Although Equity Markets sold off in the last hour of trading from their afternoon highs, all three American Indexes ended Tuesday in positive territory. 10-Year Treasury Yields falling 16 basis points helped the NASDAQ 100 to lead yesterday’s gains, closing higher by 0.56%. Federal Reserve Bank of Dallas President Lorie Logan believes that the recent surge in long-term Treasury yields may reduce the need for central-bank rate increases. She suggested that higher premiums on Treasurys could cool the economy and take some of the pressure off the Fed for additional monetary-policy tightening. However, Logan noted that the central bank may need to tighten monetary policy further if the increase in long-term rates is due to economic strength. Achieving price stabilisation is a top priority for the Fed, and Logan suggested that prolonged restrictive financial conditions may be needed to achieve its goal. Goldman Sachs (GS) economists expressed concerns that the recent surge in Treasury yields will have a negative impact on economic growth and introduce financial risks. While Goldman Sachs estimates a 0.5-percentage-point decline in GDP over the next year, it does not believe it will lead to a recession. The firm also highlighted potential risks that accompany high rates such as reduced stock valuations, potential corporate exits, and federal-debt sustainability. However, Goldman suggested that even in adverse scenarios, it believes Federal Reserve interest-rate cuts could offset much of the impact. Tesla (TSLA) has reduced prices for its electric vehicles (“EVs”) once again, putting its top-selling models in direct competition with traditional gasoline-powered cars. The Model 3 and Model Y now cost $8,700 and $3,700 less than their petrol counterparts, respectively. The reduced prices have increased pressure on traditional automakers attempting to break into EV production. However, the cost reduction has led to criticism from some investors, with one fund manager estimating the cuts could cost Tesla $1.2 billion a year starting in 2024. European Markets surged on Tuesday. German Industrial Output fell 0.2% month over month in August, marking the fourth consecutive decline. The drop in industrial output was due to poor demand from China, worker shortages, high interest rates, and sustained losses from last year’s energy crisis. As a result, Germany’s gross domestic product (“GDP”) is expected to contract 0.1% in the third quarter and 0.6% for the full year. Additionally, the weakened German economy has negatively affected the outlook for broader European economic growth. European Central Bank (“ECB”) Governing Council member Pablo Hernandez de Cos emphasised that the central bank’s monetary policy has yet to fully affect the economy. De Cos’ comments echoed last week’s remarks from ECB Vice President Luis de Guindos. The two central-bank officials believe that while the transmission of monetary-policy tightening is in progress, the impact on the real economy is moving at a slower pace. Guindos confirmed that mode-based estimates suggest much of the tightening impact will surface in the coming months. In Asia, the Nikkei again closed higher with a 0.60% gain. Elsewhere, Oil fell 0.47% while Gold closed flat.
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 50 points yesterday and is now ahead by 1522 points for October after closing September with a small gain of 228 points, 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 0.52% higher at a price of 4358.
The Dow Jones Industrial Average closed 134 points higher for a 0.40% higher at a price of 33,739.
The NASDAQ 100 closed 0.56% higher at a price of 15,131.
The Stoxx Europe 600 Index closed 1.96% higher.
This morning, the MSCI Asia Pacific closed 0.5% higher.
This morning, the Nikkei closed 2.59% higher at a price of 31,936.
Currencies
The Bloomberg Dollar Spot Index closed 0.05% higher.
The Euro closed 0.3% higher at $1.0604.
The British Pound closed 0.3% higher at 122.80.
The Japanese Yen fell 0.1% closing at $148.68.
Bonds
Germany’s 10-year yield closed 2 basis points lower at 2.75%.
Britain’s 10-year yield closed 5 basis points lower at 4.50%.
U.S.10 Year Treasury closed 17 basis points lower at 4.63%.
Commodities
West Texas Intermediate crude closed 0.47% lower at $85.97 a barrel.
Gold closed 0.1% higher at $1862.10 an ounce.
This morning on the Economic Front we already had the release of German Final CPI for September which came in as expected at 4.5% Y/Y. Next, we have U.S. MBA Mortgage Applications at 12.00 pm and PPI at 1.30 pm. Finally, we have the FOMC Minutes from last month’s Fed Meeting at 7.00 pm.
Cash S&P 500
I spent a lot of time over the weekend going back over old historic S&P charts as in my opinion the rally this week could be the start of a huge melt-up given the seasonality ahead of the Presidential Election next year. If bears cannot break this market given 1-year bond yields at a 23 year high and the Dollar rallying for an unprecedented 12 consecutive weeks then what else do need as an excuse to trade lower. A new war conflict in one of the most sensitive regions of the world could not break the market as the S&P hit a high yesterday afternoon at 4385. This is a 180 Handle rally off last Thursday’s successful test of the S&P’s 200 Day Moving Average. I am not saying that we are all-clear here for higher prices as we have to negotiate PPI this afternoon and CPI tomorrow but if Inflation prints no surprises then why would you want to be short? CTA’s have their lowest net long exposure in many years, joining asset managers in cutting their long exposure. If these two important groups join the party, then the S&P will melt-up as I expect. I am still flat the S&P as the market did not come close to yesterday’s buy range. Ahead of PPI today, I will be a small buyer from 4328/4343 with a tight 4315 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 4360.
EUR/USD
Shortly after I posted yesterday morning the Euro rallied above 1.0600, enabling me to cover my latest 1.0525 long position at my 1.0575 T/P level and I am now flat. Today, I will again be a buyer on any dip lower to 1.0490/1.0560 with a higher 1.0425 ‘’Closing Stop’’.
September Dollar Index
No Change. Again, missed my sell range over the past 24 hours. Today, I will continue to be a seller from 106.55/107.15 with the same 107.65 ‘’Closing Stop’’.
Cash DAX
The DAX has now rallied nearly 400 points since last Friday’s and this Monday’s low print. The chart could be setting up for a massive bull flag leading to a melt-up in European Indexes as they join their American counterparts. Apart from a couple of occasions buying the dip in the DAX has paid dividends over the past few weeks. I am still flat the DAX as the market never came close to yesterday’s buy range. Given the severity of the rally since Monday, I am reluctant to chase the DAX higher. I certainly do not want to be short either. Today, I will now raise my buy level to 15170/15250 with a higher 15095 ‘’Closing Stop’’.
Cash FTSE
The FTSE surged yesterday, closing above its 200 Day Moving Average, helped by Gilt Yields falling to 4.50%. I am still flat. The FTSE has support from 7480/7550 where I will now move my buy range too with a now higher 7405 ‘’Closing Stop’’.
Dow Rolling Contract
Yet again the Dow found resistance at its 200-Day Moving Average (33809) as the market fell 170 points off its 33900-afternoon high into the close. I am still flat. Ahead of this afternoon’s PPI data I will now raise my buy level to 33320/33570 with a higher 33195 ‘’Closing Stop’’ Despite the key resistance at 33800, I have no interest in being short the Dow. If this view changes I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
No Change. Even though the NDX led yesterday’s gains, the market closed 0.5% below its afternoon high of 15240. I am still flat as yesterday’s buy range was never threatened. Ahead of this afternoon’s key PPI data, I will only raise my buy level slightly to 14890/15070 with a higher 14745 ‘’Closing Stop’’. The NDX did close over its 50-Day Moving Average (15080) which is positive but the Dow again found strong selling at its key 200 Day Moving Average. If I am taken long, I will have a T/P level at 15140.
December BUND
Frustratingly, the Bund missed yesterday’s initial 128.60 buy level by three points before rallying to sit at 129.05 this morning. Ahead of U.S. PPI I will continue to be a small buyer on any dip lower to 127.90/128.60 with the same 127.15 ‘’Closing Stop’’.
Gold Rolling Contract
Gold traded in a narrow range yesterday and I am still flat. I will now raise my buy level to 1833/1848 while leaving my 1819 ‘’Closing Stop’’ unchanged.
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 unchanged at 21.85. If this view changes, I will be back with a new update for my Platinum Members.
Recent Comments