It was a risk-off session on Tuesday with underperformance in the Russell 2000 and Dow versus the S&P and NASDAQ 100. Sectors were predominantly lower, led by losses in Industrials, Energy and Financials while Consumer Discretionary, Consumer Staples and Healthcare were the relative outperformers. Meanwhile, Treasuries were ultimately flat with downside seen early on with T-Notes tracking Gilts lower after hotter-than-expected UK wages data. However, a soft US ex-autos print within US retail sales result (headline beat, control in line) saw T-Notes catch a bid, which extended after soft industrial production data. In FX, the Dollar Index continued to hover around 107 with eyes turning to the FOMC rate decision on Wednesday. Elsewhere, the Japanese Yen and Swiss Franc were bid on the risk off trade while Sterling was buoyed by the aforementioned wages data ahead of UK inflation on Wednesday and the Bank of England on Thursday. Antipodes and the Canadian Dollar lagged FX peers during the risk-off trade. Crude prices were also weighed on amid the poor sentiment. Separately, other updates to be aware of include, Reuters reporting via sources that China is to maintain its growth target of “around 5%” for 2025, and it is targeting a budget deficit of 4% in 2025 (vs 3% initially), adding that more stimulus will be funded through issuing off-budget special bonds. The German IFO business climate missed expectations, but ZEW economic sentiment beat, while the German Finance Agency announced it intends to issue around EUR 380 billion via Federal debt sales in 2025, which is -13% Y/Y. The US 20 Year Treasury Auction was soft versus averages but an improvement from the prior. Meanwhile, US Congressional Leaders struck a bipartisan deal to push the government funding deadline to March 14th, via Politico. Canadian inflation data saw the average of the Bank of Canada core measures slip marginally to 2.43% from the upwardly revised 2.5% in October. Elsewhere, Pfizer (PFE) was bid after issuing 2025 guidance, while ADRs of Nissan (NSANY) and Honda (HMC) were choppy on reports the two are to merge. Meanwhile, China is reportedly poised to investigate more US tech deals after the NVDA probe, according to The Information. U.S. Retail Sales for November rose 0.7%, above the expected 0.5%, and lifting from the prior, revised higher, 0.5%. Retail sales ex-autos came in beneath forecasts at 0.2% (exp. 0.4%, prev. 0.2%), and ex-gas/autos was 0.2% (prev. 0.2%). Retail control printed 0.4%, as expected, lifting from October’s -0.1%. The solid headline was led by vehicle sales (+2.6% M/M) but still showed signs of broad-based strength, with control group sales increasing at a healthy pace too. As such, Capital Economics thinks this suggests Q4 consumption growth will be close to 3% annualised. In addition, the 0.4% M/M rise in building materials sales may reflect some rebuilding following the hurricanes, although department store sales fell 0.6% M/M despite Black Friday, with CapEco suggesting it signalling the structural shift among consumers towards online retail, which lifted by 1.8%. For the record, the data will have little to no bearing on the Federal Reserve’s rate decision on Wednesday whereby they are widely expected to cut rates by 25bps. Lastly, the updated Atlanta FedGDP Now estimate was released following the data, and also IP, whereby it revised down its Q4 estimate to 3.1% from 3.3%. The Federal Reserve will release its latest rate decision on Wednesday 18th December at 19:00GMT/14:00EST, alongside the updated Summary of Economic Projections (SEPs). Overall, the Fed is widely expected to lower the Federal Funds Rate target by 25bps to 4.25-4.50%, with the latest Reuters poll showing 93 out of 103 economists expecting this as the outcome. Following the recent commentary and economic data, it is now almost a certainty that the central bank will cut by 25 basis points, highlighted by money market pricing moving more dovish and pricing in a 96% probability of such an outcome. Regarding the statement and press conference, Goldman Sachs says the focus will be on the relative emphasis the Fed puts on language around either slowing the pace of rate cuts, or that decisions remain on a meeting-by-meeting and data-dependent basis. Nonetheless, GS expects to hear both messages, including an addition to the statement that nods toward a slower pace. Ahead, analysts and market pricing expect the central bank to pause on rates in January, amid some concerns about rising inflation risks, with inflationary pressures potentially set to rise due to President-elect Trump’s proposed tariffs and tax cuts. Attention will then turn to Fed Chair Powell at 19:30GMT/14:30EST to explain the Fed’s decisions with any clues for guidance ahead but he will not want to front-run any fiscal policy measures from US President-elect Trump. Elsewhere, Oil closed 0.9% lower while Gold was basically flat as it closed lower by 0.2%.
To mark my 3100th 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 300 points yesterday and is now ahead by 428 points for December after closing November with a gain of 3049 points having finished October with a gain of 2179 points. September saw 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 0.39% lower at a price of 6050.
The Dow Jones Industrial Average closed 267 points lower for a 0.61% loss at a price of 43,449.
The NASDAQ 100 closed 0.43% lower at a price of 22,001.
The Stoxx Europe 600 Index closed 0.42% lower.
This morning, the MSCI Asia Pacific closed 0.4% higher.
This morning, the Nikkei closed 0.72% lower at a price of 39,081.
Currencies
The Bloomberg Dollar Spot Index closed 0.02% higher.
The Euro closed 0.1% lower at $1.0504.
The British Pound closed 0.2% higher at 1.2718.
The Japanese Yen rose 0.5% closing at $153.28.
Bonds
Germany’s 10-year yield closed 2 basis points lower 2.23%.
Britain’s 10-year yield closed 7 basis points higher at 4.52%.
U.S.10 Year Treasury closed 3 basis points lower at 4.38%.
Commodities
West Texas Intermediate crude closed 0.89% lower at $70.09 a barrel.
Gold closed 0.3% lower at $2651 an ounce.
This morning on the Economic Front we already had the release of U.K. CPI which rose 2.6% versus +2.6% Y/Y expected. Next, we have the Euro-Zone CPI and Construction Output at 10.00 am. This is followed by U.S. Building Permits and Housing Starts at 1.30 pm. Finally, we have the FOMC Statement at 7.00 pm and the Powell Press Conference at 7.30 pm.
Cash S&P 500
Tuesday saw another dump to red in internals meaning markets get more oversold despite the tech mania reaching ever new highs. The McClellan Oscillator closed last night at an oversold -205. One more down day with see the M.O. hit -250. Historically every time the MO prints -210/250 it results in a 5/6% rally over the coming days. As I said yesterday in my 40 years of trading, I have never seen such divergence in American Indexes. Tesla is now trading 80% above its 200-Day Moving Average. 136 forward multiple P/E. Charts like this are unsustainable as technical disconnects and vertical charts have a way of not ending well. There is no doubt the historic concentration we are witnessing now is distorting all perception. Thus, we can have charts like the NDX and yet reach oversold conditions in the broader market. Equal Weight dropped even further yesterday. All of this is unprecedented and hence tricky to interpret and dangerous in the wide range of possible outcomes. The oversold conditions suggest major firepower for a year-end rally hence I have bought the Dow again this morning. Yet the larger picture continuing to suggest major danger brewing. I just cannot see this having a happy ending hence my warning to months ago that if all of your personal pension is tied up in equities I would look to de-risk some of your portfolio. All eyes will be on the FOMC Statement at 7.00 pm followed by the Powell Press Conference at 7.30 pm. The Fed will cut by 25 basis points which is the wrong call in my opinion but they have no choice having promised this in the last few weeks. Subsequently I expect the Fed to go on hold until at least March to see how inflation is behaving. I am still flat the S&P. As tonight will be a binary event I am now going to change my buy/sell levels from yesterday. The S&P has short-term resistance from 6108/6126 where I will be a small seller with a 6141 ‘’Closing Stop’’. The S&P has support below from 6000/6020. I will continue to be a buyer on any dip to this area with the same 5985 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 6093. If I am taken long, I will have a T/P level at 6035.
EUR/USD
No Change: The boring sideways action in the Euro shows no sign of ending. I am still long the Euro at an average rate of 1.0665. Given how oversold the Euro is I will add to this position on any further move lower to 1.0440 with no stop for now. I will leave my T/P level unchanged at 1.0690. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
I am still flat the Dollar as the market again traded in a narrow range yesterday. The Dollar has resistance from 107.20/108.00 where I will continue to be a small seller with the same 108.55 tight ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 106.75.
Cash DAX
No Change: The breakup of the German Government saw the DAX underperform the rest of the market. Is this a reality check for the DAX? I have no idea but 2024 has told us that any sell-off in the DAX has been met by aggressive buying. I am still flat as the market never came close to Monday’s sell range. I will leave my 20440/20540 sell level unchanged with the same 20635 ‘’Closing Stop’’. If triggered, I will have a T/P level at 20380.
Cash FTSE
The two-hour RSI for the FTSE is as oversold as it was back at the August lows. Yesterday’s move lower saw its 200 Day Moving Average tested. The chart is indicating a larger bull flag coming which will depended on Thursday’s Bank of England Meeting. The bullish seasonality chart kicks in at the end of the week through to the end of year and a bit more into the beginning of January. I am still long from yesterday morning at 8230 with the same 8290 T/P level. I will continue to look to add to this position at 8160 while leaving my 8095 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
Wrong! The Dow closing lower for the tenth consecutive trading session yesterday. This is the first time the Dow has fallen 10 trading days in a row since the 1970s. This move lower stopped out of my 43825 average long position at 43525. This morning the Dow is trading at 43500. I have no choice but to be a buyer here given the technical signals that I outlined in the S&P above. I will have no T/P level on this position for now. I will add to this trade on any further move lower to 43250 with a wider 42995 ‘’Closing Stop’’.
Cash NASDAQ 100
I am still short the NDX from Monday at an average rate of 21990 with the same 22105 ‘’Closing Stop’’. Ahead of this evening’s FOMC Meeting, I will now raise my T/P level on this position to 21920. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
March BUND
The Bund continues to trade in a narrow range as it digests Friday’s large move lower. I am still flat as I continue to be a buyer on any further dip to 133.50/134.30 with the same 132.75 tight ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 134.90.
Gold Rolling Contract
It looks like all markets have gone on ‘’Hold’’ ahead of tomorrow’s Fed announcement. I am still flat. Gold has support from 2605/2621. I will now lower my buy level to this area with a lower 2589 tight ‘’Closing Stop’’. If triggered, I will have a T/P level at 2634.
Silver Rolling Contract
Silver traded in a narrow range over the past 24 hours. I am still long at an average rate of 30.95 with the same 31.60 T/P level. Meanwhile, I will leave my 29.45 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
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