Lower Bond Yields and a weaker Dollar saw U.S. Equity Markets close higher although off their afternoon highs. The NASDAQ 100 led Thursday’s gains, closing higher by 0.64%. This move higher saw the VIX fall a further 5%, closing at a price of 17.84. Internally the stock market continues to improve as shown by the McClellan Oscillator which improved for the second consecutive trading session to close at -75. Minneapolis Federal Reserve President and voting member Neel Kashkari suggested that a U.S. government shutdown or prolonged strike by the United Auto Workers (“UAW”) could be a positive. He believes that these downside scenarios would naturally slow the economy and lower inflation, ultimately reducing the need for further rate hikes from the central bank. Kashkari also outlined two potential future outcomes and how the Fed would handle each. The first one, which he believes is 60% likely, involves the central bank successfully reducing inflation to its 2% target without damaging the economy. The other, which he deems less likely, involves inflation staying high and the Fed having to hike rates more to combat it. The Senate Banking Committee has supported legislation that will protect financial institutions that are offering their services to cannabis businesses. While cannabis is still illegal at the federal level, the bill has passed the committee, and Majority Leader Chuck Schumer now plans to bring it to the voting floor. Notably, the bill does not make comprehensive legalisation or regulation changes. However, if it passes, it could encourage larger institutions to enter the multibillion-dollar sector, and the industry would begin to move away from cash transactions. Orders for Durable Goods rose by 0.2%, according to data from the U.S. Department of Commerce, beating expectations. This increase in machinery and business spending on equipment offset a decline in orders for civilian aircraft. Manufacturing makes up just over 11% of the economy, so it is an important sector to watch. Though it continues to face challenges and threats of a looming recession, it is holding strong. Orders of core capital goods, which are non-defence goods excluding aircraft and an indicator of business-spending plans, rebounded in September with a 0.9% increase. While a rise in prices is reflected in this data, the resilience of Durable-Goods Orders suggests businesses are still investing in equipment. This is a positive sign for economic growth. The initial public offering (“IPO”) market is expected to have a relatively quiet finish to the year after a string of strong issuances. U.S. IPOs have generated roughly $7.2 billion so far in September, marking the largest month for the market since January 2022. Although new offerings like Arm (ARM) and Instacart (CART) experienced initial volatility, their recent stabilization has boosted confidence among firms looking to follow suit. As companies and markets become more comfortable with the Federal Reserve’s monetary trajectory, optimism around IPOs should grow and entice more firms to go public via an IPO. European Markets closed higher. Research company Gfk revealed that German Consumer Confidence sank to negative 26.5 in October, continuing its downtrend from August and coming in below expectations. The decline was due to an increased desire to save, which reached its highest level since April 2011. Making things worse, the tendency to spend remained at its low level since the 2008 financial crisis. It does not seem likely that consumer sentiment will rebound before year’s end, as high inflation is expected to wreak havoc on the economy. European Central Bank (“ECB”) governing council member Robert Holzmann suggested commercial banks should increase their reserve holdings with central banks to a range of 5% to 10%. Currently, commercial banks need to hold 1% of select liabilities, mostly customer deposits, at the ECB. Holzmann’s proposal aims to ensure that the ECB has sufficient reserves in case unconventional monetary policies need to be enacted. His suggestion has drawn criticism from German banks, which equate the idea to a tax that’s limiting their ability to lend. This debate over reserve requirements is yet another consequence of the ECB’s “higher for longer” stance. In Asia, we had the release of Japanese Consumer Confidence overnight which came in lower than expected with a 35.2 print. Elsewhere, Oil fell 2.1% while despite a weaker Dollar, Gold closed lower by 0.5%.
To mark my 2875th 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 263 points yesterday and is now ahead by 91 points for September, after finishing August with 1485 points gain 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 0.59% higher at a price of 4300.
The Dow Jones Industrial Average closed 116 points higher for a 0.35% gain at a price of 33,666.
The NASDAQ 100 closed 0.64% higher at a price of 14,702.
The Stoxx Europe 600 Index closed 0.36% higher.
This morning, the MSCI Asia Pacific closed 0.5% lhigher.
This morning, the Nikkei closed 0.05% lower at a price of 31,857.
Currencies
The Bloomberg Dollar Spot Index closed 0.50% lower.
The Euro closed 0.5% higher at $1.0570.
The British Pound closed 0.5% higher at 122.04.
The Japanese Yen rose 0.1% closing at $149.34.
Bonds
Germany’s 10-year yield closed 9 basis points higher at 2.94%.
Britain’s 10-year yield closed 23 basis points higher at 4.56%.
U.S.10 Year Treasury closed 1 basis points higher at 4.62%.
Commodities
West Texas Intermediate crude closed 2.10% lower at $91.71 a barrel.
Gold closed 0.5% lower at $1865.10 an ounce.
This morning on the Economic Front we already had the release of German Retail Sales which fell a hefty 1.2% versus +0.5% expected. Also released was U.K. Final GDP which rose 0.2% as expected. Next, we have German Unemployment at 8.55 am followed by U.K. Mortgage Approvals and Money Supply at 9.30 am. At 10.00 am we have Euro-Zone CPI. This is followed at 1.30 pm by U.S. Personal Income/Spending and the PCE Deflator and Wholesale Inventories. Finally, we have the Chicago Purchasing Managers’ Index at 2.45 pm and the University of Michigan Consumer Sentiment Index at 3.00 pm.
Cash S&P 500
Despite the S&P continuing to build value above Wednesday’s washout 4239 low print the $BPSPX 14 Day RSI closed at a new low of 14 last night. Of particular note about this key signal, it is now showing the most extensive down period in many years. Indeed, looking back over the last 10 years I have no precedence for $BPSPX to creep along the bottom for that long. We have had lower spikes, but emphasis on spikes and these spikes usually result in moves higher on the RSI which has not happened this time. Now we know why the market has been held hostage by three unexpected developments: 1, Powell’s not my baseline comment following the Fed Meeting last week. 2, the continued 11-week rally in the Dollar which I did not expect and 3 Treasury Yields spiking to an afternoon high at 4.66%. I certainly did not see this happen making the last month one of the trickiest months to negotiate in many years. The Dollar rising for 11 consecutive weeks has never happened before so this will give some context as to how overvalued the Dollar is currently. The combination of the above three things sees the S&P leave an unprecedented number of ‘’Open Gaps’’ to the upside. As we know all gaps eventually get filled. The Seasonality Chart is now positive for the next week before falling the mid two weeks in October. I plan to use the upcoming rally to exit any long positions. This morning the S&P is trading higher at 4308. I am still long at an average rate of 4302. I will now lower my T/P level on this position to 4322 while leaving my 4369 ‘’Closing Stop’’ unchanged. If this view changes I will be back with a new update for my Platinum Members.
EUR/USD
Thankfully, the Euro has rallied off yesterday’s 1.0494 low print, trading at 1.0595 this morning. I am still long at an average rate of 1.0621 with a now lower 1.0661 T/P level. I will now have a ‘’Closing Stop’’ on this position at 1.0535. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
September Dollar Index
The Dollar is trading lower at 105.87 this morning. To reduce the number of open positions that I currently own I have now exited my 106.30 average short position here at 105.87 and I am now flat. The Dollar has strong resistance from 106.35/106.95 where I will again be a seller with a higher 107.55 ‘’Closing Stop’’.
Cash DAX
My DAX plan worked well for the third consecutive trading session as the market traded lower to my 15150-buy level before rallying to my 15237 T/P level and I am now flat. The weaker Dollar saw the DAX rally hard yesterday and is now trading over 200 points higher from where I marked prices 24 hours ago. Given how far the DAX has fallen it has plenty of room to move higher. We have short-term support from 15220/15300 where I will again be a buyer with a higher 15135 ‘’Closing Stop’’.
Cash FTSE
After the FTSE traded lower to my 7530-buy level I had too many open positions. After the FTSE had a small rally, I exited this long position at my revised 7578 T/P level and I am still flat. The FTSE continues to build value above its 200-Day Moving Average. Today, I will again be a buyer on any dip lower to 7500/7570 with a higher 7445 ‘’Closing Stop’’.
Dow Rolling Contract
No Change. I am still long at an average rate of 33910 with the same 34060 T/P level. I will now lower my stop to a ‘’Closing Price’’ of 33495. If any of the above levels are hit, I will be back with a new update for my Platinum Members. The 200-day Moving Average for the Dow comes in this morning just above current prices at 33809. For bulls to regain some control the Dow needs to break and close over this key resistance level this evening.
Cash NASDAQ 100
My NDX plan worked well as the market traded lower to my 14540-buy level before rallying to my too tight 14625 T/P level and I am now flat. This morning the NDX is trading higher at 14760. We have support from 14530/14680 where I will again be a buyer with a higher 14395 ‘’Closing Stop’’.
December BUND
Lower Treasury Yields overnight sees the Bund trading higher at 128.01 this morning. I am still long at an average rate of 128.50 with a now lower 128.80 T/P level. I will leave my 127.35 ‘’Closing Stop’’ unchanged. 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 hit hard again yesterday, trading lower to my second buy level at 1865 for a now 1872 average long position. Despite the lower Dollar, Gold is struggling to rally. I will now lower my T/P level to 1881 with the same 1853 ‘’Closing Stop’’. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Silver Rolling Contract
No Change. I am still long Silver from three weeks ago at 24.05. In a change of strategy, I will have no stop or no T/P level on this position. This morning Silver is trading higher at 23.05 as I go to press. If this view changes, I will be back with a new update for my Platinum Members.
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