Friday saw a volatile trading session as Equity Markets sold off on the higher-than-expected PCE print. The NASDAQ 100 led the declines, closing lower by 1.73%. Surprisingly, despite Friday’s across the board sell-off, the VIX only closed higher by 2.51% at a price of 21.67. The week ended with rate repricing expectations garnering heavy momentum after numerous economic indicators point toward stronger economic health. However, as JPMorgan Chase (JPM) economist Dan Silver recently pointed out, many analysts are growing cautious of January figures due to the unusual seasonal adjustments that may be swaying certain figures. Personal Consumption Expenditures (“PCE”) data for January – a key reading on inflation growth – showed hotter-than-expected results. Personal spending was up 1.8% month over month. January Home Sales printed hotter at 670,000, higher than the expected 618,000, while the February Michigan Consumer Sentiment Index was revised marginally higher, but long-term expectations remained unchanged. Within the S&P 500 Index, nine of the 11 sectors finished lower. European Markets closed lower. Bundesbank President Joachim Nagel said the European Central Bank may still need to raise interest rates for the foreseeable future as structural price growth remains too high. Germany’s Consumer Confidence figures for March are expected to improve for the fifth-consecutive month as energy prices stabilise and concerns over a deep recession fade. French Consumer Confidence for February showed a slight decline from January, as consumers continue to spend cautiously as they deal with higher prices, while Spain’s PPI for January rose 8.2% year over year – a significant decline from the prior month’s 14.9% annual growth rate. In Asia, The White House was said to consider increasing the presence of U.S. troops in Taiwan, potentially stoking political tensions with China. Bank of Japan Governor nominee Kazuo Ueda told the lower house confirmation hearing that he believes the current monetary policy in place is appropriate. Reserve Bank of New Zealand Assistant Governor Karen Silk said it is not considering ending interest-rate hikes as inflation growth risks are still to the upside. Japan’s CPI growth for January hit its highest level in more than four decades, increasing pressure on the central banks to raise interest rates. Elsewhere, Oil closed 1.54% higher while Gold closed lower by 0.48%.
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For anyone following my Platinum Service it made 330 points on Friday and is now ahead by 2574 points for February after closing January with a gain of 4687 points, while finishing December with a gain of 2054 points. November ended with a gain of 4789 points, while finishing October with a record gain of 9619 points, making 6660 points in September, 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 1.05% lower at a price of 3970
The Dow Jones Industrial Average closed 336 points lower for a 1.02% loss at a price of 32,816.
The NASDAQ 100 closed 1.73% lower at a price of 11,969.
The Stoxx Europe 600 Index closed 1.04% lower.
Last Friday, the MSCI Asia Pacific fell 0.62%.
Last Friday, the Nikkei closed 1.29% higher at a price of 27,453.
Currencies
The Bloomberg Dollar Spot Index closed 0.7% higher.
The Euro closed 0.4% lower at $1.0553.
The British Pound closed 0.5% lower at 1.1940.
The Japanese Yen fell 1.4% closing at $136.45.
Bonds
Germany’s 10-year yield closed 5 basis points higher at 2.53%.
Britain’s 10-year yield closed 6 basis points higher at 3.65%.
U.S.10 Year Treasury closed 7 basis points higher at 3.95%.
Commodities
West Texas Intermediate crude closed 1.54% higher at $76.55 a barrel.
Gold closed 0.48% lower at $1809.10 an ounce.
This morning on the Economic Front we have Euro-Zone Money Supply at 9.00 am, followed by Economic Sentiment Indicator and Industrial Confidence at 10.00 am. Next, we have U.S. Durable Goods Orders at 1.30 pm. Finally, we have Pending Home Sales at 3.00 pm and the Dallas Fed Manufacturing Business Index at 3.30 pm.
Cash S&P 500
The higher than expected PCE print cracked a lot of narratives on Friday as higher Bond Yields and a rising Dollar saw the S&P hit my aggressive buy level at 3945. For now this support level has held helping the S&P to rally to my revised 3969 T/P level. Markets are oversold following the 4.5% fall in the last week. The big question now is whether we are setting ourselves up for a major rally into the seasonally strong March/April period or whether this all melts down. So far the S&P has held its 200-Day Moving Average (3941) while the late rally saw the S&P back trading inside its Daily Bollinger Band. We have a number of open gaps above coming on the back of signal charts becoming more oversold. This suggests to me that we will get a snapback rally into month-end tomorrow. Earlier the S&P traded the whole of my first buy level for a now 3974 average long position. I will leave my 3949 ‘’Closing Stop’’ on this position while lowering my T/P level to 3992. I will continue to be an aggressive buyer from 3920/3945 with no stop or T/P level for now if triggered.
EUR/USD
No Change. I am still long the Euro at an average rate of 1.0635. I will leave my 1.0545 ‘’Closing Stop’’ unchanged while lowering my T/P level on this position to 1.0670. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
March Dollar Index
The rising Dollar saw my 105.00 sell level triggered. I will add to this position at 105.70 while leaving my 106.25 ‘’Closing Stop’’ unchanged. I will raise my T/P level to 104.60. If any of the above levels are hit I will be back with a new update for my Platinum Members.
Cash DAX
Friday was the first day we saw a small crack in the German DAX. In contrast to the Dow which is now trading lower on the year, European Markets are up over 12% year-to-date. The European rally is all the more impressive considering that the Swaps Market is now pricing in a jump in the ECB policy rate to 3.75% by September (up an incredible and unprecedented +300 basis points since last summer), versus +2.5% currently – which would match the peak posted in 2001. The yield on the two-year Bund is now pressing against 3%, the highest it has been in fourteen years. Wage growth in the continent is now approaching 5% as unions respond to the inflation surge in the past year. The CPI is now at 8.2% while the core rate was at a record +5.2% in January. It makes you wonder how long the DAX can hold in when you consider all of the above. Late Friday the DAX traded lower to my 15210 buy level before rallying to my revised 15235 T/P level as emailed to my Platinum Members and I am now flat. The DAX has resistance from 15360/15440 where I will be a small seller with a 15515 wider closing stop. The DAX has short-term support from 14950/15050 where I will be a strong buyer with a 14875 tight ‘’Closing Stop’’
Cash FTSE
No Change. I am still long from last Wednesday at a price of 7900. I will continue to look to add to this position at 7830 with the same 7795 tight ‘’Closing Stop’’. I will now lower my T/P level to 7835 which is just below Friday’s high print.
Dow Rolling Contract
As I mentioned above, the Dow is in the red for year. The Dow is the most cyclical of all the major averages. The uptrend line from last October’s lows is under tremendous pressure. This is one of the main reasons why I have had no buy level in the Dow for the last few sessions. The Equity Risk Premium offers no mathematical reason to be long the Dow right now and is a no brainer when it comes to comparing a six month T-Bill Yield, at 5.08% to the 5.5% earnings yield provided by the Dow. The Dow has resistance from 33200/33400. I will now lower my sell level to this area with a lower 33505 ‘’Fixed Stop’’.
Cash NASDAQ 100
The NDX again led the stock market lower as rising Bond Yields weighed on Technology Stocks. This move lower has me long at a price of 11980. Given how oversold tech stocks are trading I am happy to add to this position on any further move lower to 11830. I will leave my 11695 ‘’Closing Stop’’ unchanged while lowering my T/P level to 12060. If any of the above levels are hit I will be back with a new update for my Platinum Members.
March BUND
Higher Treasury Yields saw the Bund get hit hard on Friday, hitting my initial 134.00 buy level. As I wanted to be flat over the weekend I exited this position at my revised 134.25 T/P level. The Bund has support below from 132.60/133.40 where I will again be a buyer with a lower 131.95 tight ‘’Closing Stop’’.
Gold Rolling Contract
The recent price action in Gold is awful if you are bullish. On Friday after we hit my 1812 buy level I exited this position at 1816 and I am still flat. The next support level for Gold is from 1790/1805 where I will again be a buyer with a 1779 ‘’Closing Stop’’.
Silver Rolling Contract
No Change. Silver has traded sideways since we saw the market fall 3%,10 days ago. I am still convinced that it is only a matter of time before Silver takes out the key 24.00/25.00 resistance area. Remember in May 2011, Silver was trading above $50. I am still long at an average rate of 23.10 with the same no stop policy. I will leave my T/P level unchanged at 23.50. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
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