U.S. Indices closed lower on Monday, with all sectors but Technology in the red. Communications and Consumer Discretionary were the worst performers, the former weighed by downside in Alphabet (GOOGL, -2.3%) and Netflix (NFLX, -3.4% due to an attractive all-cash PSKY bid for WBD). Tesla (TSLA, -3.4%) weighed on Consumer Discretionary after receiving a downgrade at Morgan Stanley due to its high valuation, a more cautious EV outlook, and non-auto growth being priced in. A blip of reprieve was seen for US indices following a Semafor report that the US is to allow NVIDIA (NVDA, +1.7%) H200 chip exports to China. That said, the move swiftly pared for US Indices, and mostly did for NVIDIA as well. US updates included the NY Fed SCE showing consumer inflation expectations across 1 year, 3 year, and 5 year horizons unchanged, while pessimism increased surrounding current and future financial conditions. In FX, the Dollar Index was flat to start the week with currency-specific newsflow light. NZD outperformance was perhaps due to Chinese exports topping November expectations, while the Japanese Yen was weighed by a 7.6 earthquake striking Japan. The earthquake, in combination with hawkish remarks from ECB’s Schnabel, were the dominant factors behind the pressure across global fixed, with T-Notes managing to trim losses into settlement. In the US afternoon, the US sold USD 58billion of 3 year notes, which was met with strong indirect demand; reaction was muted. For commodities, crude prices settled lower amid little newsflow, while Gold & Silver incurred marginal downside. The NY Fed Survey of Consumer Expectations for November saw the 1yr, 3yr, and 5yr ahead inflation expectations unchanged at 3.2%, 3%, and 3%, respectively. Within the report, the perceptions about households’ current financial situations deteriorated notably, with a larger share of respondents reporting that their households were worse off Y/Y. Expectations about year-ahead financial situations also deteriorated slightly. On the labour footing, unemployment expectations improved slightly, decreasing by 0.4ppt to 42.1%. Lastly, perceptions of credit access vs. a year ago deteriorated, with a decrease in the net share of respondents who expect that credit will be easier to obtain a year from now. Elsewhere, Oil closed lower by 2% while Gold ended Monday with a loss of 0.2%.
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For anyone following my Platinum Service it was made 120 points yesterday and is now ahead by 1062 points for December after ending the month of November with a gain of 4542 points, after ending October with a nice gain of 5110 points after closing September with a gain of 3774 points while ending August with a gain of 3362 points after closing July with a gain of 3753 points after closing June with a gain of 3530 points, having closed May with a gain of 3606 points, after closing April with a gain of 7685 points after closing March with a gain of 2254 points while closing February with a gain of 4180 points. January ended with a gain of 2768 points while 1997 points were gained in December. October ended with a gain of 2179 points, after closing September with a gain of 4402 points, following a loss of 301 points in August. July gained 1908 points while June saw a gain of 2074 points. The Platinum Service made a record 9619 points in October 2022. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 2300 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 0.35% lower at a price of 6846.
The Dow Jones Industrial Average closed 215 points lower for a 0.45% loss at a price of 47,739.
The NASDAQ 100 closed 0.25% lower at a price of 25,627.
The Stoxx Europe 600 Index closed 0.13% lower.
This morning, the MSCI Asia Pacific closed 0.5% higher.
This morning, the Nikkei closed 0.14% higher at a price of 50,655.
Currencies
The Bloomberg Dollar Spot Index closed 0.06% higher.
The Euro closed 0.02% lower at $1.1635.
The British Pound closed 0.03% lower at $1.3322.
The Japanese Yen fell 0.27% closing at $155.75
Bonds
U.K.’s 10-Year Gilt closed 5 basis points higher at 4.53%.
Germany’s 10-Year Bund Yield closed 7 basis points higher at 2.87%
U.S.10 Year Treasury closed 4 basis points higher at 4.17%.
Commodities
West Texas Intermediate crude closed 2.08% lower at $58.83 a barrel.
Gold closed 0.22% lower at $4188.10 an ounce.
This morning on the Economic Front we already had the release of German Trade Balance which came in at EUR 16.9 Billion versus EUR 15.6 Billion expected. Next, we have U.S. NFIB Small Business Index at 11.00 am and the ADP Employment Change at 1.15 pm. This is followed by the JOLTS Job Openings and the U.S. Leading Index at 3.00 pm. Finally, at 6.00 pm we have a Ten-Year Treasury Auction.
Cash S&P 500
It should come as no surprise that we finally saw the S&P close lower on Monday having risen for 11 of the previous 12 trading sessions. Ahead of the Fed Meeting tomorrow I would expect the S&P to trade sideways/higher. However, I have no interest in being long the market at current prices. In my opinion there is huge risk in loading up on the S&P where there is zero compensation in comparison to the T-Bill Market. With VIX at such low levels having been crushed over the past two weeks it is only a matter of time before the VIX rallies leading to a lower stock market. Over the short-term the stock market is inherently unstable while Treasury Bills are quite steady. Because the Bank of Japan are signalling a rate hike while the ECB has little economic reason to anything but stand neutral the bond yield pressure from across both oceans has filtered into the US Treasury Market helping yields rise a further 5 basis points yesterday, closing at 4.18%. Sentiment for the US Indexes is off the charts at nosebleed levels while at the same time there are no sell recommendations on the S&P covered from U.S. Equity Analysts. As for strategists on Wall Street, the nine polled by the Financial Times show an increase in the S&P in their average forecast by +10% for the coming year with nobody calling for even a minor dip. I am still flat the S&P as the market just missed yesterday’s sell range before falling almost 60 Handles. Today, I will lower my sell level to 6875/6895 with no stop. If triggered, I will have a T/P level at 6848. I still do not want to be long the S&P at this time.
EUR/USD
No Change: I am still flat. The Euro has resistance from 1.1690/1.1760 where I will be a small seller with a 1.1815 ‘Closing Stop’. Meanwhile, I will continue to be a buyer on any dip lower to 1.1440/1.1510 with the same 1.1375 ‘Closing Stop’. If I am taken short, I will have a T/P level at 1.1615. If I am taken long, I will have a T/P level at 1.1570.
Dollar Index
No Change: The Dollar Index has traded in a narrow 120-point range for most of the past six weeks. The Dollar continues to hold above the key 97.00/98.00 support zone before briefly rallying above 100. If the Dollar can move back above 100, I would be more confident of the completion of a base. Resistance is from 99.60/100.20 which is derived from the last three intermediate swing lows. Beyond that, 101.65/104.91 represents a Fibonacci 38.2%-61.8% retracement of this year’s January-July decline. Regarding support, the 96.22-96.38 range is a Double Bottom. A breakdown (which I do not expect) would allow for further weakness toward the 93.50 area which is the top from the late 2020/early 2021 bottom formation. I am still long the Dollar from last week at 99.20 with the same 99.50 T/P level. I will continue to look to add to this position on any further move lower to 98.40 while leaving my 97.95 ‘Closing Stop’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Russell 2000
I am still short the Russell from last week at a price of 2505. I will add to this position at 2565 with the same 2605 ‘Closing Stop’. The Russell is short-term overbought having risen 8.7% in the past 10 days which is an insane move. Today, I will raise my T/P level to 2475. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
FTSE 100
I am still flat. Over the past three trading sessions the FTSE has closed lower but only by a small fraction each day. The FTSE has support below from 9500/9570. I will now lower my buy level to this area with a lower 9430 ‘Closing Stop’. If I am taken long, I will have a T/P level at 9630. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
I am still flat as the Dow again fell shy of Monday’s sell range. Ahead of the FOMC, I will now lower my sell level to 48150/48450 with a lower 48605 tight ‘Closing Stop’. If I am taken short, I will have a T/P level at 47880. If this view changes I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
My NDX plan worked well as the market hit my 25810-sell level before falling 200 points. This move lower saw the NDX hit my revised 25690 T/P level and I am now flat. Today, I will again be a seller from 25740/25940 with a lower 25105 ‘Closing Stop’. If I am taken short I will have a T/P level at 25560. I still do not want to be long the NDX at this time.
December BUND
The Bund followed global bond markets lower on Monday. This move lower saw the bund hit my buy range for a now 127.30 long position. I will add to this trade at 126.60 while leaving my 125.95 ‘Closing Stop’ unchanged. I will now lower my T/P level to 127.90. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
No Change: I do not like the price action in Gold and is the main reason that I have not been chasing the market higher. Gold has short-term support from 4060/4090. Today, I will continue to be a buyer on any dip to this area with the same 4035 ‘Closing Stop’. If I am taken long, I will have a T/P level at 4114.
Silver Rolling Contract
Silver has the highest extreme in bullish sentiment in 37 years. Given the vertical move higher in Silver I have no interest in buying the market at this time. My own view is that when markets correct over the next few weeks everything will be sold including both Gold and Silver. Once the precious metals correct, they should attract strong buying especially Silver which I would then expect to soar. A 25% correction from current highs would see the price fall to $43 which is a previous high and any tag would be a great buying opportunity. Despite my bearishness in Silver I do not want to be short as I learnt my lesson in trying to short Gold in October. Therefore, I will stay flat Silver for now and let’s see how this inflated market plays out over the coming days/weeks. If this view changes, I will be back with a new update for my Platinum Members.
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