U.S. Equity Markets saw strong gains on Friday (SPX +1%, NDX +1.7%) although that appeared mostly a big tech earnings story (GOOGL +10%, MSFT +2%) with the equal-weight S&P flat. The macro highlight was the March Core PCE, +0.32% M/M versus 0.3% expected, which led to a kneejerk relief dovish reaction after the hot Q1 GDP Prices data on Thursday stoked concerns over a hot March core PCE print on Friday, with the hot Q1 data largely a function of upward revisions to the January data. Treasuries bull-flattened after the data (10s -4bps at 4.67%), with the long end outperforming (2s flat at 5.00%) ahead of this week’s month-end, QRA, and Fed Meeting. The Dollar Index saw notable gains although that was largely a function of the Japanese Yen posting its largest one-day fall of the year after a lack of hawkishness or intervention commentary at the Bank of Japan, with USD/JPY hitting a new peak of 158.35 here at the close in New York on Friday despite an earlier mini flash crash to lows of 155.00. Oil futures were modestly firmer in choppy trade, affirming a W/W gain for the first time in three weeks with little market-moving energy newsflow. Metals saw strength. The US core PCE price index for March rose 0.32% M/M, in line with the expected +0.3%, and relieving concerns of a potential 0.4% or even 0.5% print after Thursday’s Q1 Core PCE prices came in significantly on the upside; that was above the prior +0.27% pace. The core Y/Y figure remained unchanged at 2.8%, above the expected fall to 2.7%. Many analysts had been pencilling in estimates between 0.2-0.3% before Thursday, although the upside risks spiked after the Q1 data came in much hotter than expected, where the March figure could have come in as high as +0.5% if the January and February data saw no revisions. However, the January and February data did indeed see some revisions taking some of the sting out of the March figure, with February revised up to +0.27% from +0.26%, while January was revised up to +0.50% from +0.45%. Despite offsetting some of the most hawkish scenarios, Oxford Economics warns, “the 0.3% reading for core inflation is still too hot for the Fed and it means that the downward trend in core inflation evident over the past two years has stalled.” Regarding the breakdown of the data, the consultancy highlights that goods prices were flat, with the strength all in core PCE services, driven by continued strong readings in housing and stronger readings in services ex housing compared to the second half of 2023. On the outlook, Oxford Economics writes, “We still think that the decline in wage growth and a fall in rental inflation in the second half of the year will mean that overall inflation cools over the rest of 2024.” Elsewhere in the March report, Personal Income rose 0.5% M/M, in line with the expected and up from the prior +0.3%, while Consumption rose 0.8%, above the expected 0.6% and the same pace as the prior. The strong spending was enabled by the savings rate falling to 3.2%, but Oxford Economics does not think this is cause for concern as it “mostly reflects the strong state of household balance sheets, with debt-to-income ratios low, the cost of servicing debt still extremely low, and household net worth rising rapidly amid elevated house and equity prices.” Meanwhile, Oil ended Friday with a small gain of 0.34%, while Gold closed 0.2% higher.
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 381 points on Friday and is now ahead by 3815 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 1.02% higher at a price of 5099.
The Dow Jones Industrial Average closed 153 points higher for a 0.40% gain at a price of 38,239.
The NASDAQ 100 closed 1.65% higher at a price of 17,718.
The Stoxx Europe 600 Index closed 1.11% higher.
This Morning, the MSCI Asia Pacific closed 0.7% higher.
This Morning, the Nikkei closed 0.81% higher at a price of 37,934.
Currencies
The Bloomberg Dollar Spot Index closed 0.47% higher.
The Euro closed 0.1% lower at $1.0693.
The British Pound closed 0.3% higher at 1.2492.
The Japanese Yen fell 2.2% closing at $158.32.
Bonds
Germany’s 10-year yield closed 1 basis points lower at 2.56%.
Britain’s 10-year yield closed 1 basis points lower at 4.33%.
U.S.10 Year Treasury closed 4 basis points lower at 4.66%.
Commodities
West Texas Intermediate crude closed 0.35% higher at $83.85 a barrel.
Gold closed 0.3% higher at $2337.10 an ounce.
This morning on the Economic Front we have the Euro-Zone Economic Sentiment Indicator at 10.00 am. Next, we have German at 1.00 pm. Finally, we have the Dallas Fed Manufacturing Business Index at 3.30 pm.
Cash S&P 500
Thursday’s aggressive shakeout in the S&P on Meta earnings was quickly reversed on Friday following much better-than-expected earnings from both Microsoft and Google. This massive 110 Handle Reversal saw the S&P close on Friday above its 14 EMA (5082). However, the S&P is still below its 50 Day Moving Average which comes in at a price of 5124 this morning. Although the VIX closed lower by 2% on Friday, it is sitting just above its 50 and 200-Day Moving Averages. Bottom line is the S&P is testing strong resistance from 5115/5130. While I can draw all kinds of scary scenarios from the crashed Japanese Yen, the resulting strength of the Dollar and the May seasonality, I also cannot help wondering whether the April sell-off was just another major ‘’Bear Trap’’. For one: Financial Conditions keep loosening. History tells us it is extremely difficult to be short the market when Financial Conditions are looser now than they were when QE stated. The TGA account has been refilled aggressively in the recent weeks and this may partially explain the recent rise in Treasury Yields. If the TGA account gets drained as rumoured on Friday then we will see another massive liquidity boost, meaning a possible melt-up in the American Indexes. With so many of my technical signals so severely oversold, it is extremely hard to be short the S&P, adding weight to my melt-up scenario. The fact is in the recent sell-off the Monthly 5 EMA held, with the S&P down three weeks in a row while signal charts remain oversold with plenty of room to run as liquidity remains the name of the game. My S&P plan worked well as the market traded the whole of my buy range for a 5013 average long position before rallying to my 5022 revised T/P level. Late Thursday night, the S&P hit my 5102-sell level before selling off to my 5088 T/P level and I am now flat. Today, I will be a small seller from 5122/5138 with a tight 5153 ‘’Closing Stop’’. The S&P has short-term support from 5065/5080 where I will be a small buyer with a 5053 tight ‘’’Closing Stop’’.
EUR/USD
I am still flat the Euro as the market traded in a narrow range since I posted on Thursday morning. Today, I will continue to be a buyer on any dip lower to 1.0590/1.0660 with the same 1.0515 ‘’Closing Stop’’. I still do not want to be short the Euro at this time.
Dollar Index
The near 2.5% fall in the Japanese Yen on Friday, saw the Dollar rally to my 106.10 sell level. I am still short. I will still look to add to this short position on any further move higher to 106.70 while leaving my 107.15 ‘’Closing Stop’’ unchanged. I will now raise my T/P level on this position to 105.60. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash DAX
My DAX plan worked well as the market traded the whole of Thursday’s buy range for a 17860 average long position. Better than expected earnings from Google and Microsoft saw the DAX rally on Friday, trading at 18180 this morning. Unfortunately, as so many of my calls hit at the same time, exited my long DAX position at 17891 and I am still flat. Hopefully you did better with your exit level. The DAX has resistance from 18280/18370 where I will be a seller with a tight 18455 ‘’Closing Stop’’. My only interest in buying the market is on a move lower to 17950/18040. If triggered, I will have a ‘’Closing Stop’’ at 17865 while my T/P level will be 18105. If I am taken short, I will have a T/P level at 18210.
Cash FTSE
My FTSE never came close to my buy range, and I am still flat. The FTSE is close to making new all-time highs. I still have no interest in been short the FTSE at this time. We have short-term support from 8020/8090 where I will be a buyer with a 7955 tight ‘’’Closing Stop’’.
Dow Rolling Contract
The Dow continues to underperform the other major U.S. Indexes and I am still flat as the market never came close to Thursday’s sell range. All eyes will be on the FOMC Statement on Wednesday and the subsequent Powell press conference. Normally the market rallies ahead of this Statement and given Friday’s rebound ahead of month-end tomorrow, I would expect the status quo to remain. The 50 -Day Moving Average has fallen slightly to 38790. I will now lower my Dow sell level to 38680/38930 while leaving my 39105 ‘’Closing Stop’’ unchanged. I still do not want to be long the Dow at this time. If this view changes, I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
Incredible reversal in the NDX following Thursday’s post-close reported earnings from both Google and Microsoft. The NDX has rallied over 550 points off Thursday’s 17170 low print. This reversal saw the NDX close back above its 20-Day Moving Average on Friday night (17706) However, for bulls to regain control, the NDX needs to break and close above its 50-Day MA which comes in at 17938 this morning. As a result, I will be a small seller from 17850/18000 with a tight 18105 ‘’Closing Stop’’. Meanwhile, my NDX plan worked well as the market sold off to my 17190-buy level before rallying to my 17310 T/P level and I am still flat. If the NDX rallies today to my sell range, I will have a T/P level at 17740. I no longer want to be long the NDX at this time despite Friday’s huge reversal.
March BUND
Higher Treasury Yields saw the Bund hit my second buy level at 129.75 for a now 130.15 average long position. I will leave my 128.95 ‘’Closing Stop’’ unchanged while lowering my T/P Level to 130.70. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
No Change: I am still flat. I do not want to chase Gold higher especially as I am still long Silver. Today, I will continue to be a buyer on any dip lower to 2280/2295 with the same 2259 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2309. I no longer want to be short Gold at this time.
Silver Rolling Contract
No Change. I am still long Silver at an average rate of 27.30 with the same 27.90 T/P level. I will leave my 25.95 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
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