Equity Markets on both sides of the Atlantic continue to react positively to Fed Chair Jerome Powell’s statement following the FOMC’s two-day policy meeting which resulted in the central bank lifting interest rates by another quarter-point. Despite predicting a noticeable slowdown in economic growth later this year, recent resilience in the economic data has led them to abandon the recession forecast. Coupled with ECB President staying that the ECB are worried about an impending recession, the ECB will go on hold after yesterday’s ninth rate hike in the past 12 months. However, just before 6 pm out of nowhere a sell-off in American Indexes saw the three main Indexes close lower, resulting in a number of Downside Key Day Reversals. Mattel (MAT) beat sales and profit expectations in the second quarter. However, the company did not receive significant help from its iconic Barbie doll, despite being featured in the top movie globally last weekend. Overall, Mattel’s sales declined by 12% to $1.09 billion in the second quarter, which was slightly better than analysts’ projections for a more significant drop. European Markets surged, led by the 2.2% rise in the French CAC. The ECB raised rates by 25 basis points yesterday afternoon, increasing the deposit rate to 3.75%. This move has been anticipated and communicated by ECB President Christine Lagarde and her colleagues. In her press conference she said the ECB were worried about the underlying weakness in the Euro-Zone economy. In Asia, Hedge Funds continue to ignore bearish sentiment on Chinese equities, buying at the fastest rate in nine months, with nine out of 11 industries showing net purchases. However, both the gross and net exposures to Chinese stocks by hedge funds are still relatively low compared to previous months. This indicates a fragile sentiment as investors await stronger economic stimulus from Beijing and the implementation of policy promises to support the market rebound. Elsewhere, Oil rose a further 1.66% while Gold was crushed on a much stronger Dollar, closing lower by 1.3%.
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 148 points yesterday and is now ahead by 288 points for July, after closing June with a gain of 2683 points. 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 0.64% lower at a price of 4537.
The Dow Jones Industrial Average closed 237 points lower for a 0.67% loss at a price of 35,282.
The NASDAQ 100 closed 0.22% lower at a price of 15,464.
The Stoxx Europe 600 Index closed 1.36% higher.
This morning, the MSCI Asia Pacific closed 0.3% higher.
This morning, the Nikkei closed 1% lower at a price of 32,562.
Currencies
The Bloomberg Dollar Spot Index closed 0.8% higher.
The Euro closed 1.1% lower at $1.0974.
The British Pound closed 1.1% lower at 1.2792.
The Japanese Yen rose 1% closing at $140.06.
Bonds
Germany’s 10-year yield closed 3 basis points higher at 2.49%.
Britain’s 10-year yield closed 3 basis points higher at 4.31%.
U.S.10 Year Treasury closed 16 basis points higher at 4.00%
Commodities
West Texas Intermediate crude closed 1.66% higher at $80.09 a barrel.
Gold closed 1,1% lower at $1944.10 an ounce.
This morning on the Economic Front we have German GDP at 9.00 am, followed by Euro-Zone Sentiment Indicator at 10.00 am. Next, we have German CPI at 1.00 pm. This is followed at 1.30 pm by U.S. Employment Cost Indicator, Personal Income/Spending and the PCE Indicator. Finally, at 3.00 pm we have the University of Michigan Consumer Sentiment Indicator.
Cash S&P 500
With Fed Chair taking the word recession off his agenda at Wednesday’s press conference and ECB President Lagarde saying in her press conference yesterday that the ECB are finally worried about the growth rate in the Euro-Zone, Equity Markets surged on both sides of the Atlantic with zero price discovery. Stronger economic data out of America saw the equity melt up continue as the S&P made new highs for the year. It looked like the way things are going we will probably have new all-time highs in a few weeks. We have now entered a period where markets are seemingly disrespecting not only fundamentals and technical signals while keeping expanding multiples at a historic pace, but one also has to wonder are we going to crash like we did in 1929, 1970 and 1987 when conditions were similar. The 10 ‘’Open Gaps’’ for the S&P since March is not part of normal market functioning in my opinion as I continue to get severely frustrated by this aggressive move higher. I have been trading for nearly 40 years and I have never seen anything like it as this market stretches my technical sensibilities. The $NYSI is now even more overbought helping the VIX to trade with a 12 Handle. Then out of nowhere, the S&P sold off 80 Handles from its 4607 afternoon high as traders finally coped on to 10-year yields hitting 4% and the Dollar up over 2% on the week. Everybody including Retail is long this market and yesterday’s aggressive reversal may be the start of something meaningful. This move lower saw me exit my 4542 short position for a small loss at 4550 and I am now flat. A benign Bank of Japan and better earnings from Intel see futures markets higher this morning. The problem with trying to short on a Friday is the probable VIX crush. However, yesterday’s reversal coming on the back of the two reversals in the NDX is important. The S&P has resistance from 4562/4582 where I will again be a seller with a 4608 ‘’Closing Stop’’ which is just above yesterday’s high print.
EUR/USD
A dovish Lagarde in her press conference and stronger than expected U.S. Economic data saw the Euro hit hard yesterday, closing lower by 1%. This move lower has me long at an average rate of 1.1030. I will now lower my T/P level to 1.1070 while leaving my 1.0935 ‘’Closing Stop’’ unchanged. If any of the above levels are hit I will be back with anew update for my Platinum Members.
June Dollar Index
My latest 100.70 Dollar long position as the market rallied to my too tight 101.05 T/P level and I am now flat. This morning, the Dollar is trading higher at 101.70. We have support from 100.70/101.40 where I will again be a buyer with a 100.15 tight ‘’Closing Stop’’.
Cash DAX
It is as if Tuesday’s sell-off never happened on the IMF calling for a recession in Germany as the DAX is now trading 400 points higher than where we were on Tuesday morning. This move higher has me short at an average rate of 16270 with the same 16405 ‘’Closing Stop’’. I will now raise my T.P level to 16220. If this view changes I will be back with a new update for my Platinum Members.
Cash FTSE
No Change. I am still a buyer on any dip lower to 7560/7620 with the same 7495 ‘’Closing Stop’’. The FTSE has resistance from 7790/7860 where I will be a seller with a 7915 tight ‘’Closing Stop’’.
Dow Rolling Contract
Just when it looked like the Dow would close higher for a the 13h consecutive trading session, a massive sell programme hit the market driving the Dow lower by 400 points. The last time we saw winning streaks for the Dow of this magnitude was in 1929, 1970 and 1987. History tells us that each time this happened the market crashed. Year after year we now see things in markets that we have never seen before. When is it going to end? Recession says it should end at any moment. History says it should end at any moment. But this market has left reason at the March door when the Fed pumped liquidity to stem the banking crisis as the FOMO hits record levels, so who knows. Finally, my technicals worked as the Dow hit my 35235 T/P level on my 35368 average short position. Given yesterday’s reversal from a 35650 high print I will now be a seller against this resistance level. The Dow has rallied this morning and I have now gone short here in small size at 35386. I will add to this position at 35640 with a tight 35805 ‘’Closing Stop’’. I will have a T/P level on this position at 35190. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
My NDX plan worked well as the market rallied to my 15680-sell level. Subsequently, we hit a high at 15790 before selling off 370 points. This move lower saw my revised 15620 T/P level triggered and I am now flat. Yesterday’s sell-off means the NDX has now had a second reversal of a lower high. This has serious implications for a large move lower. However, I do not want to get ahead of myself especially as it is a Friday where rallies tend to happen almost every week. The NDX has resistance from 15600/15750 where I will be a strong seller with the same 15905 ‘’Closing Stop’’. I still do not want to be long the NDX at this time.
September BUND
Despite a dovish Lagarde the Bund got hit hard yesterday. This move lower saw my 132.00 buy level triggered this morning. I will add to this position at 131.20 with a now lower 130.65 ‘’Closing Stop’’. I will have a T/P level on this position at 132.65.
Gold Rolling Contract
Frustratingly, Gold missed my 1942 buy level by $1 before having a nice rally overnight. As I am back long Silver, I will now lower my buy level to 1920/1935 with a lower 1909 ‘’Closing Stop’’.
Silver Rolling Contract
Thankfully we exited our two-week latest long position at 25.05 as the much stronger Dollar saw Silver fall 3% yesterday. This move lower has me long again at a price of 24.60. I will continue to look to add to this position at 23.80 with the same no stop. I will now lower my T/P level to 24.30.
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