U.S. Equity Markets saw notable selling on Tuesday, extending the April rot, amid various micro factors in the backdrop of an aggressive Treasury bear-steepener. Treasuries saw large bear-steepening on Europe’s return, despite soft German inflation figures, as oil prices ripped and Europeans reacted to the long weekend’s events. However, Fed expectations were little changed for the year-end, with Fed’s Daly and Mester both noting today that three rate cuts look like a good baseline (same as the Fed median SEP view). In stocks, Tesla (TSLA) added particular pressure on the NASDAQ after very poor Q1 delivery figures, while Semiconductors were another pocket of weakness. Elsewhere, there was pressure in the apparel space after PVH’s (PVH) awful guidance, citing weakening consumer trends in Europe, especially Germany and the UK. Health insurance names were slammed after the final Medicare Advantage rate has ignited margin concerns. In FX, the Dollar was lower with some profit taking in Euro shorts after the soft German regional inflation figures, while commodity currencies prospered amid the further rip in oil and metals, including Gold. Bitcoin extended its selloff and is flirting either side of USD 65k. Mester (voter, but retiring at June-end) said to reporters after the speech that three rate cuts this year is still reasonable, putting her in line with the Fed’s median Dot from the March FOMC. Mester also said the May 1st meeting is too soon for a rate cut but later said she would not rule out a June cut. The Cleveland Fed President also confirmed that she now sees the longer run Funds Rate at 3% versus her prior 2.5% forecast, where she says it had been for some time, that compares to the Fed median of 2.6%, where only four dots were higher than 3% and there were three dots at 3% including Mester. In her speech, Mester said that if the economy evolves as expected, she expects that the Fed will be able to move rates down gradually as inflation and inflation expectations move down, but she also warned that moving rates down too soon or too quickly without sufficient evidence would risk undoing the progress made, which she sees as the bigger risk at the moment (vs waiting too long to cut). Meanwhile, Fed Member Daly (2024 voter) said standing pat is the right policy for the moment and three rate cuts this year is a “reasonable” baseline (on Feb 16th, she said three cuts was a good baseline for the year). Further on rates, Daly said need to see how long to leave rates where they are, no urgency to adjust the rate, and there is a real risk of cutting rates too soon. On inflation, said it is coming down, bumpy and slow, and there is further work to do before being confident inflation is on the right path. JOLTS Job Openings for February came in more-or-less inline at 8.756 million (exp. 8.75 million), although January’s was revised lower to 8 from 8.863 million, with the quits rate unchanged at 2.2%, albeit the prior months was revised higher from 2.1%, which was the post-COVID low. As Oxford Economics illustrates, the data is consistent with a labour market that is still quite healthy, easing concerns among Fed officials about the downside risks to the economy from taking a patient approach toward rate cuts. On the quits rate, it is still below pre-pandemic levels and consistent with the consultancy’s view of gradually easing wage growth to a pace compatible with the Fed’s inflation target of 2%. Elsewhere, Oil rose a further 1.62% and is now ahead by over 15% for the year, while Gold continued to make new all-time-highs, closing Tuesday a gain of 1.1%.
To mark my 2975th 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 56 points yesterday and is now ahead by 315 points for April after ending March with a gain of 2113 points. February closed with a gain of 1606 points, 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 0.72% lower at a price of 5205.
The Dow Jones Industrial Average closed 396 points lower for a 1% loss at a price of 39,170.
The NASDAQ 100 closed 0.94% lower at a price of 18,121.
The Stoxx Europe 600 Index closed 0.80% lower.
Yesterday, the MSCI Asia Pacific closed 0.7% higher.
Yesterday, the Nikkei closed 0.09% higher at a price of 39,838.
Currencies
The Bloomberg Dollar Spot Index closed 0.29% lower.
The Euro closed 0.2% higher at $1.0765.
The British Pound closed 0.1% higher at 1.2567.
The Japanese Yen rose 0.1% closing at $151.57.
Bonds
Germany’s 10-year yield closed 10 basis points higher at 2.40%.
Britain’s 10-year yield closed 15 basis points higher at 4.09%.
U.S.10 Year Treasury closed 4 basis points higher at 4.36.
Commodities
West Texas Intermediate crude closed 1.62% higher at $85.07 a barrel.
Gold closed 1.1% higher at $2279.10 an ounce.
This morning on the Economic Front we have Euro-Zone CPI at 10.00 am, followed by U.S. MBA Mortgage Applications at 12.00 pm. Next, we have ADP Employment Change at 1.15 pm and Services PMI at 2.45 pm. At 3.00 pm we have ISM Services PMI at 3.00 pm. Finally, we have speeches from Fed Members Bowman, Goolsbee, Barr and Kugler at 2.45 pm, 5.00 pm, 6.10 pm and 9.30 pm respectively. Meanwhile Fed Chair Powell is speaking at 5.10 pm.
Cash S&P 500
Yesterday was the first trading session that we saw some follow through selling in the S&P following Monday’s large Key Day Reversal. However, it was not all one-way traffic as the S&P managed to rally 25 Handles off its 5183 low print into the Chicago close. The S&P has support from 5170/5185 where I will be a small buyer with a higher 5157 ‘’Closing Stop’’. I will now lower my sell level slightly to 5240/5256 with a lower 5272 ‘’Closing Stop’’.
EUR/USD
No Change: I am still long the Euro form last week at an average rate of 1.0845 with the same 1.0729 ‘’Closing Stop’’. I will continue to leave my exit level unchanged at 1.0798. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
I saw an interesting chart on the Dollar over the weekend. Last week Large Speculators became net short 2.1% of Open Interest, which is their first net short position since July 2021. The last two weeks this cohort has sold the Dollar rally, which is not their norm. To me this suggests the strong Dollar may be coming to at least a temporary halt. This morning, the Dollar is trading at 104.81. I will now lower my sell level to 104.95/105.55 with a lower 106.05 ‘’Closing Stop’’. If triggered, I will have no T/P level on this position for now. If this view changes, I will be back with a new update for my Platinum Members.
Cash DAX
Just as we thought the DAX would never sell-off again. It falls 300 points yesterday. This is the first significant sell-off in the DAX since last October. The DAX has resistance from 18405/18505 where I will be a small seller with an 18605’’ Closing Stop’’. I still do not want to be long the DAX at this time.
Cash FTSE
I am still flat, as yesterday’s sell-off in FTSE again missed my buy range. Given how much the FTSE has underperformed the other major Indexes, I will continue to look to buy the dip for a move to new all-time highs. Today, I will raise my buy level to 7840/7910 with a higher 7775 ‘’Closing Stop’’. If I am taken long, I will have no T/P level on this position.
Dow Rolling Contract
The Dow hit a low at 39050, before having a small 130-point rally into the close. The Dow has now fallen over 800 points since Monday morning’s 39990 high print. The Dow has support from 38650/38900 where I will be a small buyer with a 38495 tight ‘’Closing Stop’’. I will now lower my sell level to 39600/39850 with a lower 40105 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 39440. If I am taken long, I will have a T/P level at 39080.
Cash NASDAQ 100
My NDX plan worked well as a 7% fall in Tesla Shares saw the market hit my 18030-buy level. Subsequently, the NDX rallied over 100 points into the close. This move higher saw my revised 18086 T/P level triggered and I am now flat. Today, I will again be a buyer of the NDX on any further dip lower to 17820/17970 with a lower 17695 ‘’Closing Stop’’. The NDX has resistance from 18400/18550 where I will be a small seller with a higher 18705 ‘’Closing Stop’’.
March BUND
Frustratingly, the Bund just missed my initial 131.80 buy level by eight points before rallying 50 points into the New York close. Today, I will raise my buy level to 131.20/132.00 with a higher 130.65 ‘’Closing Stop’’. I still do not want to be short the Bund at this time.
Gold Rolling Contract
Gold continued to make new all-time highs yesterday and I am still flat. Given how overbought Gold is trading I just cannot chase the market higher from here. Gold has resistance from 2310/2325 where I will be a small seller with a wider 2341 ‘’Closing Stop’’.
Silver Rolling Contract
Silver soared yesterday and I am still flat the Cash Market although I am still long for my Pension Fund. In my opinion there is huge scope for Silver to rally further. Today, I will now raise my buy level to 24.80/25.50 with a higher 23.85 ‘’Closing Stop’’.
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