U.S. Stocks were lower on Monday but recovered gradually, albeit significantly, from the lows earlier in the session that were seen as part of the broader hawkish reaction to the hot ISM Services. In stocks, Caterpillar (CAT) was firmer despite mixed results and guidance; McDonald’s (MCD) fell on disappointing comp sales; Boeing (BA) fell on more 737 problems; Nvidia (NVDA) firmed on a Goldman PT rise. There was a slew of Fed Speak to digest including Chair Powell speaking on 60 Minutes, where he largely stuck to the FOMC script, while the broader tone of Fed Speak has been relatively hawkish, in fitting with Powell’s pushback on a March cut. The climb in Bond Yields continued to fresh YTD highs amid the hawkish Fed Speak and the busy debt supply calendar, accentuated by the hot ISM Services print, which included an uncomfortable rise in the Prices Paid Component. In FX, the Dollar was bid broadly alongside the rising US yields, with USD/JPY also stretching to new YTD peaks. Oil prices were firmer on Monday, recovering off earlier lows despite the stronger Dollar. However, metals succumbed to the firmer Dollar. Equity Markets made new all-time highs on Friday after gradually reversing kneejerk losses on the back of the huge 353k new jobs reported in the January BLS report that ignited a broad hawkish reaction. The forecast-beating figures saw the Dollar surge and Treasuries unwind their WTD gains in a big bear-flattener, although curve spreads recovered off lows into the afternoon ahead of this week’s Treasury auctions and corporate supply expectations. The market-implied probability of a March cut has fallen to 20% probability from 35% before the data, with the first fully priced cut moving back to June from May; the total amount of cuts priced across 2024 has fallen to 125bps from 140bps. Strong post-earnings gains in META (+20%) and AMZN (+8%), despite weakness in AAPL (-0.5%), saw the NASDAQ 100 outperform, while modest gains in the regional banks (KRE) also provided some support for market sentiment. Meanwhile, oil prices were lower despite geopolitical angst and the solid US jobs data, with the strong Dollar weighing on commodities. The jobs report was hot on all accounts. The U.S. economy added 353k jobs in January, well above the 180k consensus and accelerating from December’s upwardly revised 333k (initially 216k). There was a large increase in private payrolls of 317k, above the expected 155k and prior 278k (revised up from 164k). Manufacturing payrolls rose by 23k, up from the 8k prior and above the 5k forecast while Government payrolls rose by 36k, down from the prior 55k. The Unemployment Rate was unchanged at 3.7% despite expectations for a rise to 3.8%. Earnings were hotter than expected in January, suggesting the easing wages seen in the Q4 ECI and December Quits rate has not continued into the start of 2024. Monthly earnings rose 0.6% (exp. 0.3%, prev. 0.4%), Y/Y earnings rose 4.5% (exp. 4.1%, prev. 4.4% – revised up from 4.1%). It is worth highlighting the BLS released the annual revisions for the establishment survey (NFP, earnings) while it conducted new methodology on the household survey (unemployment rate). The non-seasonally adjusted revisions were revised up to -187k from -306k for 2023, while the seasonally adjusted print saw a huge revision lower to -266k from +568k. The report speaks for itself with the upward revisions and beats across all major metrics. The hot report coupled with Powell’s commentary on Wednesday largely reduces the probability of a March cut with markets now just pricing a 20% probability vs a 35% probability before the data. Powell had also said if there was an unexpected weakening of the labour market, the Fed would be prepared to cut sooner, but this data is anything but weak and supports the Fed taking a cautious approach to future rate adjustments. Note, the next FOMC is on March 19-20th. The January & February CPI reports are due on February 13th and March 12th, respectively, as well as the February jobs report due March 8th and the January PCE due February 29th. All will be key in determining the timing of the Fed’s first rate cut and extrapolating the depth of cuts over the year, with the market still priced for nearly five 25bps cuts across the year – vs six 25bps cuts before the data. Elsewhere, Oil closed Monday with a small gain of 0.71% while a stronger Dollar saw Gold fall 0.7%, following a volatile trading session.
To mark my 2925th 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 542 points yesterday, on the first few trading days of February after closing January with a gain of 3675 points. December saw a gain of 1890 points after finishing November with a gain of 1734 points. October ended with a gain of 3184 points, after closing September with a small gain of 228 points, after finishing August with a gain of 1485 points, 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 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 0.32% lower at a price of 4942.
The Dow Jones Industrial Average closed 274 points lower for a 0.71% loss at a price of 38,380.
The NASDAQ 100 closed 0.17% lower at a price of 17,613.
The Stoxx Europe 600 Index closed 0.14% lower.
Yesterday, the MSCI Asia Pacific closed 0.8% lower.
Yesterday, the Nikkei closed 0.54% higher at a price of 36,354.
Currencies
The Bloomberg Dollar Spot Index closed 0.80% higher.
The Euro closed 0.7% lower at $1.0740.
The British Pound closed 1.1% lower at 1.2534.
The Japanese Yen fell 1.4% closing at $148.40.
Bonds
Germany’s 10-year yield closed 14 basis points higher at 2.31%.
Britain’s 10-year yield closed 20 basis points higher at 4.01%.
U.S.10 Year Treasury closed 23 basis points higher 4.16%.
Commodities
West Texas Intermediate crude closed 0.71% higher at $72.79 a barrel.
Gold closed 0.7% lower at $2024.10 an ounce.
The morning on the Economic Front we have German Factory Orders at 7.00 am, followed by U.K. Construction PMI at 9.30 am. Next, we have Euro-Zone Retail Sales at 10.00 am. Finally, we have a speech from Fed Member Mester at 5.00 pm.
Cash S&P 500
The big seven stocks driving the S&P continue to get bigger leading to more distortions in equity markets. A little over a year ago, Meta’s share price stood at $88 per share but on Friday it gained an incredible $80 in one-day. This move higher saw the Market Cap surge $178 billion in one-day. This was the fourth largest increase by a U.S. firm in history, following Amazon in February 2022, Apple in November 2022 and Nvidia last May. To put things in perspective, on Friday Meta added a Disney’s worth of Market Cap. The end result is that it is so difficult to be short any market for any length of time. After the S&P hit my sell range for a 4935-short position on Thursday, the market quickly fell 30 Handles, hitting my 4917 T/P level on the way before surging to a Friday afternoon new all-time high at 4975. This is putting extreme valuations on stocks which is adding to the distorted market that we are experiencing. I sold the S&P on Friday as emailed to my Platinum Members at an average rate of 4940 with no stop over the weekend. I was lucky that the S&P sold off to my 4925 T/P level yesterday afternoon as emailed to my Platinum Members late Friday night. Subsequently, the S&P hit a 4917 low print yesterday afternoon, before rallying 25 Handles into the close and I am still flat. The S&P has short-term support from 4895/4910 where I will be a buyer with a wider 4879 ‘’Closing Stop’’. We have short-term resistance from 4972/5988 where I will be a small seller with a 5002 ‘’Closing Stop’’.
EUR/USD
My latest 108.35 long Euro position worked well as the market rallied to my 108.75 T/P level. Subsequently, I bought the Euro again at an average rate of 108.08. I am still long with a 107.15 ‘’Closing Stop’’. The 14 Day RSI for the Euro closed last night at 33. I will have a T/P level on this long position at 108.40. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
Monday’s Dollar surge saw the whole of my buy range triggered, for a now 104.35 average short position. I will now raise my T/P level on this position to 103.90 while leaving my 105.05 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash DAX
I am still flat as the DAX never came close to Thursday’s buy range. I will now raise my buy level to 16720/16810 with a higher 16635 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 16890. I still do not want to be short the DAX at this time. If this view changes, I will be back with anew update for my Platinum Members.
Cash FTSE
I am still flat as the FTSE. The FTSE traded in a narrow range over the past few days before following the American Indexes lower yesterday afternoon. I will now lower my FTSE buy level slightly to 7480/7550 while leaving my 7435 tight ‘’Closing Stop’’ unchanged.
Dow Rolling Contract
After weeks of upward price action, the Dow finally saw at least a temporary top at Friday’s 38750 high print, falling 500 points, trading at 38280 this morning. Like any short position over the past 14 weeks, you have to be quick off the mark to take any gain. After the Dow hit my 38520-sell level we had a small sell-off to my revised 38479 T/P level. On Friday, I emailed my Platinum Members to sell the Dow again at a price of 38710 before the market sold off on Sunday night to my 38580 T/P level and I am now flat. The Dow has support from 37780/38030 where I will be a small buyer with a 37595 ‘’Closing Stop’’. I no longer want to be short the Dow at this time. If this view changes, I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
The NDX never came close to Thursday’s buy range before soaring on better-than-expected Tech earnings, especially Meta which saw its Market Cap increase a staggering $200bn on Friday alone. This morning, the NDX is trading at a price of 17600. We have support from 17310/17460. I will now raise my buy level to this area with a higher 17175 ‘’Closing Stop’’. I still do not want to be short the NDX at this time. If this view changes, I will be back with a new update for my Platinum Members.
March BUND
I am glad I stayed flat the Bund over the past few days. Shorting the Bund is difficult, but reality may finally be setting that we will not see the number of expected rate cuts which economists have been touting since December. The Bund is trading 150 points lower from where I marked prices last Thursday. The Bund has support below from 132.60/133.40 where I will be a strong buyer with a 131.95 tight ‘’Closing Stop’’. If triggered, I will have a T/P level at 133.95.
Gold Rolling Contract
No Change. I am still flat Gold. The stronger Dollar sees Gold $20 lower since Thursday. As I still long both the Euro and Silver, I have no interest in chasing the price of Gold higher. Therefore, I will leave my 1983/1998 Gold buy level unchanged with the same 1969 wider ‘’Closing Stop’’.
Silver Rolling Contract
No Change. I still believe in the bull case for this precious metal. I will continue to hold my 24.40 average long position with no stop or T/P level for now. This morning, Silver is trading 60 points lower at a price of 22.91. I will continue to look to add to my existing long position on any further move lower to 21.50. If this view changes, I will be back with a new update for my Platinum Members.
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