Both U.S. Equity and Bond Markets saw heavy losses while the Dollar ripped on Tuesday after the hot US CPI report for January saw a large pullback in Fed easing expectations. The greatest selling pressure in the Indices was in the small caps Russell 2000, where many of the constituents are in need of lower rates to refinance their debt, although losses in the NASDAQ 100 and S&P 500 were still significant as froth came out of the market after the rally Year-To-Date, although note a bounce off the lows across stocks into the close. Money markets have seen the March implied cut probability fall to 8.5% from 15% on Monday and a cut by May falling to 40% from 70%, with now just 90bps of cuts priced across 2024 vs 110bps before. The Dollar Index soared to near 105.00, with attention now on the Japanese Yen with USD/JPY breaching above 150 and now nearing 151, with intervention expectations likely to ramp the more this sustains. The stronger Dollar weighed broadly on metals, although oil prices managed to shake off the currency effects and tread higher, with negotiations on a Gaza ceasefire yet to yield any fruit. Overall, the inflation report for January was hotter than expected on all accounts and has pushed back money market pricing on rate cuts. The March rate cut probability has largely diminished while May is sub 50% with June fully priced for the first 25bp rate cut. The hot report, coupled with a strong January jobs report, shows the final stretch of the Fed’s fight to return to the 2% inflation target will likely be bumpy and uneven, and arguably the hardest part of the fight. The Core M/M rose 0.4%, above the 0.3% forecast and prior with the Y/Y maintained at 3.9% despite expectations for a decline to 3.7%. The headline numbers saw the M/M accelerate to 0.3% (prev. & exp 0.2%), with the Y/Y easing to 3.1% from 3.4%, but not as cool as the 2.9% forecast. Within the report, the BLS highlighted “The index for shelter continued to rise in January, increasing 0.6 percent and contributing over two thirds of the monthly all items increase”. Meanwhile, Service prices less rent of shelter rose 0.6%, accelerating from the prior 0.4%. For the annualised figures, the US Core CPI 3-month annualised rate rose to 3.9% in Jan from 3.3% (highest since June 2023), 6-month annualised rate rose to 3.5% from 3.2% (highest since September).
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 lost 61 points yesterday and is now ahead by 581 points for 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 1.37% lower at a price of 4953.
The Dow Jones Industrial Average closed 524 points lower for a 1.35% loss at a price of 38,272.
The NASDAQ 100 closed 1.58% lower at a price of 17,600.
The Stoxx Europe 600 Index closed 0.95% higher.
Yesterday, the MSCI Asia Pacific closed 0.6% higher.
Yesterday, the Nikkei closed 2.89% higher at a price of 37,963.
Currencies
The Bloomberg Dollar Spot Index closed 0.65% higher.
The Euro closed 0.6% lower at $1.0705.
The British Pound closed 0.3% lower at 1.2588.
The Japanese Yen fell 1% closing at $150.80.
Bonds
Germany’s 10-year yield closed 7 basis points higher at 2.40%.
Britain’s 10-year yield closed 9 basis points higher at 4.15%.
U.S.10 Year Treasury closed 25 basis points higher 4.33%.
Commodities
West Texas Intermediate crude closed 1.09% higher at $77.76 a barrel.
Gold closed 1.2% lower at $1993.10 an ounce.
The morning on the Economic Front we have U.K. CPI, PPI and the Retail Price Index at 7.00 am. Next, we have Euro-Zone GDP, Industrial Output and Employment Change at 10.00 am. At 12.00 pm we have U.S. MBA Mortgage Applications. Finally, we have speeches from ECB Members De Guindos and Cipollone at 8.30 am and 2.00 pm respectively, while Fed Members Goolsbee and Barr are speaking at 2.30 pm and 9.00 pm respectively.
Cash S&P 500
The S&P hit a late low of 4920 – a massive 150 Handles below Monday’s 5049 all-time high. This is a huge move in such a short space of time resulting in the 15-minute chart been oversold. The 14 EMA was saved by the late 30 Handle rally into the Chicago close. I am still flat as thankfully we had no buy levels in yesterday’s commentary. As we know shorting is a difficult exercise but even, I was shocked by the extent of Tuesday’s aggressive sell-off. The S&P has support from 4918/4934 where I will be a strong buyer with a wider 4904 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 4951.
EUR/USD
Wrong! The surge in the Dollar saw my 1.0715 stop triggered on my latest 1.0808 long position. Subsequently, I emailed my Platinum Members that I bought the Euro again at a price of 1.0705. I will add to this position at 1.0745. I will have a T/P level on this position at 1.0765 while my stop will be at a ‘’Closing Price’’ of 1.0595. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
The Dollar surged yesterday, hitting my 104.80 sell level. I am still short with a now higher 104.30 T/P level. I will add to this position at 105.40 while raising my ‘’Closing Stop’’ to 106.05.
Cash DAX
Just before the New York close the DAX finally sold off to my initial 16790 buy level. We had a small rally off this inflection point which enabled me to cover this position at my revised 16822 T/P level and I am now flat. The DAX has further support from 16600/16680 where I will again be a buyer with a 16495 wider ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 16760. 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
Wrong! I was stopped out of my latest 7595 average long position at 7515 and I am still flat. Given the fact that the FTSE has not followed the other Global Indexes higher I can make a case to be a buyer of this market on any further dip lower. The FTSE has support from 7370/7440 where I will be a strong buyer with a 7295 wider ‘’Closing Stop’’.
Dow Rolling Contract
It is a long time since we have the Dow fall almost 800 points in one session before recovering 200 points of these losses into the New York close. Following the CPI print the Dow traded the whole of my buy range for a 38350 average long position. We had a late afternoon rally to my revised 38400 T/P level, and I am now flat. With the Small Cap Russell 2000 having its worst day since June 2022, the Dow got hit hard. The Dow has support below from 37900/38050 where I will be a small buyer with a 37750 tight ‘’Closing Stop’’. If I am taken long. I will have a T/P level at 38260. I still do not 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 hit a low at 17500 late yesterday before having a small 100-point rally into the close. Despite this rally the NDX is trading 450 points below Mondays’ latest all-time high. This is the kind of correction needed to make it easier to set up a long position. The NDX has short-term support from 17360/17510 where I will be a small buyer with a 17245 ‘’Closing Stop’’. I no longer want to be short the NDX at this time.
March BUND
After the Bund traded lower to my 132.90 buy level, we had a small bounce enabling me to cover this position at my revised 133.20 T/P level and I am now flat. The Bund has support below from 131.80/132.50 where I will again be a buyer with a lower 131.15 tight ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 133.10.
Gold Rolling Contract
Gold fell over $40 from its morning highs, trading the whole of my buy range for a now 1998 average long position. I will leave my 1979 wider ‘’Closing Stop’’ unchanged while lowering my T/P level to 2007. 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. The boring price action shows no sign of ending unfortunately. 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 lower at a price of 22.12. 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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