Apart from the Dow, U.S. Equity Markets tumbled on Wednesday with tech and semis leading the weakness on Bloomberg reports that the US warned allies of stricter trade rules in a China chip crackdown, while ASML (ASML NA) provided weak Q3 guidance. US Presidential Candidate Trump’s warning on China tariffs (between 60-100%) also hit sentiment. Trump also suggested that Taiwan should pay for defence, which hit TSMC (TSM) shares. Although Indices saw steep losses, it was highly concentrated in Tech, Communication, and Consumer Discretionary, while Consumer Staples, Energy, and Financials saw decent gains. Although sectors were mixed, the equal-weight S&P and Russell 2000 both saw losses. Elsewhere, T-notes were sold overnight and throughout Europe and at the start of the US session amid the Trump commentary, hot UK CPI, and beats on US Housing and IP data, while Waller had a slightly hawkish tone. Nonetheless, the sharp losses in stocks saw T-notes pare from lows to see Treasuries close marginally in the green with an average 20 Year Treasury Auction looked through. In FX, the Dollar Index tumbled to the lowest level since March as haven outperformance pressured the greenback. The Japanese Yen was the clear outperformer, but the Swiss Franc also performed well as equities slid but Reuters suggested that some Yen strength was also attributed to potential intervention while desks were also citing an unwind of carry trades. Oil prices surged to a softer buck and heightened geopolitics while crude stocks saw a chunky draw, but it was offset by product builds. The New York Fed President said in a Wall Street Journal interview that the Fed is closer but not ready to cut; noting that a rate cut will be appropriate in the coming months but more data will help provide confidence on inflation. Williams did acknowledge they are seeing broad-based declines in inflation. He pushed back against concerns that bringing inflation back to 2% would be more difficult than it had been so far. Williams added that even if the Fed starts to lower rates, they will remain at a setting that restrains economic activity. He echoed Powell in noting the last three months of data are getting the Fed closer to the disinflationary trends the Fed is looking for, and that the current rate stance is appropriate to achieve goals. He also noted the labour market is not weak. Meanwhile Fed Member Waller said that the time to cut policy rates is getting close based on the analysis of potential scenarios; his second (“probably more likely”) scenario is uneven inflation data ahead that still shows progress but makes a cut in the near future more uncertain. The Fed Governor’s optimistic scenario is more good inflation data, which could mean an interest rate cut in the not-too-distant future, while his third scenario, but with low probability, is a significant resurgence in inflation in H2. Currently, Waller sees more upside risk to unemployment than has been seen for a long time but notes that current data is consistent with a ‘soft landing’ and even less of a trade-off in terms of unemployment. Waller noted the recent inflation data makes him more confident that the Fed will achieve its inflation goal, but on monthly PCE inflation, he needs to see a bit more evidence that this will be sustained. In the Q&A, Waller noted the exact timing of the rate cut does not matter a lot, but the key to easing is when conditions justify it. He added the Fed has done its job with high rates, and it is an open question about the timing of a rate cut. On the labour market, Waller said it is in a sweet spot with firms having the workers they want. ECB PREVIEW: Expectations are unanimous amongst economists that the ECB will stand pat on rates with markets assigning a 92% chance of such an outcome. As such, it looks like the upcoming meeting will largely be a non-event with policymakers set to sit on their hands and see how data plays out between now and September. On which, market pricing currently assigns a roughly 80% chance of a cut with a total of 46bps of easing seen by year-end. Elsewhere, Oil ended Wednesday with a gain of 2.53%, while Gold hit a new all-time high at $2483 before selling off, closing with a small 0.4% loss.
To mark my 3025th 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 yesterday and is now ahead by 399 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 1.59% lower at a price of 5588.
The Dow Jones Industrial Average closed 243 points higher for a 0.60% gain at a price of 41,198.
The NASDAQ 100 closed 2.94% lower at a price of 19,800.
The Stoxx Europe 600 Index closed 0.48% lower.
This Morning, the MSCI Asia Pacific closed 0.6% lower.
This Morning, the Nikkei closed 2.36% lower at a price of 40,126.
Currencies
The Bloomberg Dollar Spot Index closed 0.42% lower.
The Euro closed 0.3% higher at $1.0936.
The British Pound closed 0.2% higher at 1.3004.
The Japanese Yen rose 1.36% closing at $156.18.
Bonds
Germany’s 10-year yield closed 2 basis points lower 2.42%.
Britain’s 10-year yield closed 3 basis points higher at 4.08%.
U.S.10 Year Treasury closed 2 basis points lower at 4.14%.
Commodities
West Texas Intermediate crude closed 2.53% higher at $82.80 a barrel.
Gold closed 0.4% lower at $2458 an ounce.
This morning on the Economic Front we already had the release of U.K. May Unemployment which printed 4.4% as expected. Next, we have Euro-Zone Construction Output at 10.00 am, followed by a 30-Year German Bund Auction at 10.30 am. This is followed by the ECB Rate Announcement at 1.15 pm where no change is expected. ECB President will host a Press Conference following the Statement at 1.45 pm. In between, we have U.S. Weekly Jobless Claims and the Philly Fed Manufacturing Index at 1.30 pm. Finally, we have a speech from Fed Member Logan at 5.45 pm and a 10 Year Treasury Auction at 6.00 pm.
Cash S&P 500
The propensity for Equity Markets to go full retard on one thing or another has been with us all-year with the past week no exception. Now it is the rotation trade. Wednesday’s 600-point fall in the NASDAQ was its biggest loss in percentage terms since December 2022. The Dow RSI hit 83 yesterday while the sell-off in the NDX led to an 80 Handle drop in the S&P. The 12% rally that I mentioned in the Russell 2000 is not normal as I mentioned in yesterday’s Daily Commentary. Doing further research on this insane move the Historical Daily OB/OS Readings are the highest ever. ‘’EVER’’ is a long time. The last time the 5-Day % change in SPX/RTV was just before the October 1987 crash. I had just returned from our Honeymoon and will never forget it. Does this mean that the stock market will crash now- I have no idea, but I just want to show that these are not normal times. Suddenly the Market Cap to GDP is back at 200% which is not sustainable. This is the second time that this ratio has hit 200% and raises the strong prospect of a double top. Yes, maybe this market will continue to melt up and that the world is in a different place, but history is against this happening and is why I am waiting for a correction to be a buyer of the S&P. Traders are worried as shown by the 10% rise in the VIX yesterday, closing at a price of 14.48. Remember we have a large ‘’Open Gap’’ from earlier this year at 18.50. Any spike in the VIX to this price level will see me look to buy the S&P. Yesterday’s sell-off saw my 5606 average large, short S&P exited at my revised 5601 T/P level and I am now flat. The S&P will have support at its previous top from 5550/5566. The fact that the RSI closed lower at 61 will see me be a small buyer on any dip to this area with a tight 5537 ‘’Closing Stop’’. As I am now short the Dow, I have no interest in shorting the S&P at this time. If this view changes, I will be back with a new update for my Platinum Members.
EUR/USD
No Change: The Euro continues to trade in a narrow range, and I am still flat. The Euro has strong resistance from 1.0980/1.1060 where I will be an aggressive seller with a 1.1115 ‘’Closing Stop’’. Meanwhile, I will continue to be a buyer on any dip lower to 1.0770/1.0840 with the same 1.0695 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 1.0920. If I am taken long, I will have a T/P level at 1.0890.
Dollar Index
The Dollar fell 0.5% yesterday. This move lower saw the Dollar hit my initial 103.70 buy level with a 103.65 low print. I am still long with a now lower 104.10 T/P level. I will add to this position at 102.90 while leaving my 102.15 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members. I still do not want to be short the Dollar at this time.
Cash DAX
No Change: The DAX continues to trade heavy, and I am still flat. As I am aggressively short the S&P, I am reluctant to chase the DAX lower despite the chart showing a potential Head & Shoulders Pattern and a bear flag. I will only lower my sell level slightly to 18650/18750 with a lower 18865 ‘’Closing Stop’’. I still do not want to be long the market at this time. If this view changes I will be back with a new update for my Platinum Members. I am taken short; I will have a T/P level at 18580.
Cash FTSE
Frustratingly, the FTSE missed my 8120-buy level with an 8130 low print before rallying back to 8250 this morning. I am still flat. I will now raise my buy level to 8090/8160 with the same 7995 wider ‘’Closing Stop’’. If triggered, I will have a T/P level at 8215. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
The Dow continued to build on this week’s breakout, rising a further 250 points. This move higher saw my second sell level at 41080 triggered for a now 40955 average short position. With the RSI closing at an extremely overbought 83 I am happy to hold this position against my now long NDX position. I will continue to have no stop on this trade while raising my T/P level to 40840. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
The NDX had it worst trading day in percentage terms in nearly two years. Yesterday’s 600-point fall saw the RSI close at 49. The sell-off in the NDX is now overdone in my opinion. I am now long the market at an average rate of 20150. I will add to this trade on any further move lower to 19750 with no stop for now. I will now lower my T/P level to 20310. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
September BUND
The Bund never came close to yesterday’s buy range as it continues to build value above last week’s 130.50 support level. I will now raise my buy level to 131.00/131.70 with a higher 130.05 ‘’Closing Stop’’. If triggered, I will have a T/P level at 132.25.
Gold Rolling Contract
No Change: Gold continues to build value above 2400 and I am still flat. Today I will continue to be a small buyer on any dip lower to 2397/2412 with the same 2383 tight ‘’Closing Stop’’.
Silver Rolling Contract
Silver was weak yesterday. This move lower saw the market hit my 30.20 buy level. I am still long with a now lower 30.90 T/P level. I will add to this position on any further move lower to 29.40 while leaving my 28.55 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Please Note: There will be no Daily Commentary tomorrow. Any of my calls that are not executed today and are subsequently triggered on Friday will see me return with updated emails for my Platinum Members.
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