U.S. Equity Markets closed a new all-time high on Monday with Tech supporting Indices higher and the NASDAQ 100 outperformance. The majority of sectors closed in the green although energy closed in the red on account of lower oil prices. The tech outperformance was led by Nvidia (NVDA) after a number of positive sell-side updates (see equity section below), helping the stock close at record highs. Oil prices were hit on China demand fears after the weekend fiscal update lacked specific details, which weighed on the Yuan, while soft inflation and trade data also disappointed. There was a slight reprieve on reports in Caixin that China could issue up to CNY 6 Trillion of bonds to help support its growth initiatives but ultimately the move was short-lived, but it did help support US equity futures. T-note futures were weighed on through the European morning but saw a turnaround after the Caixin report before settling off lows on account of the Fed’s Waller. The Fed Governor said the Fed can move policy to a more neutral stance at a “deliberate pace”, but he did keep his options open, depending on how the economy evolves, but his baseline case is for a gradual reduction in policy rate over the next year. The Dollar outperformed while havens lagged with T-note futures lower on the session (cash markets closed for Columbus Day). Geopolitics remains in the limelight with the Israel security meeting occurring at pixel time about a response to Iran, which will be “strong”, and they “must prepare for an exchange of blows”, “which may drag Washington into war, which Iran does not want”, according to the Israeli press. The Minneapolis Fed President (Kashkari) stated the economy is in the final stages of returning inflation to 2%, noting policy is in a restrictive stance but it is unclear how restrictive. He believes that further modest cuts appear appropriate, and the future path of policy is to be data-driven. He added the job market remains strong and recent data shows the labour market is not weakening quickly. He said the neutral rate is likely to be higher than pre-COVID (previously said he thinks it is around the 3% mark), adding if US debt continues to increase, then the neutral rate will also increase. Fed Governor Waller said the Fed should proceed with more caution on rate cuts than what was needed at the September meeting. His baseline calls for reducing the policy rate gradually over the next year, noting it is currently restrictive. If the economy proceeds as expected, the Fed can move policy to a neutral stance at a ‘deliberate pace.’ However, if, in a less likely case, inflation falls below 2% or the labour market deteriorates, the Fed can front-load rate cuts. He also added that if inflation unexpectedly climbs, the Fed could pause rate cuts; he labelled the latest inflation data ‘disappointing.’ Waller also noted that there is considerable room for cutting above the neutral rate. Waller stated the economy is on solid footing and may not be slowing as much as desired; he expects GDP to grow faster in 2H 2024, adding household resources for future consumption are ‘in good shape.’ Waller sees pent-up demand for big-ticket items, stating that consumers are ‘eager’ to make purchases as rates come down. He said the labour market is ‘quite healthy,’ and labour supply and demand have come into balance. He warned that hurricanes and the Boeing strike may reduce October payrolls growth by 100,000. Looking ahead, Waller expects payroll gains to moderate and the unemployment rate to drift higher but stay historically low. He is watching inflation data to see how persistent the recent uptick is; noting that progress on inflation has been a ‘rollercoaster.’ China’s MoF announced on Sunday night it will “significantly increase” government debt issuance to offer subsidies to those with low incomes, support the property market and replenish state banks’ capital to boost economic growth. However, it was not very specific in the particular measures or scale of such measures. However, Caixin later reported China could issue CNY 6 Trillion of Treasury Bonds over three years, noting funds will be partially used to help local governments resolve their off-the-books debts. This follows on from the MoF over the weekend pledging assistance to alleviate debt pressure, but specifics were light. It is also worth noting Reuters had previously reported that around CNY 2 Trillion of special bonds were to be issued in 2024, with the latest update implying another 2 Trillion in 2025 and 2026. Elsewhere, there was plenty of data to digest, Chinese inflation data was cooler than expected while trade data was also weak. Chinese exports rose just 2.4%, beneath the 6.0% forecast and 8.7% prior while imports rose 0.3%, beneath the 0.9% forecast and 0.5% prior, seeing the trade surplus narrow to USD 81.71 billion from 91.02 billion. Elsewhere, Oil closed 2.29% lower while Gold fell 0.4% following a quiet trading session.
To mark my 3075th 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 286 points on Friday is now ahead by 989 points for October after ending September with a gain of 4402 points following a 301-point loss for August after closing July with a gain of 1918 points while June closed 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 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 0.77% higher at a price of 5859.
The Dow Jones Industrial Average closed 201 points higher for a 0.47% gain at a price of 43,065.
The NASDAQ 100 closed 0.82% higher at a price of 20,439.
The Stoxx Europe 600 Index closed 0.53% higher.
Yesterday, the MSCI Asia Pacific closed 2.3% higher.
Yesterday, the Nikkei closed 0.57% higher at a price of 39,605.
Currencies
The Bloomberg Dollar Spot Index closed 0.31% higher.
The Euro closed 0.3% lower at $1.0906.
The British Pound closed 0.1% lower at 1.3055.
The Japanese Yen fell 0.4% closing at $149.78.
Bonds
Germany’s 10-year yield closed 1 basis points higher 2.28%.
Britain’s 10-year yield closed 3 basis points higher at 4.24%.
U.S.10 Year Treasury closed 4 basis points higher at 4.10%.
Commodities
West Texas Intermediate crude closed 2.29% lower at $73.83 a barrel.
Gold closed 0.4% lower at $2648 an ounce.
This morning on the Economic Front we have German Wholesale Prices and U.K. Employment Change at 7.00 am. Next, we have the German and ZEW Surveys at 10.00 am. This is followed by U.S. New York Empire State Manufacturing Index at 1.30 pm. Finally, we have speeches from Fed Members Daly and Kugler at 4.30 pm and 7.00 pm respectively.
Cash S&P 500
Wrong! Traders are piling into Calls relative to Puts, betting heavily on the side of a continued rally, as the 5-day CBOE Equity Put/Call Ratio is now at its lowest level in over a year, since July 2023. The 3-Week average of Market Vane’s Bullish Consensus is at 72, a tick away from matching a 6 ½ year optimistic extreme. The percentage of Bears in the Weekly Investors Intelligence Advisors’ Survey has been below 24% for the past eleven months. Finally, as I mentioned yesterday the Fear & Greed Index has jumped back into’ ’Extreme Greed’’ territory for the first time since March. At the same time, the Goldman Sachs Bull/Bear Indicator, a combination of stock valuations, the Yield Curve, Manufacturing Activity, Inflation, Private Sector Spending and Unemployment is at levels that have attended the start of major stock market declines over the past 50 years. Investors have essentially zero concerns or fears that stocks will decline in any substantial amount for any significant period. In my opinion the vulnerability for just such a sell-off is extremely high. The only question is the ‘’When and from Where’’. Yesterday, the S&P hit my second sell level at 5835 for a 5825 average short position before stopping me out of this trade at 5852 and I am now flat. The 14-Day RSI closed at 68 last night so this indicator is also close to giving a sell signal. The S&P has further resistance from 5870/5890 where I will again be a seller with a 5911 wider ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 5843.
EUR/USD
I am still long the EURO from last week at an average price of 1.1015. I am stunned that the strength in the Dollar over the past six weeks has had no negative effect on the stock market. I will leave my ‘’Closing Stop’’ unchanged at 1.0895 which is just below Friday’s low. I will now lower my exit level on this Euro position to a small loss at 1.0970. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
Wrong! Late yesterday I was stopped out of my 102.40 average short position at 103.15 and I am now flat. The next resistance level for the Dollar is from 103.80/104.50 where I will be an aggressive seller with a higher 105.15 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 103.20.
Cash DAX
Like any short position at the moment you have to quick to take your gain or it will quickly evaporate. This is not a fundamental rally but one based on liquidity. After all Germany has negative growth yet the DAX is trading at all-time highs. Chinese stocks have surged as yet again we saw more stimulus announcement after I posted on Sunday night. After the DAX hit my 19460-sell level we sold off to my revised 19404 T/P level and I am now flat. This morning the DAX is trading higher at 19550. I cannot be a buyer of the DAX at these levels and shorting the market requires full concentration given the explosiveness of the upward price action. I am going to stay flat the DAX for now until I feel I have a better edge.
Cash FTSE
I am still flat the FTSE as the market never came close to yesterday’s buy range before a late rally saw the FTSE close over 8300. I will now raise my buy level to 8190/8260 with a higher 8135 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 8310.
Dow Rolling Contract
The surge in the share price of Goldman Sachs propelled the Dow to a new closing all-time high on Monday. It is interesting that this 200-point rally occurred with the slowest NYSE volume in over six weeks. Today, I will continue to be a seller on any further rally to 43250/43500 with the same 43705 ‘’Closing Stop’’. Despite the bullish price action in the Dow, I still do not want to be long the market at this time.
Cash NASDAQ 100
The NDX led Monday’s rally helped by the 3% rally in NVIDIA shares to a new all-time closing high. NVIDIA share price has now risen nearly 40% since the August 5 low. This is an incredible move by the most watched and traded stock on the planet. Thankfully we have had no sell levels in NDX over the past couple of weeks. The NDX is now within 200 points of its all-time high. I will now raise my NDX buy level to 20000/20160 with a higher 19895 ‘’Closing Stop’’. If triggered, I will have a T/P level at 20280. I still do not want to be short the NDX at this time.
December BUND
The Bund traded in a narrow range on Monday which was no surprise given the U.S. Treasury Market was closed for Columbus Day Holiday. Today, I will again be a buyer on any further dip lower to 131.90/132.70 with the same tight 131.45 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 133.30. I still no longer want to be short the Bund at this time.
Gold Rolling Contract
Gold traded in a narrow range yesterday and I am still flat. Today, I will continue to be a buyer from 2595/2611 with the same 2579 tight ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2625.
Silver Rolling Contract
Silver sold off to Monday’s buy range for a now 31.00 long position. I will continue to look to add to this trade on any further move lower to 30.30 while leaving my 29.55 ‘’Closing Stop’’ unchanged. I will now lower my T/P level to 31.70. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
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