Equity Markets rallied for the second consecutive session with average gains of 0.70% across the board. In the process the S&P has now regained 70% of Thursday’s ugly 100 Handle fall. After Federal Reserve Chair Jerome Powell’s speech at Jackson Hole last Friday, investors did not gain many new insights. Powell reiterated the Central Bank’s willingness to lift rates further and emphasised that rates will remain elevated for an extended period. Powell did note that the central bank has noticed the economy may not be cooling as fast as expected. It did not matter as Equity Markets rallied hard on Monday, again ignoring all the Downside Key Day Reversals from Thursday. This week will spotlight two critical Fed data points: a report on labour and the latest view on inflation. The Personal Consumption Expenditures (“PCE”) index, the Federal Reserve’s inflation gauge of choice, is slated for release on Thursday afternoon. Meanwhile, the August employment report is set to arrive on Friday at 1.30 pm London Time. Investors are now watching closely for any signs that the economy might be slowing down again, which would affect when the Fed decides to stop increasing rates. In the past week, investors gained a clearer understanding of the retail sector’s condition as key players like Dick’s Sporting Goods (DKS), Lowe’s (LOW), Macy’s (M), and Kohl’s (KSS) released their reports. These retail giants collectively portrayed a weakening outlook driven by cautious consumer behaviour and the rising concern of retail theft. As we move into this week, attention turns toward upscale retailers such as Lululemon (LULU) and Best Buy (BBY). Their upcoming reports will shed light on whether their customer base has truly exhibited the resilience that has been suggested. However, any indications of a slowdown could serve as a cautionary signal, suggesting that even well-off consumers have not been immune to the impact of high inflation. Last week investors took in the news that Existing Home Sales were on the decline while New Home Sales were rising as existing supply continues to fall to historic lows. This diminished supply has kept a further decline in prices at bay so far. This week, investors will get the latest update on housing prices this afternoon, with the S&P/Case-Shiller National Home Price Index and FHFA House Price Index for June. Despite the plummeting affordability and rising mortgage rates, prices are expected to rebound for the fifth straight month. Market participants should pay close attention to two important themes we see carrying over from last week. The rapid rise of both U.S. Treasury yields and the U.S. Dollar – which surged following Federal Reserve Chair Jay Powell’s speech Friday. Yields on long-term debt last week soared to 16-year highs, and if data this week points towards a stronger economy, yields could move even higher as bonds sell off. Last week, another noteworthy event was the U.S. dollar index (DXY) reaching its highest point since May. If investors believe that interest rates have further to climb, the Dollar is likely to rise. European Markets closed higher. Investors ignored ECB President’s bearish comments on Interest Rates, closing higher by 1% on Monday. Elsewhere, Oil rose 0.3% while Gold closed higher by 0.4%, continuing to build valie above $1900.
To mark my 2850th 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 38 points yesterday and is now ahead by 1355 points for August following a small gain of 285 points gain in 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 0.63% higher at a price of 4433.
The Dow Jones Industrial Average closed 213 points higher for a 0.62% gain at a price of 34,559.
The NASDAQ 100 closed 0.74% higher at a price of 15,052.
The Stoxx Europe 600 Index closed 0.89% higher.
This morning, the MSCI Asia Pacific closed 0.4% higher.
This morning, the Nikkei closed 0.18% higher at a price of 32,226.
Currencies
The Bloomberg Dollar Spot Index closed 0.2% lower.
The Euro closed 0.1% higher at $1.0811.
The British Pound closed 0.2% higher at 126.05.
The Japanese Yen fell 0.1% closing at $146.53.
Bonds
Germany’s 10-year yield closed 2 basis points lower at 2.54%.
Britain’s 10-year yield closed 2 basis points lower at 4.44%.
U.S.10 Year Treasury closed 2 basis points lower at 4.22%
Commodities
West Texas Intermediate crude closed 0.3% higher at $80.12 a barrel.
Gold closed 0.4% lower at $1922.10 an ounce.
This morning on the Economic Front we already had the release of German GFK Consumer Confidence which came in at -25.5 versus -24.3 expected. Next, we have U.S. Housing Price Index at 2.00 pm. Finally, at 3.00 pm we have Consumer Confidence and JOLTS Job Openings.
Cash S&P 500
The S&P rallied as expected given how oversold my technical signals are. This move higher saw the S&P close above both the 5 EMA and 8 MA but crucially still below the 20 MA and 50 MA. The 50 MA comes in at 4460 – so still some work to do. However, with the $BPSPX ticking up to a still severely oversold 16 print on the 14-Day RSI, the S&P in my opinion has plenty of room to go on a proper rally. The Seasonal Chart bottomed last Friday and now has a clear run higher until Mid-September. Last Friday’s lows saw the Dow, NASDAQ 100, S&P and Junk Bonds hold important trendlines, adding to the bullish case. The Bears need these lows to break convincingly for any meaningful downside price action to occur. Amazingly last week’s aggressive sell-off saw a complete flush out in Asset Manager Exposure, now the lowest of the year. If markets do adhere to seasonality, then these funds will be forced to re-buy the S&P at higher levels. There are two worries about the bull case, namely the Dollar and Bond Market. The Dollar is overbought and a risk of a reversal which will help the S&P, while the Treasury Yields are at multi-year highs, and also at risk of a reversal. I am still flat the S&P. I will now raise my buy level to 4405/4420 with a tight 4389 fixed stop. I still do not want to be short the S&P at this time.
EUR/USD
Despite yesterday’s aggressive move higher in Global Equity Markets the EURO traded sideways. As I was expecting the Euro to rally and Dollar to fall, I decided to exit my latest 1.0770 long Euro position for a small gain at my revised 1.0808 T/P level and I am now flat. Today, I will again be a buyer on any dip lower to 1.0700/1.0770 with the same 1.0655 ‘’Closing Stop’’.
June Dollar Index
No Change. I am still short from last Thursday at 103.90 with the same 103.40 T/P level. I will look to add to this position at 104.60 with the same 105.10 ‘’Closing Stop’’. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash DAX
No matter how weak the German Economic data is the DAX continues to find buyers of dips. This morning we saw a weak GFK Consumer Confidence, and the DAX is higher by 0.5%. Remember a market that cannot fall on bad news has to be respected. I am still flat the DAX and will now raise my buy level to 15600/15680 with a higher 15535 ‘’Closing Stop’’.
Cash FTSE
The FTSE is opening higher this morning following London being closed yesterday for the August Bank Holiday, trading at 7415 as I go to press. With Gilt Yields at 4.5% it makes more sense to have funds tied up in Bond Markets rather than the volatile equity market. There is no doubt that this has been a strong catalyst for the underperforming FTSE so far in 2023. The FTSE has support from 7270/7340 where I will be a buyer with a 7195 tight ‘’Closing Stop’’.
Dow Rolling Contract
I am still flat the Dow as the market never came close to yesterday’s buy range. I am reluctant to chase the Dow higher given the fact it continues to trade below its 50 Day Moving Average (34664). Therefore, I will continue to be a buyer on any dip lower to 34100/34350 with a higher 33895 ‘’Closing Stop’’.
Cash NASDAQ 100
Frustrating. I have had the correct view in being a buyer on dips of the NDX. Unfortunately, getting stopped on Thursday is annoying especially as the NDX is now trading over 350 points higher from where we were post- Powell’s Jackson Hole speech. This should come as no surprise given how oversold all my technical signals are at this time. The NDX has support from 14800/14950. I will now raise my buy level to this area with a higher 14795 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 15070.
September BUND
The Bund missed yesterday’s buy level by 2 points before having a small 40-point rally into the close. Today, I will continue to be a buyer on any dip lower to 131.00/131.80 with the same 130.25 ‘’Closing Stop’’.
Gold Rolling Contract
With London closed yesterday, Precious Metals trade in narrow ranges. I am still flat. I will now raise my Gold buy level to 1886/1901 with the same 1869 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 1912.
Silver Rolling Contract
No Change. Silver has traded in a narrow 50-point range over the past week. I am still long at an average rate of 24.20 with the same 25.10 T/P level. I will leave my ‘’Closing Stop’’ unchanged at 22.95. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
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