The Federal Reserve as expected halted its interest rate hikes at yesterday’s Fed Meeting, marking the first pause in 15 months. However, the central bank will retain a tightening bias, indicating a possibility of resuming rate increases as early as next month. Federal Reserve Chair Jerome Powell in his Q&A said it made perfect sense to moderate the pace of rate hikes. No matter the initial sell-off was met by strong buying in tech stocks helping the NASDAQ 100 to close with a gain of 0.70%. According to the recent data from the Labor Department, inflation continued to decline in May, with the consumer price index (CPI) showing a 4% year-on-year increase. This figure is significantly lower than the peak of 9.1% recorded in June last year and slightly down from April’s 4.9% increase. The data indicates progress made by Federal Reserve officials in addressing price pressures. However, the fact that inflation remains at elevated levels suggests that further actions may be necessary to effectively manage and control inflationary pressures. Amazon Web Services (“AWS”), the leading cloud computing provider globally, is reportedly contemplating the utilisation of new artificial intelligence (“AI”) chips developed by Advanced Micro Devices (AMD). However, AWS has not yet reached a final decision on this matter, as confirmed by an AWS executive in a conversation with Reuters. The executive’s remarks were made during an AMD event that focused on outlining the company’s strategy for the AI market, an industry currently dominated by its competitor Nvidia Corp. A Federal judge in California has issued a temporary restraining order to halt Microsoft’s (MSFT) $69 billion acquisition of Activision Blizzard (ATVI). The judge’s decision aims to maintain the current state of affairs while the Federal Trade Commission (“FTC”) challenges the merger. The FTC, which initiated the move to block the deal within its own court system, filed an emergency motion on Monday to put a stop to the acquisition. European Markets closed higher. Euro-Zone Industrial Production experienced a stronger-than-anticipated recovery in April, bouncing back from a decline in March. According to Eurostat, Industrial Production rose by 1.0% in April, resulting in a 0.2% year-on-year increase. The data revealed that increased output in capital goods, including buildings and equipment, counterbalanced the reduced production of consumer goods. In Asia, Chinese investors are increasingly diverting their funds into overseas assets, driven by the Federal Reserve’s interest rate hikes that enhance the attractiveness of dollar deposits and bonds. This trend has put pressure on domestic stocks, which have been experiencing a decline. With expectations of the Fed maintaining high interest rates and Chinese policymakers reducing short-term borrowing costs, this trend is expected to gather further momentum. However, the increased outflows could negatively impact the local stock market, exacerbating concerns over economic growth and geopolitical issues. China’s economy is anticipated to have experienced a further slowdown in May, prompting economists to revise their projections and increase expectations of an interest rate cut by the central bank. Official data, scheduled to be released on Thursday (local time), is expected to reveal a moderation in retail sales growth compared to the robust post-reopening surge observed in the first quarter. Furthermore, Industrial Production is likely to have weakened due to a decline in exports and an easing of domestic demand. These factors indicate a loss of momentum in the economic recovery, prompting calls for policy measures to support and stabilise the economy. Elsewhere, Oil closed 0.60% higher, while Gold closed flat 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 210 points yesterday and is now ahead by 1040 points for June. May closed with a gain of 3205 points. 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 0.08% higher at a price of 4372.
The Dow Jones Industrial Average closed 232 points lower for a 0.68% loss at a price of 33,979.
The NASDAQ 100 closed 0.70% higher at a price of 15,005.
The Stoxx Europe 600 Index closed 0.36% higher.
Yesterday, the MSCI Asia Pacific closed 0.8% higher.
Yesterday, the Nikkei closed 1.47% higher at a price of 33,502.
Currencies
The Bloomberg Dollar Spot Index closed 0.4% lower.
The Euro closed 0.3% higher at $1.0832.
The British Pound closed 0.3% higher at 1.2660.
The Japanese Yen rose 0.1% closing at $140.01.
Bonds
Germany’s 10-year yield closed 5 basis points higher at 2.47%.
Britain’s 10-year yield closed 3 basis points lower at 4.40%.
U.S.10 Year Treasury closed 1 basis points higher at 3.80%.
Commodities
West Texas Intermediate crude closed 0.60% higher at $68.68 a barrel.
Gold closed 0.1% higher at $1942.10 an ounce.
This morning on the Economic Front we have Euro-Zone Trade Balance at 10.00 am. This is followed by the ECB Rate Announcement at 1.15 pm followed by the Lagarde Press Conference at 1.45 pm. At 1.30 pm we have U.S. Weekly Jobless Claims, Retail Sales, Philly Fed Survey and the New York Empire State Manufacturing Index. At 2.15 pm we have Industrial Production and Capacity Utilisation. Finally, we have Business Inventories at 3.00 pm and the Total Net TIC flows at 9.00 pm.
Cash S&P 500
The S&P sold off on the supposedly hawkish statement from the FOMC. However, the market did not believe Powell and rallied hard into the close. The NDX surged to a new high for 2023, closing above 15,000. The VIX got crushed, closing lower by 5% with Monday’s move higher now reversed after yesterdays and Tuesday’s fall. Powell avoided the first question on easing financial conditions in light of core inflation remaining high which was no surprise. After the S&P hit my 4382 sell level the S&P fell to a post FOMC low at 4337 before reversing most of these losses into the close. I covered my short position at 4371 and I am still flat. With the RSI at 73, I will now look to sell the S&P again from 4388/4408 with no stop. If triggered, I will have a T/P level at 4369. The S&P has support from 4290/4310 where I will be a strong buyer with a 4279 tight ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 4331.
EUR/USD
The Euro rallied on the FOMC Statement, and I am still flat. I will not raise my buy level 1.0690/1.0770 with a higher 1.0625 ‘’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 before closing below 103.00. I will now lower my sell level to 103.50/104.10 with a lower 104.75.
Cash DAX
No Change. I am still flat the DAX and I will stay flat until I see the reaction to the expected 0.25% rate hike from the ECB this afternoon. If this changes I will come back with an update for my Platinum Members
Cash FTSE
The FTSE continues to trade heavy, and I am still flat. The FTSE has strong support from 7480/7540. I will continue to be a buyer on any dip to this area with the same 7425 ‘’Closing Stop’’.
Dow Rolling Contract
My Dow plan worked well as the market traded lower to my 33900-buy level before rallying to my 34030 revised T/P level and I am now flat. Today, I will again be a buyer on any dip lower to 33550/33800 with a lower 33395 ‘’Closing Stop’’. Despite the negative divergences I still do not want to be short the Dow.
Cash NASDAQ 100
The charts remain insane in tech land. Yesterday’s close above 15,000 saw the 14-Day RSI close at 76.30. History tells us you cannot be a buyer at these levels. In afterhours trading the NDX hit my second sell level at 15030 for a now 14955 average short position. I will leave my 15105 ‘’Closing Stop’’ unchanged while raising my T/P level to 14820. If any of the above levels are hit I will be back with a new update for my Platinum Members.
September BUND
Rising Treasury Yields saw the Bund trade lower to my 133.00 second buy level for a now 133.35 average long position. I will leave my 132.35 ‘’Closing Stop’’ unchanged while lowering my T/P level to 133.75.
Gold Rolling Contract
I do not like the price of Gold as we keep making lower highs. I will continue to be a buyer from 1895/1910 with the same 1879 ‘’Closing Stop’’.
Silver Rolling Contract
After Silver missed my 23.60 buy level, I emailed my Platinum Members to buy the market at 23.93. I am still long, and I will add to this position at 23.20 with no stop. I will have a T/P level at 24.70 on this position.
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