U.S. Equity Markets were choppy on Tuesday, albeit settling with upside bias (SPX flat, NDX +0.1%, DJIA flat) but underperformance was in the small-cap Russell 2000 (-0.4%). Sectors were also mixed amid a deluge of earnings with Industrials and Materials the laggards, with the former weighed on by disappointing GE Aerospace (GE) (-9%) and Lockheed Martin (LMT) (-6%) earnings, and the latter by Sherwin-Williams (SHW) (-5.5%). Consumer Staples was the outperforming sector. Aside from earnings, fundamental newsflow was quite sparse on Tuesday in a week that lacks tier 1 US data, although the crude complex saw a second consecutive day of gains and was buoyed by a couple of catalysts in the European morning. One, Israeli PM Netanyahu will hold consultations tonight with various Cabinet Ministers regarding the response to Iran, and two, Iranian embassy officials were reportedly involved in the drone attempt on Netanyahu. In addition, and later in the session, Channel 12 citing two sources said the Israeli army has completed its preparations to attack Iran and it seems that it will be within days. The Dollar was firmer once again, continuing to be buoyed by rising optimism that Donald Trump will win the U.S. election, while Antipodeans were the G10 outperformers and attempted to pare some of its recent losses. Lastly, Treasuries were ultimately lower but did chop in technical trade on another day with a lack of fundamentals. Looking ahead, US corporate earnings continue to come thick and fast with Tesla (TSLA) and Coca-Cola (KO) the highlights on Wednesday, in addition to the Bank of Canada policy rate announcement. The Bank of Canada is expected to cut rates by 50bps to 3.75% on Wednesday, according to 19/29 analysts surveyed by Reuters, while 10 analysts look for a smaller 25bps rate cut. Alongside the rate decision, the latest Monetary Policy Report will be released as well as a speech from Governor Macklem. Remarks from BoC Governor Macklem on 10th September, a week after the BoC cut by 25bps for the third consecutive time, stated that bigger cuts are possible if the economy and CPI are weaker. The August inflation data was soft, although a strong September jobs report saw money markets price a 25 or 50bps move as a near-coin flip. Thereafter, the September inflation data was notably softer than forecast and 50bps bets ramped up, supported by the latest Business Outlook Survey showing firms expect prices and wage growth to soften further. As things stand, Money Markets are pricing in 48.5bps of easing at the upcoming meeting, implying a 94% probability of a 50bps reduction. The focus of the meeting will largely be on the rate decision, however, the statement and MPR will be eyed for guidance and how the BoC is explaining the recent soft inflation data. We will also look to the MPR for the BoC’s economic forecasts. Elsewhere, Oil closed higher by 2.17% while Gold made a fresh new all-time closing high with a gain of 1.1%.
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 was flat yesterday and is still ahead by 1440 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 0.05% lower at a price of 5851.
The Dow Jones Industrial Average closed 6 points lower for a 0.02% loss at a price of 42,924.
The NASDAQ 100 closed 0.11% higher at a price of 20,383.
The Stoxx Europe 600 Index closed 0.18% lower.
Yesterday, the MSCI Asia Pacific closed 0.7% lower.
Yesterday, the Nikkei closed 1.39% lower at a price of 38,411.
Currencies
The Bloomberg Dollar Spot Index closed 0.06% higher.
The Euro closed 0.15% lower at $1.0796.
The British Pound closed 0.1% lower at 1.2974.
The Japanese Yen fell 0.1% closing at $151.01.
Bonds
Germany’s 10-year yield closed 3 basis points higher 2.32%.
Britain’s 10-year yield closed 3 basis points higher at 4.17%.
U.S.10 Year Treasury closed 3 basis points higher at 4.21%.
Commodities
West Texas Intermediate crude closed 2.17% higher at $72.09 a barrel.
Gold closed 1.1% higher at $2748 an ounce.
This afternoon on the Economic Front we have U.S. MBA Mortgage Applications at 12.00 pm followed by the Bank of Canada Rate Announcement at 12.45 pm. Next, we have Existing Home Sales and Eur0-Zonce Consumer Confidence at 3.00 pm. Finally, we have the Beige Book at 7.00 pm. Meanwhile we have the usual clatter of Central Bank speakers: The Fed’s Bowman and Bank of England’s Breeden who will both speak at 2.00 pm, ECB President Lagarde is due at 3.00 pm along with ECB Member Lane at the same time, followed by Cipollone at 3.30 pm.
Cash S&P 500
To say that the American Equity Market is probably one of the most challenging to analyse currently is a huge understatement. The correlation between a strong Dollar and higher Bond Yields has so far been ignored by the broader Indexes. I cannot remember the last time a 4% rally in the Dollar accompanied by a 60-basis point rise in 10-Year Yields has led to both the S&P and Dow trading close to all-time highs. To add to my conundrum the $NYSI is close to been maximum oversold. For me the $NYSI Stochastic has one of the best technical signals to follow over the last few years. It may give a buy/sell signal a few days early but ultimately has worked well for all of us. However, making my analysis more difficult is the fact that the $BPSPX has miles of downside risk. The best strategy that we can use at this time is to keep selling rips. Even though the $NYSI is close to been oversold I have no real interest in buying the market given how overbought all the fundamentals are currently. I have a sneaky suspicion that when the S&P falls it is going to fall much further than traders expect and will catch a lot of people ‘’long with offside’’ positions. Today, I will continue to be a seller on any further rally to 5871/5889 with the same 5911 ‘’Closing Stop’’. If this view changes I will be back with a new update for my Platinum Members.
EUR/USD
The Euro closed at a new two-month low at 1.0796 last night as the one-way sell-off continues. Although the daily ranges in the Euro have been tiny it continues to trade lower. The US. Equity Market continue to ignore the huge move higher in both the Dollar and 10-Year T Notes since the Fed hiked rates last month. Just before the New York close, the Euro hit my second buy level at 1.0795 for a now 1.0830 average long position. I will leave my 1.0745 ‘’Closing Stop’’ unchanged while lowering my T/P level to 1.0885. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
No Change: I am still short the Dollar from Monday at a price of 103.95 with the same 103.50 T/P level. I will add to this position on any further move higher to 104.75 while leaving my 105.25 ‘’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
The DAX never came close to yesterday’s sell range, and I am still flat. It is noticeable that the DAX has made a series of lower highs since last week’s latest all-time-high. Now this may be nothing or could be the start of a meaningful correction that is long overdue. I will now lower my DAX sell level to 19540/19640 with a lower 19725 tight ‘’ Closing Stop’’. I still do not want to be long the DAX at this time.
Cash FTSE
No Change: The FTSE never came close to yesterday’s sell range, and I am still flat. We have short-term resistance from 8380/8460. I will now lower my sell level to this area with a now lower 8535 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 8335.
Dow Rolling Contract
This week the Dow has traded heavy. I am reluctant to chase the market lower given the price action of the past few months. Neither do I have any interest in buying the market at these levels. The Dow has resistance from 43100/43400 where I will again be a seller with the same 43605 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 42960.
Cash NASDAQ 100
Frustratingly, the NDX missed yesterday sell range by seven points before falling nearly 100 points off Tuesday’s 20443 high print and I am still flat. NVIDIA continues to attract buying and is now higher by over 50% since the lows of August 5th. This is an insane move. Nvidia alone has stopped the NDX for having any meaningful sell-off. Today, I will continue to be a small seller from 20460/20620 with a higher 20805 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 20335. I no longer want to be long the NDX at this time. If this view changes I will be back with a new update for my Platinum Members.
December BUND
Although the Bund traded in a narrow range yesterday, the market did hit my buy range for a now 132.70 long position. I am still long with a now lower 133.20 T/P level. I will add to this trade at 132.00 while leaving my 131.35 ‘’Closing Stop’’ unchanged.
Gold Rolling Contract
There is no end to this Gold rally, closing at another new all-time high in New York. I am still flat. I am reluctant to chase the Gold market higher, preferring to leave my 2650/2676 buy level unchanged with the same 2639 tight ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2693.
Silver Rolling Contract
Silver continues to build momentum following last week’s 6% rally. I will now raise my buy level to 33.00.34.20 with a now higher ‘’Closing Stop’’. If triggered, I will have a T/P level at 35.10.
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