U.S. Equity markets surged led again the big tech cap stocks. The NASDAQ 100 closed higher by a huge 1.84% while the VIX fell a further 5%, closing at a price of 16.05. President Joe Biden said that he was confident an agreement would be reached that would avoid a default on the country’s debt. The expressed optimism came on the same day JPMorgan Chase (JPM) CEO Jamie Dimon also struck a positive tone saying the U.S. ‘probably’ won’t face a default. Walmart (WMT) raised its annual sales and profit targets following strong first quarter results which topped expectations. The retailer cited significant trade-down effects from consumers who are seeking lower prices as the primary driver of sustained demand. The strong results are in stark contrast to the trend we have been seeing in the retail industry this week. IBM (IBM) and Alphabet’s Google (GOOGL) pledged $150 million to the University of Chicago and the University of Tokyo for quantum-computing research. The deal is a result of a renewed commitment by both the U.S. and Japan to maintain its place as global leaders ahead of the threat of an emergent Chinese sector. Cisco Systems (CSCO) raised its full-year profit forecast, citing it believes that demand will remain strong for its networking solutions. The company also noted that significant strides were made to solve supply chain issues that were plaguing customer commitments. Former Google CEO Eric Schmidt became the latest artificial intelligence (“AI”) expert to warn the U.S. of China’s growing usage of AI for military use. In his testimony to Congress on Wednesday, Schmidt said that if the U.S. does not fully embrace the new technology into its national defense plans that it risks falling behind China as a military power. According to Moody Analytics, commercial real estate prices fell in the first quarter for the first time in over a decade. The decline was led by a steep drop in multi-family residences and office buildings – which are still struggling with high vacancy rates due to pandemic effects. Mark Zandi, Moody Analytics’ chief economist, warned that this is just the start of further price declines. European Markets closed higher. French Finance Minister Bruno Le Maire said that industrial food producers have agreed to come to the table with major supermarkets to renegotiate pricing structures. The decision comes because of immense pressure from the French government to find a solution that would ease inflation pressures on consumers. Russian Finance Minister Anton Siluanov admitted that Russia is struggling to combat gas and oil price caps put into place by western nations. Energy revenues have fallen to their lowest levels in years due to steep discounts taken as part of a measure to circumvent energy sanctions. In Asia, British Prime Minister Rishi Sunak said he is considering the implementation of stricter export controls and restrictions on investment in China. The decision would mirror a similar move taken by U.S. President Joe Biden. While the U.S. has been the most aggressive in its sanctions against China, it appears that European allies and fellow G-7 nations are slowly joining the efforts by the U.S. to maintain economic dominance in the west. Elsewhere Oil fell 1.33% while Gold was slammed, closing lower by 1.50%.
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 lost 370 points yesterday and is now ahead by 2110 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 0.94% higher at a price of 4198.
The Dow Jones Industrial Average closed 115 points lower for a 0.34% gain at a price of 33,535.
The NASDAQ 100 closed 1.81% higher at a price of 13,834.
The Stoxx Europe 600 Index closed 0.43% higher.
Yesterday, the MSCI Asia Pacific closed 0.40% lower.
Yesterday, the Nikkei closed 1.60% higher at a price of 30,574.
Currencies
The Bloomberg Dollar Spot Index closed 0.5% higher.
The Euro closed 0.6% lower at $1.0768.
The British Pound closed 0.5% lower at 1.2405.
The Japanese Yen fell 0.8% closing at $138.65.
Bonds
Germany’s 10-year yield closed 7 basis points higher at 2.42%.
Britain’s 10-year yield closed 11 basis points higher at 3.96%.
U.S.10 Year Treasury closed 6 basis points higher at 3.64%.
Commodities
West Texas Intermediate crude closed 1.33% lower at $71.86 a barrel.
Gold closed 1.50% lower at $1959.10 an ounce.
This morning on the Economic Front we have German Producer Prices at 7.00 am, followed by Euro-Zone Economic Bulletin at 9.00 am. Next, we have speeches from Fed Members Williams at 1.45 pm Bowman at 2.00 pm and Schnabel at 3.55 pm. Finally, at 4.00 pm we have a speech from Fed Chair Powell.
Cash S&P 500
The S&P reversed earlier losses to close on the highs of the day led again by the rip higher in technology stocks. Rising Bond Yields, a rising Dollar and falling crypto did not matter yesterday. Previously this combination would have led to a large decline in the S&P. The so-called optimism about a debt ceiling deal is neglecting to account for the rise in yields that is coming as a result of the Treasury refilling its TGA account never mind the coming liquidity drain. Besides there is still no deal at the moment. Markets again ignored Fed speak again which resulted in increased probability of a June rate hike. Much to my frustration, the markets ignored everything. Tech is even more jammed overbought as these seven stocks leading the charge are jammed outside the top of their respective Bollinger Bands. These seven stocks have a combined market cap of nearly $10 trillion and a combined multiple of 37. In my opinion this remains an accident waiting to happen. The bearish case is becoming ever more convincing especially as the markets chose to ignore both the rising Bond Yields and rising Dollar. Today, I will continue to be an aggressive seller from 4235/4260 with the same no stop or T/P level for now if triggered. I no longer want to be long the S&P at this time.
EUR/USD
The Euro sold off to my 1.0770 buy level. Given the strength of the Dollar and Bond Yields it does not make sense why equity markets are so strong. I will add to this position at 1.0700 with a now lower 1.0635 ‘’Closing Stop’’. If any of I will be back with a new update for my Platinum Members.
June Dollar Index
The Dollar rallied a further 0.50% yesterday. This move higher has me short at 103.50. Given how overbought the Dollar is trading I will add to this position at 104.20 with a now higher 104.75 ‘’Closing Stop’’. I will have a T/P level on this position at 102.90. If any of the above trades are hit, I will be back with a new update for my Platinum Members.
Cash DAX
The DAX spiked higher shortly after I posted yesterday morning. This move higher saw my second sell level at 16120 triggered for a now 16075 average short position. The DAX hit new all-time highs on negative divergence. The DAX is now higher for five consecutive months and 7 of the last 8 months despite awful economic data, with Germany close to a recession. European stocks are partying like 2021 while the Japanese Nikkei has hit a new 30-year high this morning, by flying above its Monthly Bollinger Band. I will now raise my T/P level on this position to 15990 while leaving my 16205 ‘’Closing Stop’’ unchanged.
Cash FTSE
I am still flat. The FTSE is again trading unchanged from where I marked prices 24 hours ago despite the surge in American Indexes. I will not chase the FTSE higher leaving my 7600/7670 buy level unchanged with the same 7545 ‘’Closing Stop’’. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
I want to talk about the Bank Index as indicated in yesterday’s Commentary. The fear around Regional Banks continues despite the 5% rally in the Bank Index on Wednesday. I want to highlight the price action in the SPDR and S&P Regional Banking Fund (KRE). I have been working on this chart for the past number of weeks. The takeaway here is we have a textbook Elliott Wave move down from the February high, forming a large fifth wave down. Remember, when a wave 5 ends the trend reverses. In my opinion this reversal started on Tuesday. If you want to put some pension money to work I would buy some of this Index given how oversold the Regional Banks are. I know this strategy is not for everyone but I believe that the Regional Banks are bombed out and due a decent rally. Unfortunately, the Dow missed my initial 33200 buy level by 10 points before having a 300+ point rally into the close and I am still flat. I am not going to chase the Dow higher from here leaving my 32950/33200 buy level unchanged with the same 32795 ‘’Closing Stop’’. I still do not want to be short the Dow at this time.
Cash NASDAQ 100
The NDX surged to a new 2023 high at 13835. The 14-Day RSI is at an overbought 72 while the 14-Day RSI for Google is at an unprecedented 78.50. This latest rally to new highs has come with a negative divergence. Although we lost points yesterday, we are still ahead for the month. In my opinion the NDX is severely overbought. I am now going to raise my stop on this position to a 13850 ‘’Closing Stop’’. I will now raise my T./P level on this position to 13400. If any of the above levels are hit I will be back with a new update for my Platinum Members.
June BUND
Wrong! Gold hit my second buy level at 134.90 for a 135.25 average long position before stopping me out of this position at 134.45 and I am still flat. The Bund is now oversold having fallen 500 points in the past 10 days. We have support from 132.80.133.50 where I will be an aggressive buyer with a 131.95 ‘’Closing Stop’’.
Gold Rolling Contract
Wrong! I should have paid more attention to the break of the key $2000 support level. Gold accelerated to the downside stopping me out of my 1988 long position at 1959 and I am now flat. I do not have an edge in Gold today and I will stay flat until Monday as I lick my wounds.
Silver Rolling Contract
The aggressive sell-off in Silver saw my initial 23.40 buy level triggered. I will add to this position at 22.70 with the same no stop. I will have a T/P level at 24.20. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
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