U.S. Equity Markets ultimately finished the Monday session mixed. Growth fears initially weighed on sentiment after the US Manufacturing ISM headline fell by more than expected. Within the data the Prices Paid component slipped beneath all analyst expectations. The data supported Treasuries across the curve but the downside in Bond Yields and softer prices data was not enough to provide a convincing tailwind to stocks. Stocks did close off the lows with outperformance in Nvidia shares (+5%) which helped the NASDAQ outperform after its slew of AI/Chip updates over the weekend. The fall in yields gave a helping hand to traditional havens with the Japanese Yen and Swiss Franc outperforming in FX while gold also saw decent upside. Crude prices slumped in the aftermath of the OPEC+ decision, which ultimately extended the official crude output cuts in 2025, while Saudi Arabia and Russia would also extend their voluntary production until the end of Q3 24, before being restored gradually until the end of September 2025. There will also be increased supply from the UAE by 300k BPD from Jan-Sept 2025. On Friday Stocks were choppy on month end with futures firmer in the premarket, with gains seen in the wake of the softer-than-expected Core PCE data. Gains were short-lived, however, with a woeful Chicago PMI print hitting sentiment thereafter. However, once Europe had left for the day, stocks gradually climbed into the US close to see the S&P 500 reclaim positive territory while the Dow outperformed with a monster rally into the closing bell on account of month-end. The PCE data for April was dovish overall, with the Fed’s preferred gauge of inflation, Core PCE, rising 0.2% M/M in the month, beneath expected 0.3% (unrounded it was 0.249%, so only just rounding down to 0.2%, but still lower than the prior 0.317%). All the other PCE metrics were in line with expectations, with the Core Y/Y at 2.8% again, while the 3 Month annualised rate eased to 3.46% from 4.4%, with the 6 Month annualised rate at 3.18%, up from the 3% prior, marking the highest level since July, while the 12 Month rate was 2.75%, a three year low. Headline PCE rose 0.3% M/M, matching the prior month pace, while the Y/Y also matched the prior at 2.7%. The super core metric eased from the prior, which will also be a welcome sign for the Fed; PCE Services ex-energy and housing dipped to 0.3% from 0.4%. The consumer side was also soft leaning, with Personal Income rising by 0.3% in April, in line with forecasts, easing from the 0.5% prior, while Consumer Spending rose 0.2%, beneath the 0.3% forecast and down from the revised 0.7% (initially 0.8%). Overall, it will be a welcome sign for the Fed but likely do little to influence their near term thought process, and the central bank still wants to see several more months of price improvements before being convinced inflation is heading back to target. Analysts at ING suggested that the door for a September rate cut is still open, but we must see a series of 0.2% M/M readings between now and then for this to be confirmed, alongside further slack in the jobs market and more evidence that consumer spending is cooling. ING states that these are all certainly possible, but by no means guaranteed. Markets currently assign a 60% probability of a September rate cut. On Thursday we got the latest GDP reading. The second look at US GDP in Q1 saw the headline revised down to 1.3% from the initially reported 1.6%; the GDP deflator was unrevised at 3.1%, but all other inflation focussed components saw downward revisions (PCE Prices Prelim revised down to 3.3% from an initial 3.4%, Core PCE Prices were revised down to 3.6% from 3.7%, PCE excluding-Food, Energy and Housing was revised down to 3.2% from 3.3%, while PCE services prices excluding Energy and Housing was revised down to 4.9% from 5.1%). Elsewhere, the Consumer Spending estimate eased to 2.0% from 2.5%. Oxford Economics said that the downward revision to the Q1 GDP headline will not rattle the Fed, as a chunk of the weakness early this year was attributed to inventories and net exports, which are volatile components of GDP. “Revisions to the headline and core PCE deflator were modest, at best,” OxEco writes, “the new data does not alter our subjective odds that the first-rate cut will occur in September, but this is contingent on inflation moderating over the next couple of months.” (NOTE: money markets assign an approximate probability of 80% of a November rate cut, with the first fully discounted rate reduction priced for December). Elsewhere, Oil closed Monday with a hefty 4% fall, while a weaker Dollar saw Gold got June off to a positive start with a 1.3% gain.
To mark my 3000th 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 170 points yesterday on the first trading session for June. The Platinum Service made 122 points on Friday, closing May with a gain of 1843 points, having finished April with a gain of 4010 points 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 0.11%% higher at a price of 5283.
The Dow Jones Industrial Average closed 115 points lower for a 0.3% loss at a price of 38,571.
The NASDAQ 100 closed 0.35% higher at a price of 18,600.
The Stoxx Europe 600 Index closed 0.29% higher.
This Morning, the MSCI Asia Pacific closed 0.2% higher.
This Morning, the Nikkei closed 0.22% lower at a price of 38,837.
Currencies
The Bloomberg Dollar Spot Index closed 0.31% lower.
The Euro closed 0.4% higher at $1.0887.
The British Pound closed 0.4% higher at 1.2790.
The Japanese Yen rose 0.8% closing at $156.30.
Bonds
Germany’s 10-year yield closed 9 basis points lower at 2.59%.
Britain’s 10-year yield closed 17 basis points lower at 4.24%.
U.S.10 Year Treasury closed 20 basis points lower at 4.41%.
Commodities
West Texas Intermediate crude closed 4% lower at $74.22 a barrel.
Gold closed 1.3% higher at $2349.10 an ounce.
This morning on the Economic Front we have German Unemployment at 8.55 am. The only other data of note is U.S. Factory Orders and JOLTS Job Openings at 3.00 pm.
Cash S&P 500
Despite witnessing one of the wildest three trading sessions of the year-to-date, the VIX still ended Monday at a price of 13.11. Just when it looked like Thursday’s aggressive sell-off which spilled into Friday was going to turn nasty, the last hour of trading on Friday saw the Dow rally 660 points leading to a 50-Handle move higher in the S&P. I have seen a lot of silly rips in my time but Friday’s melt-up is certainly up there with the best of them. Every single time since the Summer of 2022, that the S&P is within an inch of breaking lower, the market gets saved helped by the 20 Basis point fall in Treasury Yields despite last week producing the weakest Treasury Auctions in many years. I have stated numerous times over the past few months that the ultimate goal of Treasury buybacks was to get yields lower because Treasury Secretary Yellen needs much lower yields to finance all the debt issuance and refinancing. Adding to the liquidity is the fact that QT commenced yesterday helping Yields to reverse and helping the S&P to a 50-Handle rally into last night’s Chicago close. With the ECB expected to cut rates on Thursday, it is hard to see the market falling against this backdrop. My S&P plan worked well as just before Thursday’s close the Market hit my 5225-buy level before rallying on Friday to my 5242 T/P level. Subsequently, the S&P dropped to my second buy level at 5221 on Friday before rallying to my revised 5234 T/P level and I am now flat. My 5234 T/P level could not have been timed worse because as soon as I exited this position the S&P rallied 50 Handles. This morning, the S&P is trading lower at 5274. We have support from 5249/5265 where I will be a small buyer with a 5235 ‘’Closing Stop’’. I no longer want to be short the S&P at this time ahead of the seasonally strong first week of June. If this view changes, I will be back with a new update for my Platinum Members.
EUR/USD
My Euro plan worked well as the market traded lower to my 1.0810 buy level before rallying to my revised 1.0845 T/P level and I am now flat. I tried to buy the Euro again on Friday at the same price but the market missed by one point before rallying to sit over 1.0900 this morning. The Euro has support from 1.0805/1.0875 where I will again be a buyer with a higher 1.0755 ‘’Closing Stop’’.
Dollar Index
Overnight, the Dollar finally sold off to my 104.10 buy level. I am still long with a now lower 104.60 T/P level. I will add to this position on any further move lower to 103.40 while lowering my ‘’Closing Stop’’ to a price of 102.95. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash DAX
Despite the surprise rally in U.S. Indexes on both Friday and yesterday, European Equity Markets continue to struggle. I do not feel I have an edge in the DAX at this time. On Thursday after the market hit my 18490 buy level I exited this position at 18512 and I am still flat. This morning, the DAX is trading at 18530. My only interest in buying the DAX is on a move lower to 18320/18420 with a lower 18245 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 18490.
Cash FTSE
The FTSE rallied on Thursday to my 8240 T/P level on my latest 8190 long position and I am still flat. This morning, the FTSE is trading unchanged at 8240. We have support from 8120/8190 where I will again be a buyer with the same 8075 ‘’Closing Stop’’.
Dow Rolling Contract
Wrong and Frustrated! I had the correct view in buying the Dow given the number of positive divergences as outlined in Thursday’s Commentary. The late sell-off on Thursday evening saw my 38665 long position stopped at 38185 for a huge 480 point loss. Subsequently, I emailed my Platinum Members to buy the Dow again at a price of 38065 before exiting this position too early at 38195 on Friday and I am now flat. This morning, the Dow is trading at a price of 38510. We have short-term support from 38170/38420 where I will again be a buyer with a 37995 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 38580. I still do not want to be short the Dow at this time.
Cash NASDAQ 100
Incredible two-way volatility in the NDX over the past three trading sessions. The NDX hit a low at 18190 on Friday afternoon before rallying to a rebound high yesterday morning at 18704. This initial sell-off saw my 18435-exit level triggered on my 18385 average short position and I am still flat. I had a sell level at 18710 yesterday but unfortunately the NDX missed this target price by six points before falling over 200 points. This morning, the NDX is trading heavy at 18540 despite Nvidia’s 5% rally on Monday. The NDX has resistance from 18670/18820 where I will again be a seller with a wider 19005 ‘’Closing Stop’’. I still do not want to be long the NDX at this time. If I am taken short, I will have a T/P level at 18560.
March BUND
My latest 129.15 average long Bund position worked well as the market rallied to my 129.60 T/P level and I am still flat. Lower Treasury Yields sees the Bund trading higher at 130.70 this morning. The Bund has support from 129.50/130.20 where I will again be a buyer with a 128.75 ‘’Closing Stop’’.
Gold Rolling Contract
My Gold plan worked well as yesterday morning, the market hit my 2316 buy level before rallying to my revised 2326 T/P level (as I wanted to get June off to a positive start) and I am now flat. Today, I will again be a buyer on any dip lower to 2315/2330 with a higher 2299 ‘’Closing Stop’’.
Silver Rolling Contract
My Silver plan worked well as Silver traded lower to my 30.90 buy level before rallying to my revised 31.60 T/P level. Subsequently, I emailed my Platinum Members to buy Silver again yesterday at 29.80 before rallying to my 30.50 T/P level and I am now flat. Silver has support from 29.10/29.90 where I will again be a buyer with a lower 28.35 ‘’Closing Stop’’.
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