stabilise the Euro, which has fallen to parity compared with the Dollar. That has not happened since 2002. In Asia, Markets finished higher on Chinese stimulus optimism. Premier Li Keqiang said the government remains focused on stable prices and jobs, so It is willing to accept economic growth slightly above or below the target. Also boosting sentiment was a report from the Wall Street Journal regarding the ongoing technology probe by Chinese government officials. The story said Beijing was preparing to fine ride-hailing company Didi Global over $1 billion before ending the investigation. Elsewhere, Oil fell 0.91% while Gold closed 1% lower.
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For anyone following my Platinum Service it made 540 points yesterday and is now ahead by 2759 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 0.59% higher at a price of 3959.
The Dow Jones Industrial Average closed 47 points higher for a 0.15% gain at a price of 31,874.
The NASDAQ 100 closed 1.55% higher at a price of 12,439.
The Stoxx Europe 600 Index closed 0.8% lower.
This morning, the MSCI Asia Pacific Index rose 0.2%.
This morning, the Nikkei closed 0.4% higher at a price of 27,789.
Currencies
The Bloomberg Dollar Spot Index closed 0.4% higher.
The Euro closed 0.4% lower at $1.0179.
The British Pound closed 0.3% lower at 1.1989.
The Japanese Yen fell 0.1% closing at $13828.
Bonds
Germany’s 10-year yield closed 1 basis points lower at 1.26%.
Britain’s 10-year yield closed 5 basis points lower at 2.15%.
US 10 Year Treasury closed 1 basis points higher at 3.04%.
Commodities
West Texas Intermediate crude closed 0.91% lower at $102.46 a barrel.
Gold closed 0.96% lower at $1695.10 an ounce.
This afternoon on the Economic Front we have the ECB Rate Decision when a 25/50 basis point rate hike will be announced at 1.15 pm. This is followed by U.S. Weekly Jobless Claims and the Philly Fed Manufacturing Survey at 1.30 pm. Finally, we have the Lagarde Press Conference at 1.45 pm.
Cash S&P 500
My S&P plan worked well yesterday as the 50 Day Moving Average held a couple of times during the afternoon, before accelerating to yesterday’s highs overnight. After the S&P hit my 3925 buy level we rallied to my revised 3940 T/P level. Subsequently, I emailed my Platinum Members to buy the S&P again at 3922 before we rallied to my 3936 T/P level and I am now flat. It was interesting that we saw plenty of dip buying during yesterday’s session despite rising Bond Yields and a stronger Dollar courtesy of the ongoing Dragi situation in Italy. All eyes will be on the ECB rate decision, at the later time of 1.15 pm. If the ECB chicken out and just do a 0.25% rise then the Euro may dump, leading to another ramp in the Dollar, pressuring stocks. Likewise, if they surprise with a 0.5% rate hike this should help the Euro and possibly drive the S&P back to 4000. However, that push into the upper Bollinger Band maybe as good as it gets for a while. The S&P has resistance from 3998/4015 where I will be a small seller with a 4031 ‘’Closing Stop’’. We have strong support from 3908/3928 where I will be an aggressive buyer with a 3889 ‘’Closing Stop’’.
EUR/USD
My Euro plan worked well with the market trading lower to my 1.0160 buy level before rallying overnight to my 1.0220 T/P level and I am now flat. I expect plenty of volatility surrounding the ECB announcement and Lagarde press conference at 1.45 pm. The Euro has support from 1.0090/1.0150 where I will again be a buyer with a 1.0035 ‘’Closing Stop’’.
March Dollar Index
The Dollar rallied to my initial 107.00 sell level before trading lower to my 106.60 T/P level this morning and I am now flat. Today, I will again be a seller on any further rally to 107.30/107.90 with a higher 108.55 stop.
Cash DAX
The DAX is nervous ahead of today’s ECB Meeting. After the market traded lower to my 13230 buy level we rallied to my 13270 T/P level and I am now flat. This morning the DAX hit a high of 13360 before selling off as I go to press. We have strong support at yesterday’s 13125 low print. I will be a buyer from 13070/13150 with a wider 12995 ‘’Closing Stop’’.
Cash FTSE
The FTSE traded in a narrow range yesterday and I am still flat. I will now lower my sell level to 7360/7430 with a lower stop.
Dow Rolling Contract
To recap where we are: The reduced liquidity this year has led to the expected sell-off across the board with Indexes lower between 15% and 30%. Consumer Confidence is at all-time lows while the now consistent Atlanta Fed Negative Q2 GDP readings suggest the U.S. is now in a technical recession. Retail Sales are dropping on a real basis. Inflation data, while on the headline front is still at a 40-year high, continues to show massive roll overs which I expect to hit data points hard in the next two months. This all sets us up for the Fed Flip Flop. The fact is the Fed always cuts rates in every recession because it has to and they do not want to loose control of their rate hike narrative ahead of next week’s Fed Meeting. They will probably hike by 75 basis points. That will probably be it especially if Inflation data comes down hard ahead of the September Meeting. The Markets have recognised this with no new lows over the past few weeks despite every excuse to do so on worsening economic data. It will be interesting to see if this scenario holds when earnings are released. Yesterday, the Dow was weak in a session that saw plenty of two-way price action. After the Dow hit my 31670 buy level we rallied 300 points allowing me to cover this position at my 31780 revised T/P level and I am now flat. The 50-Day MA comes in at 31592 and I expect this support level to hold on any retest. Today, I will again be a buyer from 31430/31680 with the same 31295 ‘’Closing Stop’’. The ‘’Fear & Greed Index continues to improve, closing at 39 which is still a reading of ‘’Fear’’. A 50 print is neutral and when this happens it should propel the Dow higher given the level of bearishness amongst traders and Fund Managers.
Cash NASDAQ 100
The NDX had a nice rally yesterday and is now back trading at 12400. I will not add to my position, preferring to exit my 14327 existing long position at 12900. If this view changes I will be back with a new update for my Platinum Members.
September BUND
No Change. The Bund has strong support from 150.00/150.60 where I will again be a buyer with a 149.55 lower ‘’Closing Stop’’.
Gold Rolling Contract
Gold is heavy as I go to post. As I am now long Silver, I will lower my Gold buy level to 1660/1675 with a wider 1647 ‘’Closing Stop’’.
Silver Rolling Contract
In the past few minutes, Silver has traded lower to my 18.45 buy level. I will add to this position at 17.75 while leaving my 16.95 ‘’Closing Stop’’ unchanged. My T/P level is 18.90 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
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