On the shortened holiday trading day, the S&P and Nasdaq 100 managed to close at record highs while Bond Yields and the U.S. Dollar tumbled. The primary drivers of price action were a slew of soft economic data. The highlight was the woeful ISM Services PMI which saw the headline fall back into contractionary territory, printing the lowest level in four years, amid a slump in business activity and new orders, while both prices and employment dipped too. This sparked the majority of the moves on Wednesday but rising Jobless Claims and an ADP miss also contributed. T-Notes rallied with the 10 Year yield falling to a low of 4.34% in response to the dovish data while the Dollar slumped with the DXY finding support at 105.00 from a peak of 105.80 pre-data. Stocks were choppy around the data, but once the dust settled and yields remained lower, Indices advanced higher into the close led by pronounced upside in the tech stocks while Tesla (TSLA) added to its recent rally. Health Care was the underperforming sector led by downside in Eli Lilly (LLY) on reports of a serious eye condition related to weight loss drugs. Crude prices were choppy with larger-than-expected crude stock draws initially resulting in upside before swiftly paring but it ultimately pared those losses finishing the session with strong gains. The FOMC Minutes, released after the market close, revealed little new about the Fed’s policy path. US ISM Services PMI was woeful, as the headline tumbled to a four year low of 48.8 (exp. 52.5, prev. 53.8), with New Orders and Business Activity also diving into contractionary territory to 47.3 (prev. 54.1) and 49.6 (prev. 61.2), respectively. Note, New Orders subsided beneath 50 for only the second time since May 2020. Elsewhere, employment dipped to 46.1 from 47.1, while the inflationary gauge of prices paid printed 56.3 (prev. 58.1), indicating a slightly faster slowdown in the labour market but slower price growth. Supplier deliveries slightly fell, while inventories and backlog of new orders both fell beneath 50. Within the report, it notes, “Survey respondents report that in general, business is flat or lower, and although inflation is easing, some commodities have significantly higher costs. Panellists indicate that slower supplier delivery performance is due primarily to transportation challenges, not increases in demand.” Overall, ING states, broad-based weakness in ISM services coupled with an upward trend in jobless claims suggests that the pieces are falling into place regarding a September interest rate cut from the Fed. While the Fed is signalling one cut this year, ING continue to see the risk of three rate cuts in 2024. Initial Jobless Claims (w/e June 29th) rose to 238k from 234k, marginally above the 235k forecast, with the 4wk average rising to 238.5k from 236.25k. The unadjusted data saw claims rise to 238k, +13k W/W, while the seasonal factors had expected an increase of about 8.5k. The Continued Claims data, for the preceding week, saw a notable jump to 1.858 million from 1.832 million, above the consensus 1.840 million, and above the highest analyst forecast of 1.845 million. It is worth noting that neither of these prints coincide with the usual survey window for the NFP report due Friday. Analysts at Pantheon Macroeconomics note that “Looking ahead, initial claims usually are choppy in July as a result of the timing of auto plant shutdowns, which vary every year. Nevertheless, most leading indicators suggest that claims will continue to trend up”. ADP national employment rose 150k in June from the prior, revised higher, 157k and beneath the expected 160k. Looking within in the report, median change in annual pay saw job-stayers printed 4.9% Y/Y (prev. 5.0%), while job-changers was 7.7% Y/Y (prev. 7.8%). Leisure/hospitality dominated the jobs creation, with a chunky 63k, followed by Construction, 27k, and Professional/Business services, 25k. As such, ADP Chief Economist Nela Richardson stated, “Job growth has been solid, but not broad-based. Had it not been for a rebound in hiring in leisure and hospitality, June would have been a downbeat month.” This comes ahead of the US Payrolls report on Friday, whereby analysts current estimate 190k Non-Farm Payroll additions, while average hourly earnings are expected to decline to 3.9% Y/Y in June vs 4.1% in May. Elsewhere, Oil 1.06% higher while a weaker Dollar saw Gold end Wednesday with a gain of 1.2%.
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 lost 200 points yesterday and is now ahead by 133 points for July after closing June with a gain of 2074 points, 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 0.51% higher at a price of 5537.
The Dow Jones Industrial Average closed 23 points lower for a 0.06% loss at a price of 39,308.
The NASDAQ 100 closed 0.87% higher at a price of 20,186.
The Stoxx Europe 600 Index closed 0.74% higher.
Yesterday, the MSCI Asia Pacific closed 0.2% higher.
Yesterday, the Nikkei closed 1.26% higher at a price of 40,580.
Currencies
The Bloomberg Dollar Spot Index closed 0.34% lower.
The Euro closed 0.3% higher at $1.0785.
The British Pound closed 0.4% higher at 1.2741.
The Japanese Yen fell 0.2% closing at $161.71.
Bonds
Germany’s 10-year yield closed 3 basis points lower 2.56%.
Britain’s 10-year yield closed 8 basis points lower at 4.18%.
U.S.10 Year Treasury closed 8 basis points lower at 4.35%.
Commodities
West Texas Intermediate crude closed 1.06% higher at $83.69 a barrel.
Gold closed 1.2% higher at $2356 an ounce.
This morning on the Economic Front we have German Factory Orders at 7.00 am, followed by U.K, Construction PMI at 9.30 am. With the U.S. Markets closed for Independence Day, the only other data of note is the ECB Monetary Policy Meeting Accounts from the June Meeting which will be released at 12.30 pm.
Cash S&P 500
There is no doubt but the higher the S&P and NASDAQ rally the more susceptible they are to a major decline. The S&P rallied 28 Handles yesterday but only 49% of the stocks comprising the Index closed higher. The S&P made a new closing high on Tuesday and a new intraday high yesterday. The combined number of new highs minus new lows on the NYSE and NASDAQ has now been negative for 24 out of the past 27 trading sessions or 89% of the time since May 23. Meanwhile, as I go to press the yield on a risk-free three-month U.S. Treasury Bill is 5.39%. Since the above-mentioned May 23 date, both the NDX and S&P have had two strong downside Key Day Reversals, yet this has not mattered so far as the buy the dip mania shows up on every dip. I have never seen anything like this in my 35 years of trading. The 14 Day RSI for the S&P closed at a severely over 74 last night while for the NDX it is even more overbought with a 76 print. Buying against this background is nuts in my opinion. Yesterday after the S&P hit my second sell level at 5521 for a 5511 average short position I was stopped out of this trade at 5531 and I am still flat. Today, I will be a strong seller from 5540/5560 with a 5573 tight ‘’Closing Stop’’. If triggered, I will have a T/P level at 5523. I still do not want to be long the S&P at this time.
EUR/USD
As expected, the Euro keeps attracting buying on any dip. I am still flat as the Euro never came close to yesterday’s buy range. I will now raise my buy level to 1.0670/1.0740 with a higher 1.0595 ‘’Closing Stop’’. If triggered, I will have a T/P level at 1.0810.
Dollar Index
The Dollar is trading 50-points lower from where I marked prices 24 hours ago. I am still flat as the market just fell shy of my 106.00 sell level. I will now lower my sell level to 105.70/106.40 with a wider 107.05 ‘’Closing Stop’’.
Cash DAX
The DAX is now trading 200 points higher from where I marked prices yesterday morning. Thankfully we had no sell level in this market. As I have no edge here, I will stay flat until I return on Monday. If this view changes I will be back with a new update for my Platinum Members.
Cash FTSE
No Change: Ahead of the U.K Elections today the FTSE again traded in narrow range. Looking at the Daily chart I do wonder if the market is setting itself up for a strong rally. I am seeing a potential bull flag with huge support below in the 7900/8100 area. In this range we have the 2023 highs, the 100 Day Moving Average and close to the .382 fin retracement. I am still long from Tuesday at a price of 8120. I will now have a T/P level on this position at 8230. I will add to this trade on any spike lower to 8020. I will also have no stop on this position as I take a punt on the outcome of the Elections given that no matter what the result, the market is already priced in. If this view changes, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
I am still flat the Dow. I will not chase the market higher especially as we have NFP tomorrow. Therefore, I will continue to be a buyer on any dip lower to 38850/39100 with the same 38695 ‘’Closing Stop’’.
Cash NASDAQ 100
The NDX has now rallied over 500 points since Tuesday morning’s low print. This move higher has driven the NDX to an even more overbought condition. I hate trying to short the NDX but with the RSI closing over 76 I have to try the short side. The NDX has resistance from 20280/20430 where I will be a small seller with a tight 20555 ‘’Closing Stop’’. If triggered, I will have no T/P level for now. If this view changes I will be back with a new update for my Platinum Members.
September BUND
Although Treasury Yields fell 8 basis points yesterday, the Bund did not follow suit and I am still flat. I will now raise my Bund buy level to 129.70/130.40 with a higher 129.15 ‘’Closing Stop’’. If triggered, I will have a T/P level at 130.95.
Gold Rolling Contract
Gold closed over 1% higher yesterday and I am still flat. I will now raise my buy level to 2305/2320 with a higher 2289 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2332.
Silver Rolling Contract
I am still flat as Silver rallied hard, finally following Gold higher. I will now raise my buy level to 28.90/29.70 with a higher 27.95 ‘’Closing Stop’’. If triggered, I will have a T/P level at 30.40.
Please Note: There will no Daily Commentary tomorrow. Any of my calls that are not hit today and are subsequently triggered on Friday will see me return with updated emails for my Platinum Members.
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