U.S. Equity Markets closed lower on Friday following a volatile trading session on Friday which was no surprise given it was Quadruple Witching Expiration for the June Futures and Options Contracts. Late Friday saw some notable chop into the closing bell, particularly in AAPL and AMZN shares while NVDA were lower throughout the majority of the session, adding to the losses seen Thursday. The main macroeconomic highlight was the flash PMI data from the US which came in hotter than expectations but alongside some optimistic commentary on inflation. The European PMI data however was largely disappointing across the board. Fixed income settled flat across the curve with morning upside in wake of the European PMIs offset by the downside seen after the hot US data. Crude prices were lower throughout the session with the hot PMI data weighing. The Dollar saw mild gains, while the Yen lagged to see USD/JPY back above 159.00 with participants cautious of intervention above 160. Attention this week turns to Treasury supply as well as US PCE and GDP data. Flash PMIs for June were hot across the board, highlighted by manufacturing rising to 51.7 (prev. 51.3, exp. 51.0), and services to 55.1 (prev. 54.8, exp. 53.7), leaving the composite lifting to 54.6 from 54.5. Within the report, it notes “Historical comparisons indicate that the latest decline brings the survey’s price gauge into line with the Fed’s 2% inflation target.” Elsewhere within the report, it added that the early PMI data signals the fastest economic expansion for over two years in June, hinting at an encouragingly robust finish to Q2 while at the same time inflation pressures have cooled. In addition, the report said that the PMI is running at a level broadly consistent with the economy growing at an annualised rate of just under 2.5%. Encouragingly, the report quips that the survey also brings welcome news in terms of job gains, with a renewed appetite to hire being driven by improved business optimism about the outlook. Lastly, and on the inflation footing, selling price inflation has meanwhile cooled again after ticking higher in May, down to one of the lowest levels seen over the past four years. Existing home sales for May marginally dipped 0.7% to 4.11 million from 4.14 million, and more-or-less in line with the expected 4.10 million. Looking at the details, the national median home price for existing homes rose 5.8% Y/Y to USD 419,300, while the supply of homes for sale rose 6.7% M/M in May, its highest since August 2022, but Oxford Economics does slightly caveat that increases in inventory during the spring selling season are common. Further on inventory, OxEco declares the rise in supply will support sales as mortgage rates move lower, but inventory remains relatively tight, though, and the shortage of supply continues to prop up home prices. Back to the headline, it slightly slipped reflecting the backup in mortgage rates a month or two earlier, but Oxford adds the more recent decline in mortgage rates, which they expect to gain steam as interest-rate cuts by the Fed get underway, will support a modest rebound in home sales later in the year. On Thursday, the Babk of England left Interest Rates unchanged as expected in a 7-2 vote split but the dovish reaction was seen on remarks in the Minutes that the decision to hold or cut was “finely balanced” for some. The SNB cut rates by 25bps earlier, in line with the consensus, but a third of analysts surveyed expected a hold. Norges Bank left rates unchanged but with hawkish rate guidance. Elsewhere, Oil ended Friday with a loss of 0.69% while Gold closed 1.1% lower following a volatile session that saw plenty of two-way price action.
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 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 50 points on Friday and is now ahead by 1668 points for June, having made 1843 points in May. The Platinum Service made 4010 points in 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 to 4 updated emails throughout the trading day to demonstrate this value, a 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 0.16% lower at a price of 5464.
The Dow Jones Industrial Average closed 15 points higher for a 0.04% gain at a price of 39,150.
The NASDAQ 100 closed 0.26% lower at a price of 19,700.
The Stoxx Europe 600 Index closed 0.73% lower.
Last Friday, the MSCI Asia Pacific closed 0.3% higher.
Last Friday, the Nikkei closed 0.1% lower at a price of 38,596.
Currencies
The Bloomberg Dollar Spot Index closed 0.23% higher.
The Euro closed 0.3% lower at $1.0694.
The British Pound closed 0.5% lower at 1.2645.
The Japanese Yen fell 0.8% closing at $159.72.
Bonds
Germany’s 10-year yield closed 1 basis points lower 2.40%.
Britain’s 10-year yield closed 2 basis points higher at 4.09%.
U.S.10 Year Treasury closed 3 basis points higher at 4.26%.
Commodities
West Texas Intermediate crude closed 0.69% lower at $80.73 a barrel.
Gold closed 1.1% lower at $2322 an ounce.
This morning on the Economic Front we have the German IFO Survey at 10.00 am. This is followed by U.S Chicago Fed National Activity Index at 1.30 pm and the Dallas Fed Manufacturing Business Index at 3.30 pm. Finally, we have a speech from ECB Member Schnabel at 4.30 pm and the Fed’s Daly at 7.00 pm.
Cash S&P 500
The U.S. Economy has shown more resilience and stamina than most people expected when the Fed started raising Interest Rates in March 2022. But now more than two years into the Fed’s tightening campaign, we find ourselves in a state of unstable equilibrium, with powerful forces pulling the economy in opposite directions. On the one hand, the lagged effects of the Fed rate hikes continue to reign in growth, with higher borrowing costs biting into over-leveraged consumers, corporates and banks alike. The upshot? Rising consumer delinquencies, higher corporate bankruptcies and increased pressure on some banks’ balance sheets. On the other hand, the Fed ‘’Pivot’’ in December 2023 triggered an easing of financial conditions – bond issuance surged, M&A activity weakened, risky assets rallied, and bond spreads tightened meaningfully. These easier conditions have at least partly neutralised the effects of Fed hikes, paving the way for a reacceleration in both economic growth and inflation. Given the current underlying strength of the U.S. Economy, I believe that easier financial conditions will continue to offset the effects of the Fed rate hikes, at least for the next three quarters, driven by strong consumer spending, still strong aggregate corporate earnings and the ‘’Wealth Effect’’ triggered by rising asset prices. It looks likely to me that U.S. Economic growth will come in above consensus for 2024, at a rate of 2.5% on the back of the still strong employment picture. As a result, I no longer see any rate cuts this year especially as inflation is unlikely to fall much below 3%. On Thursday the S&P surged to a new all-time high at 5517 before falling over 60 Handles to my revised 5458 T/P level on my latest 5460 average short position and I am still flat. The S&P has resistance from 5482/5500 where I will again be a seller with a higher 5521 ‘’Closing Stop’’. Given how overbought the S&P is trading, my only interest in buying the market is on a dip lower to 5412/5428 with a 5399 ‘’Closing Stop’’.
EUR/USD
On Friday morning the Euro traded lower to my 1.0675 buy level I am still long with a now lower 1.0715 T/P level. I will continue to look to add to this position at 1.0605 while leaving my 1.0565 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
Just before Friday’s New York close, on the back of the weaker Yen, the Dollar rose to my 105.90 sell level. I am still short with a now higher 105.45 T/P level. I will add to this position at 106.50 while leaving my 107.05 ‘’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
No Change: I am still flat the DAX. Today, I will continue to be a buyer on any dip lower to 17850/17930 with the same 17775 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 17995.
Cash FTSE
The FTSE again just missed my buy level before rallying and I am still flat. I am not going to chase the FTSE higher, continuing to be a buyer on any dip lower to 8100/8170 with the same 8045 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 8220. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
Investors decided last Thursday to swap the NASDAQ for the Dow. While the NASDAQ closed higher by 0.12% for the week, the Dow ended last week with a gain of 1.3%. Thankfully we had no sell level in the Dow on Thursday with market trading 500 points higher from where I last marked prices. The Dow has short-term support from 38700/38950. I will now raise my buy level ti this area with a higher 38595 tight ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 39110. I still do not want to be short the Dow at this time.
Cash NASDAQ 100
On Thursday morning the NDX made a new all-time high at 20077 before falling of 500 points late Thursday/ Friday afternoon. This move lower registered a huge Downside Key Day Reversal. While I know none of the KDR’s that we have seen in either the S&P or NDX since last October have worked this one feels different given the scale of the points lost. Nvidia shares made a new high at $140 shortly after the open on Thursday before leading the NDX lower, closing at $126 on Friday night. The NDX hit my revised 19690 T/P level on my large 19720 average short position and I am still flat. Today, I will again be a seller on any further rally to 19810/19970 with a higher 20105 ‘’Closing Stop’’.
September BUND
The Bund traded in a narrow range over the past two trading sessions, and I am still flat. I will now raise my buy level to 131.50/132.10 with a higher 130.95 ‘’Closing Stop’’. I no longer want to be short the Bund at this time.
Gold Rolling Contract
Gold got hit hard on Friday and I am still flat. I have no edge in Gold at this time. I do not want to chase the market higher, preferring to only be a buyer on any dip lower to 2272/2288 with the same 2259 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2302.
Silver Rolling Contract
Silver hit a high at 30.80 on Thursday before falling 130 points on Friday and I am still flat. I will now lower my buy level to 28.20/29.00 while leaving my tight 27.55 ‘’Closing Stop’’ unchanged.
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