U.S. Equity Markets got hit hard yesterday following more worries that a number of Regional Banks may go under. The Dow led Tuesdays declines closing lower by 1.08% while the VIX surged closing higher by over 10% at a price of 17.78. Morgan Stanley (MS) is set to enact another round of job cuts as part of a renewed focus on expense reduction. Prospects for the dealmaking business continue to look weak as the economy enters a recession. International Business Machines (IBM) CEO Arvind Krishna said that the company is planning to halt hiring in the next few years in select areas due to artificial intelligence (“AI”). He said that he could envision as many as 7,800 jobs being replaced with AI and automation by 2028. U.S. Treasury Secretary Janet Yellen said that the U.S. could run out of money to pay its bills as soon as June 1 if Congress does not act on a solution to solve the ongoing debt limit gridlock. European Markets closed lower. Core inflation in the Euro-Zone eased for the first time since last June, as costs rose 5.6% YOY, down from March’s record of 5.7%. The first sign of core inflation peaking provides the European Central Bank with a bit more wiggle room to take its foot off the gas pedal and slow rate hikes moving forward. In Asia, Hong Kong saw a spending boom in the first quarter. The economy expanded 2.7% in the quarter and marked the first expansion of GDP in over a year. The economy is finally starting to recover from pandemic lockdowns, as foreign visitor arrivals surged in the final two months of the quarter. Australia’s central bank reversed course and continue its policy tightening campaign after unexpectedly raising rates by 25-basis points Tuesday. Furthermore, the central bank provided guidance that suggests a renewed effort for further rate hikes to come. Elsewhere, Oil got crushed, closing lower by 5.29% while a weaker Dollar saw Gold rise 1.3%.
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For anyone following my Platinum Service it made 87 points yesterday and is now ahead by 883 points for May. April saw a gain of 3354 points while March closed with a gain of 6168 points. The Platinum Service made 3164 points in February, 4687 points in January 2054 points in December, 4789 points in November and a record 9619 points last October. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1900 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 1.16% lower at a price of 4120.
The Dow Jones Industrial Average closed 367 points lower for a1.08% loss at a price of 33,684.
The NASDAQ 100 closed 0.89% lower at a price of 13,113.
The Stoxx Europe 600 Index closed 1.24% lower.
This morning, the MSCI Asia Pacific closed 0.20% higher.
This morning, the Nikkei closed 0.12% higher at a price of 29,157.
Currencies
The Bloomberg Dollar Spot Index closed 0.6% lower.
The Euro closed 0.2% higher at $1.1001.
The British Pound closed 0.2% lower at 1.2475.
The Japanese Yen fell 0.2% closing at $136.47.
Bonds
Germany’s 10-year yield closed 5 basis points lower at 2.26%.
Britain’s 10-year yield closed 2 basis points lower at 3.71%.
U.S.10 Year Treasury closed 11 basis points lower at 3.44%.
Commodities
West Texas Intermediate crude closed 5.29% lower at $71.66 a barrel.
Gold closed 1.3% higher at $2014.10 an ounce.
This morning on the Economic Front we have Euro-Zone Unemployment at 10.00 am followed by U.S. MBA Mortgage Applications at 12.00 pm. Next, we have the ADP Employment Change at 1.15 pm and Global Services PMI at 2.45 pm. At 3.00 pm we have ISM Services PMI. Finally, we have the FOMC Statement at 7.00 pm where the Fed is expected to raise rates by 25 basis points and the Powell Press Conference at 7.30 pm.
Cash S&P 500
This is not an easy market to trade. I am bearish but as we have seen over the past six months it is extremely difficult to be short for any length of time as the buy the dip is relentless. Despite the banking carnage all three American Indexes are trading above both their 50- and 200-Day Moving Averages. Yesterday’s sell-off saw the S&P hit a low at 4090 before aggressive buying sees the S&P trading at 4129 as I go to press. With Microsoft trading close to all-time highs we cannot say we have had a proper sell-off. The danger for short positions is if Apple Earnings come in better than expected when it reports after they close tomorrow then both the S&P and NDX will surge as we saw last week after Facebook, Google and Microsoft beat the street. Yesterday’s move lower has me long at an average rate of 4137 as my 4119 ‘’Closing Stop’’ held. If we get a rally ahead of the FOMC Statement I will exit this long S&P position at 4135. If this happens, I will come back with a new update and strategy for my Platinum Members
EUR/USD
Unfortunately, the Euro missed my 1.0940 second buy level by two points before rallying overnight to my 1.1030 T/P level on my latest 1.1000 long position and I am now flat. Today, I will again be a buyer on any dip lower to 1.0910/1.0980 with a lower 1.0865 ‘’Closing Stop’’. I still do not want to be short the Euro at this time.
June Dollar Index
The Dollar never came close to yesterday’s sell range, and I am still flat. I will now lower my sell level slightly to 102.40/103.10 with a lower 103.65 ‘’Closing Stop’’.
Cash DAX
Despite Retail Sales falling 2.4% the DAX made a new 2023 high at 16010 before falling over 300 points. This move lower produced a massive Downside Key Day Reversal. The DAX has bounced this morning, trading at 15800 as I go to press. We have resistance from 15890/15990. I will now lower my sell level to this area with a lower 16065 ‘’Closing Stop’’. I still do not want to be long the DAX at this time.
Cash FTSE
The FTSE sold off after I posted yesterday morning. This move lower saw my 7830-buy level triggered. I am still long and I will add to this position at 7760 while lowering my T/P level to 7855. I will leave my 7695 ‘’Closing Stop’’ unchanged for now. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
The 4.5% fall in the Bank Index saw the Dow get slammed yesterday. However, a combination of the Dollar weakening and the Dow holding its 50-Day Moving Average (33068) keeps me on the buy side of the Dow for now. With the banks showing no sign of stability I would have expected the Dow to have had a larger fall than yesterday’s 1% decline. What a lose lose situation the Fed is in. Six weeks after SVG nothing is solved on the banking front despite massive interventions, depositor bailouts and Government take overs. If the Fed don’t hike this evening they may cause a panic. If they hike it may just exacerbate the damage flowing through the system which is now the wall of slowing credit growth which will choke the economy into a recession. Tonight’s Powell press conference will be interesting to say the least. My view is that Powell is increasingly set up to be the fall guy if anything blows up. Yesterday’s move lower saw the market get very oversold short-term hence the late rally into the close that has continued overnight. The Dow has support from 33150/33400 where I will be a strong buyer with a 32995 ‘’Closing Stop’’. I will now lower my sell level to 34050/34300 with a lower 34505 wider ‘’Closing Stop’’.
Cash NASDAQ 100
Despite a huge fall in 10-Year Treasury Yields the NDX still hit my 13050 initial buy level. We rallied small enabling me to cover this position at my revised 13107 T/P level and I am now flat. Ahead of this evening’s FOMC Statement I will be a buyer of the NDX on any further dip to 12840/12990 with a lower 12695 ‘’Closing Stop’’. My only interest in selling the NDX is still on a further rally to 13300/13450 with the same 13505 tight ‘’Closing Stop’’.
June BUND
Frustratingly the Bund missed yesterday’s buy level by 18 points before rallying 200 points and I am still flat. With Bund Yields at 2.25% the Bond Market is telling us that the ECB are close to finishing their rate hiking phase. A 2.4% fall in German Retail Sales should be enough to worry ECB President Lagarde. I will now raise my buy level in the June Bund to 134.70/135.40 with a higher 133.95 ‘’Closing Stop’’.
Gold Rolling Contract
Gold hit a morning low below rallying over $30 on the renewed regional bank sell-off in the States. I am still flat. I will now raise my buy level to 1970/1985 with a higher 1959 ‘’Closing Stop’’.
Silver Rolling Contract
No Change. I am still long Silver from Monday at 25.10 with a now lower 25.60 T/P level. I will continue to add to this position at 24.40 while leaving my 23.85 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
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