Lower Bond Yields and a retreating Dollar saw U.S. Equity Markets surge yesterday, led by the 2.66% gain in the Dow. Markets rallied as10-Year Treasuries fell 19 basis points, closing at 3.63%. Over the weekend, new British Prime Minister Liz Truss said her government would rethink its plan to lower tax rates. Members of the ruling Tory Party said they would not support the idea of lowering the 45% top tax level. They worried that such a move would worsen the inflation outlook as lower taxes would support more spending. With stimulus plans back to the drawing board, this meant less need for the Bank of England, and potentially other central banks, to become even more aggressive with interest rate hikes. So, as yields dropped, it meant lower costs to borrow and service debt. That improved the potential for spending going forward, buoying the mood for risk assets like stocks. Helping the cause were manufacturing metrics for September from the Institute for Supply Management. The data showed prices paid by companies for raw materials continued to drop – back to pre-pandemic levels – while employment eased. Both numbers signalled central bank interest rate hikes were being felt by the economy. Within the S&P 500 Index, all 11 sectors finished higher. European Markets closed higher. As I stated above, investors were encouraged by the U.K. government’s about-face on its tax-cut plans. In addition, energy companies helped to support the gains. Energy Ministers from OPEC+ said they were considering an oil output cut of up to one million barrels per day to support higher prices. In Asia, Equity markets in mainland China and South Korea were closed for the national holidays. China’s markets will remain shut through Friday for the Golden Week holiday. Japanese shares rallied after the Bank of Japan said it would increase the total amount of government bonds it buys during the fourth quarter to cap bond yields. In addition, speculators were optimistic a weak Yen would spur increased global demand for cheap Japanese-made goods. Elsewhere, Oil rose 5.21% while a weaker Dollar saw Silver surge 8.80%.
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For anyone following my Platinum Service it made 780 points yesterday, the first trading session of October, after finishing September with an incredible gain of 6660 points, after closing August with a gain of 2228 points, having made 2660 points in July, following a gain of 3371 points in June. The Service made 3651 points in May, after making 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 2.59% higher at a price of 3678.
The Dow Jones Industrial Average closed 765 points higher for a 2.66% gain at a price of 29,490.
The NASDAQ 100 closed 2.36% lower at a price of 11,229.
The Stoxx Europe 600 Index closed 0.77% higher.
This morning, the MSCI Asia Pacific Index rose 1.1%.
This morning, the Nikkei closed 2.96% higher at a price of 26,991.
Currencies
The Bloomberg Dollar Spot Index closed 0.4% lower.
The Euro closed 0.3% higher at $0.9826.
The British Pound closed 1.2% higher at 1.1302.
The Japanese Yen rose 0.2% closing at $144.55.
Bonds
Germany’s 10-year yield closed 18 basis points lower at 1.93%.
Britain’s 10-year yield closed 13 basis points lower at 3.95%.
US 10 Year Treasury closed 19 basis points lower at 3.63%.
Commodities
West Texas Intermediate crude closed 5.21% higher at $83.55 a barrel.
Gold closed 2.37% higher at $1701.10 an ounce.
This morning on the Economic Front we have Euro-Zone PPI at 10.00 am. The only other data of note is U.S. JOLTS Job Openings and Factory Orders at 3.00 pm. However, we have a clatter of Fed speakers: Williams 2.00 pm, Mester at 2.15 pm and Daly at 6.00 pm.
Cash S&P 500
The aggressive rally that I have been looking for started shortly after I posted yesterday’s commentary. This rally has seen follow through overnight with the S&P trading higher at 3715 as I go to press. Frustratingly, the S&P missed my second buy level at 3680 with a 3682 low print. The Weekly 200 MA held prices as expected meaning a low-risk entry for long positions. The Fed got hammered yesterday with the UN, IMF and even the UK Chancellor all blaming the Fed and asking them to stop rate hikes. We still have lots of resistance above but do note that yesterday’s rally came on falling Bond Yields and U.S. Dollar which was always the base requirement that I have been talking about for the past few weeks. I am still long the S&P at 3733 with the same 3770 T/P level. The S&P has support from 3675/3695 where I will again be a buyer with a 3659 tight ‘’Closing Stop’’.
EUR/USD
My long .9750 Euro position worked well with the market hitting my .9850 T/P level this morning and I am now flat. Today, I will again be a buyer on any dip lower to .9760/.9820 with a .9695 ‘’Closing Stop’’.
March Dollar Index
No Change as I need a miracle. I am still short at an average rate of 108.90 with the same 108.10 T/P level. This morning the Dollar is trading at 111.10, one hundred points lower from where I marked prices yesterday morning.
Cash DAX
Just like the S&P above the DAX fell shy of yesterday’s buy range before rallying over 400 points and I am still flat. The stronger Euro and lower Bund are certainly helping the DAX to rally off the now key 11900 support level. The DAX has short-term support from 12100/12200. I will now raise my buy level to this area with a higher 11995 ‘’Closing Stop’’.
Cash FTSE
The FTSE rallied to my 6895 T/P level on yesterday’s 6815 average long position and I am now flat. The surge in Sterling may hinder any further progress in the FTSE. We have short-term resistance from 7010/7070 where I will be a small seller with a 7125 tight stop.
Dow Rolling Contract
Wow!! The Dow is now trading 1100 points higher from where I marked prices 24 hours ago with short positions slammed. This move higher saw my 29300 T/P level triggered on Friday’s 29025 average long position and I am now flat. The overnight follow through is encouraging. If the Dow can survive and rally on any back test this afternoon then we can look for higher prices. Yet again a combination of a 14-Day RSI in the 20s and a McClellan Oscillator with a negative reading over 250, prove what valuable technical signals they are. The Dow has support from 29300/29500 where I will be a buyer with a 29095 ‘’Closing Stop’’.
Cash NASDAQ 100
While I was unlucky with the DAX and S&P above, at least the NDX hit my 10900 buy level before rallying to my 11125 T/P level and I am now flat. Given how far the NDX has fallen, any follow through in Bond buying will see the NDX outperform the other main Indexes into year-end. Today, I will again be a buyer on any dip lower to 11000/11220 with a 10895 ‘’Closing Stop’’.
December BUND
The Bund is trading 310 points higher from where I marked prices yesterday morning, never coming close to my buy range as thankfully we had now sell level in this market. Such a huge move higher makes it difficult to get on board, especially as there is every chance we will see a back test first. The Bund has short-term support from 139.80/140.60 where I will be a small buyer with a tight 138.95 ‘’Closing Stop’’. If I am taken long I will have a T/P level at 141.30.
Gold Rolling Contract
Gold has now rallied over $90 off last Wednesday’s massive upside ‘’Key Day Reversal’’. Who says technicals do not matter? I will now raise my buy level to 1665/1680 with a higher 1649 wider ‘’Closing Stop’’.
Silver Rolling Contract
Silver surged almost 9% yesterday as the market finally proved how cheap this precious metal is. This move higher saw my 19.60 T/P level triggered on my 18.40 two-week-old long position and I am now flat. This morning, Silver is trading at $21. We have short-term support from 19.90/20.60 where I will again be a buyer with no stop.
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