News that Home Depot had its worst revenue miss in 20 years saw the Dow close lower by 1%. This is the sixth down day for the Dow out of the last seven sessions. Meanwhile the NASDAQ 100 kept making new highs despite the rest of the market getting sold. House Speaker Kevin McCarthy said continued talks to avoid a U.S. debt default were making little to no progress. On Monday, McCarthy told Capitol Hill that despite the ongoing staff-level meetings, the talks have not produced an “agreement on anything.” Congressional Republicans are meeting President Joe Biden and other Democrat officials overnight. Federal Reserve Bank of Chicago President Austan Goolsbee said much of the impact from the Fed’s rate hikes has yet to be felt. He warned that further tightening could be an overreaction and that policymakers must be diligent in assessing the potential consequences of the central bank’s monetary policy. Federal Reserve Bank of Minneapolis President Neel Kashkari said the central bank likely has further work to do if it wants to bring inflation back down to its 2% target. Kashkari’s views differ from Chicago’s Goolsbee and Atlanta’s Raphael Bostic, who are in favour of pausing rate hikes in June. However, Bostic did push back any notion that rate cuts would be on the radar for the central bank before 2024. The European Union’s antitrust watchdog approved Microsoft’s (MSFT) planned acquisition of Activision Blizzard (ATVI). This comes just weeks after the U.K.’s regulatory body rejected the deal. While the decision remains a win for the tech giant, Microsoft still faces an uphill battle in the appeal process in the U.K. as well as a hearing with the U.S. Federal Trade Commission later this summer. Amazon (AMZN) announced plans to bring its own artificial-intelligence interface – similar to OpenAI’s ChatGPT product – to its web store. It faces competition from other major tech names such as Microsoft and Alphabet’s (GOOGL) Google, which have recently announced plans to integrate the technology into their own search engines. European Markets closed lower. Euro-Zone economic growth for the first quarter was 0.1% quarter-over-quarter. Stronger employment and a rebound in exports pushed the trade balance into a net positive. The region’s year-over-year gross domestic product was largely in line with preliminary estimates of 1.3%. According to economists polled by Reuters, the European Central Bank (“ECB”) is projected to hike interest rates by 25 basis points at its next two meetings. This is in line with several hawkish ECB members who have repeatedly said that inflation remains too high and a terminal rate of at least 4% would be likely by the end of the summer. The ZEW institute’s gauge of investor confidence fell for a third consecutive month, reigniting fears that Germany and the larger Euro-Zone region could still be headed for a recession. After a resurgence in confidence to end 2022, investor optimism has once again slipped into negative territory as inflation remains high and manufacturing has unexpectedly declined. In Asia, following an initial surge in economic activity post-lockdowns, China’s recovery is losing momentum. Industrial output, retail sales, and fixed investment all showed muted signs of growth in April. The figures become even more disappointing when you consider that last year’s comparisons were from an economy still in lockdown. Elsewhere, Oil closed 0.65% lower while Gold was hit hard closing lower by 1.20% after a volatile trading session.
To mark my 2800th issue of TraderNoble Daily Commentary I am offering a special 2-Year Rate of Euro 2750 for my Platinum Service which includes 1 to 4 updated emails throughout the trading day to demonstrate this value, a monthly subscription over the same period would cost 4440 euro in total This offer represents a 38% discount and is open to both new and existing members. If anyone is interested in this offer can you please email me on bryan@tradernoble.com for details
For anyone following my Platinum Service it made 4 points yesterday and is now ahead by 2445 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 0.64% lower at a price of 4110.
The Dow Jones Industrial Average closed 336 points lower for a 1.01% loss at a price of 33,012.
The NASDAQ 100 closed 0.09% higher at a price of 13,426.
The Stoxx Europe 600 Index closed 0.41% lower.
This morning, the MSCI Asia Pacific closed 0.40% higher.
This morning, the Nikkei closed 0.76% higher at a price of 30,069.
Currencies
The Bloomberg Dollar Spot Index closed 0.3% higher.
The Euro closed 0.1% lower at $1.0860.
The British Pound closed 0.3% lower at 1.2481.
The Japanese Yen fell 0.2% closing at $136.38.
Bonds
Germany’s 10-year yield closed 4 basis points higher at 2.34%.
Britain’s 10-year yield closed 2 basis points higher at 3.82%.
U.S.10 Year Treasury closed 4 basis points higher at 3.54%.
Commodities
West Texas Intermediate crude closed 0.65% lower at $70.64 a barrel.
Gold closed 1.20% lower at $1991.10 an ounce.
This morning on the Economic Front we have Euro-Zone CPI at 10.00 am. At the same ECB Members Panetta and Elderson are due to speak. Next, we have U.S. MBA Mortgage Applications at 12.00 pm. This is followed by Building Permits and Housing Starts at 1.30 pm. Finally, we have a speech from the ECB’s De Guindos at 4.15 pm.
Cash S&P 500
The frustrating chop continues as traders look for direction. As I understand it this past few weeks is now the tightest range for the S&P in five years. It is very difficult to make points when the daily ranges are so small. Big Cap Tech is getting more overbought while the larger market is getting more oversold. This is truly bizarre making it difficult to analyse. The danger with short positions is if the larger market catches a ‘’Bid’’ then we will have a melt-up in the S&P. This is the main reason why I am reluctant to be short unless the S&P hits my 4235/4250 aggressive sell level target. While Quant Funds are not a massive part of the market, the Options Complex is and with a combination of low volume as participants stand on the side-lines their effect is exacerbated. This has resulted in low volume and explains a lot of what we are currently seeing. The fundamental picture is frightening. Never mind the lag effects of rate hikes. Fact is consumer debt has now swelled to $17 trillion with nearly a trillion dollars in credit card debt at all-time highs in credit card interest rates and credit tightening in the form of lending standards is a giant wall about to hit the economy and with it the markets. I am still flat the S&P. I will continue to be a small buyer from 4088/4103 with the same 4079 ‘’Closing Stop’’. My only interest in selling the S&P is from 4235/4250 where I will be an aggressive seller with no stop.
EUR/USD
No Change. The Euro made a high above 109.10 before selling off on the back of the weaker Dow. I am still flat. The Euro has support from 1.0740/1.0810 where I will continue to be a buyer with a 1.0695 ‘’Closing Stop’’. I still do not want to be short the Euro at this time.
June Dollar Index
The early weakness in the Dollar saw my 102.10 buy level triggered. Overnight the Dollar rallied to my 102.55 T/P level and I am now flat. Today, I will again be a buyer from 101.50/102.10 with the same 100.95 ‘’Closing Stop’’.
Cash DAX
No Change. The DAX traded in a narrow range yesterday and I am still flat. I will continue to be a small seller on any further rally to 16010/16100 with a higher 16205 ‘’Closing Stop’’. The DAX is trading 11% above its 200 Day Moving Average. This is pretty extended and another reason why not to be long the market.
Cash FTSE
I am still flat. I will now lower my buy level to 7600/7670 with a lower 7545 ‘’Closing Stop’’. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
After the Dow traded lower to my 33090 buy level I emailed my Platinum Members to exit any long position at my revised 33170 T/P level. Thankfully, the Dow made a rebound high at 33183 before falling a further 200 points into the close. The Dow is severely oversold. As a result, I have no interest in being short at this time even though the Dow closed below its 50-Day Moving Average at 33143. We have short-term support from 32630/32880 where I will be a strong buyer with a 32495 tight ‘’Closing Stop’’.
Cash NASDAQ 100
No Change. I am still short from late Monday at 13420. The NDX is jammed overbought as six Big Cap stocks continue to trade outside their respective Daily Bollinger Bands. I will add to this position at 13570 while leaving my 13705 ‘’Closing Stop’’ unchanged. My T/P level remains unchanged at 13330. If any of the above levels are hit I will be back with a new update for my Platinum Members.
June BUND
No Change I am still long the Bund from yesterday morning at 135.60. I will add to this position at 134.90 while leaving my 134.45 ‘’Closing Price’’ unchanged. I will also lower my T/P level to 136.05. If any of the above levels are hit I will be back with a new update for my Platinum Members.
Gold Rolling Contract
Gold got slammed yesterday. I am now long at 1995. I will add to this position at 1980 with a now lower 1969 ‘’Closing Stop’’. I will also lower my T/P level to 2003. If any of the above levels are hit I will be back with a new update for my Platinum Members.
Silver Rolling Contract
Wrong! Silver followed Gold yesterday, stopping me out of my 25.00 long position at 23.79 and I am now flat. I will continue to be an aggressive buyer from 22.80/23.50 with no stop. If executed I will have a T/P level at 24.40.
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