US Indices were broadly lower to end the week, although the tech-heavy NASDAQ 100 was the sole index in the green and supported by gains in NVIDIA (+1.5%) after China informed the biggest tech firms that they can prep orders for H200 chips. However, Intel’s (-17%) plunge after weak guidance capped gains. Sectors were mixed, as Financials and Industrials lagged, while Energy was the outperformer and buoyed by strength in the crude complex, given the US’s continued punchy rhetoric surrounding Iran. In addition, the US/Russia/Ukraine have commenced their trilateral meeting, albeit concluded for the day, and Zelensky said it is still too early to draw conclusions and will see how the conversation develops tomorrow and what results it produces. Despite the above, the main story was in the FX space as the Japanese Yen saw notable strength as the USD/JPY retraced from a high of 159.226 to a low of 155.68. On Friday morning, there was a slightly hawkish vote split from the Bank of Japan where 8 voted for hold, Takata voted for a 25bps hike), and speculation over FX intervention followed. A few important events followed the decision. 1) Governor Ueda said they must pay attention to even small FX moves, 2) Finance Minister Katayama said they are watching FX moves with a high sense of urgency, and 3) A sharp bout of JPY strength in Ueda’s conference. All this combined led markets to believe intervention was possibly at play; however, desks note the size of the move and timing (amid Ueda press conference) likely diminishes it being the case. Thereafter, the Yen once again saw sharp appreciation, albeit over a couple of hours, on a lack of headline newsflow. Elsewhere in the FX space, all majors benefited against the US Dollar. Despite the moves in the Dollar, T-Notes saw slight weakness in thin parameters ahead of the FOMC next week. Precious metals (XAU, XAG) saw strength amid possible diversification away from the Dollar, and saw spot silver top USD 100/oz and spot gold edged towards USD 5000/oz. Manufacturing PMI printed 51.9 in January from 51.8, beneath the expected 52.0. Services fell short of the expected 52.8, as it was unchanged at 52.5 from December’s 52.5. This left the composite at 52.8, up from 52.7. Employment rose slightly, with the near-stalled job market reflecting concerns from companies over rising costs and softer sales growth in recent months. Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, wrote that “The survey is signalling annualised GDP growth of 1.5% for both December and January, and a worryingly subdued rate of new business growth across both manufacturing and services adds further to signs that Q1 growth could disappoint”. The University of Michigan final data for January was strong and revised up across the board, highlighted by sentiment at 56.4 from 54.0, conditions at 55.4 (prev. 52.4), and forward-looking expectations lifting to 57.0 from 55.0. Inflation expectations saw the short-term 1 year ahead falling to 4.0% from 4.2%, with the longer-term 5 year inching up to 3.3% from 3.2%, but beneath the expected 3.4%. Surveys of Consumers Director Joanne Hsu remarked that while the overall improvement was small, it was broad-based, seen across the income distribution, educational attainment, older and younger consumers, and Republicans and Democrats alike. Despite saying that, Hsu adds, national sentiment remains more than 20% below a year ago, as consumers continue to report pressures on their purchasing power stemming from high prices and the prospect of weakening labor markets. Elsewhere, Gold surged, ending Friday’s session with a 1.6% gain while Oil ended a volatile trading session with a 3% gain.
To mark my 3300th issue of TraderNoble Daily Commentary I am offering a special 2-Year Rate of Euro 2750 for my Platinum Service which includes 1 to 4 updated emails throughout the trading day to demonstrate this value, a 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 445 points on Friday and is now ahead by 4432 points for January having closed December with a gain of 2599 points, 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 0.03% higher at a price of 6915.
The Dow Jones Industrial Average closed 285 points lower for a 0.58% loss at a price of 49,098.
The NASDAQ 100 closed 0.34% higher at a price of 25,605.
The Stoxx Europe 600 Index closed 0.09% lower.
This Morning, the MSCI Asia Pacific closed 0.5% higher.
This Morning, the Nikkei closed 1.79% lower at a price of 52,885.
Currencies
The Bloomberg Dollar Spot Index closed 0.92% lower.
The Euro closed 0.81% lower at $1.1821.
The British Pound closed 1.2% higher at $1.3642.
The Japanese Yen rose 1.6% closing at $155.67
Bonds
U.K.’s 10-Year Gilt closed 8 basis points higher at 4.53%.
Germany’s 10-Year Bund Yield closed 1 basis points higher at 2.89%
U.S.10 Year Treasury closed 1 basis points lower at 4.23%.
Commodities
West Texas Intermediate crude closed 2.88% higher at $61.07 a barrel.
Gold closed 1.6% higher at $4975.10 an ounce.
This morning on the Economic Front we already have the German IFO Business Survey at 9.00 am, followed by U.S. Durable Goods Orders and the Chicago Fed National Activity Index at 1.30 pm. Finally, we have the Dallas Fed Manufacturing Index at 3.30 pm.
Cash S&P 500
On Wednesday we will have the FOMC meeting and Fed Chair Powell press conference. It seems like great TV for President Trump to announce his Fed chair that day, ideally at 2:30 PM ET. That would certainly divert the headlines, put the financial media offside, and create maximum confusion. Whatever the case, the Fed is not expected to cut rates at this meeting anyway, so it should be a bit of a snoozefest. What the Fed does between now and May probably does not matter, especially if we get a new Chair who starts cutting on day one. The market seems to think the path for lower rates is not quite as steep as it had been, with the Fed Funds rate by December somewhere around 3.25%, and then that is it. So, the pick is going to have to be someone who leans very dovish to change expectations, because the market knows, just like everyone, that Trump is going to pick a dovish person. As a result, the potential for the 2-year yield breaking out and moving higher seems real, with resistance at 3.62%. What seems to stand in the way is a 2-year potentially rising back to 4%. It certainly seems possible, and technically speaking, after the 2-year has made multiple bottoms in recent months and the RSI has started to trend higher. Where the 2-year goes, though, may be tied more to oil. With inflation still running around 3% and oil dropping to around $60 from a high in the $120s, this really emphasises the idea that higher oil prices could easily start driving inflation higher again. Which is probably why the chart of oil and the 2-year look nearly the same. The Bank Of Japan took the “kick the can down the road” path again, opting not to raise rates and, in my view, not providing a clear policy timeline. The only reason the Yen strengthened on Friday was rumors of a “rate check“ by the New York Fed on behalf of the US Treasury. This is basically a signal that an intervention could be on the way. Maybe the plan is to try to hold things together until after the snap election in February. It is not clear to me, but it will be interesting to see how things trade once Japan opens again on Monday. The KRW also strengthened materially against the Dollar on Friday. There has been talk in recent weeks about the Korean won being too weak, so I guess the KRW took the JPY news as putting it on notice. The KRW probably matters more than most would think, given that South Korean investors have built up a sizeable stake in US equities. It is probably one reason why the KRW has weakened so much. An investor in South Korea has to sell KRW to buy USD to buy US equities. So, if the KRW starts to strengthen at this point, it could begin to pressure this trade, because the FX exposure leaves unhedged investors exposed to potential USD losses. Of course, there will be big earnings this week from MSFT, AAPL, TSLA, and META. All four stocks, as far as I can see, are in positive gamma with positive delta positions. Implied volatility generally rises into earnings due to the risk event, so we could be in one of those situations where, unless the reporting company delivers blowout earnings, it may very well be a sell-the-news event, as implied volatility gets crushed after the release and hedges get unwound due to delta decay. My S&P plan worked well as overnight the market traded lower to my 6850 buy level. I had no T/P level on this position given the importance of the 6850 support level. I have now exited this position here at 6908 and I am now flat. Today, I will again be a buyer from 6840/6860 with a 6825 ‘Closing Stop’. If I am taken long, I will have a T/P level at 6890. Meanwhile, I will leave my 6950/6975 sell level unchanged with the same 7001 ‘Closing Stop’. If I am taken short, I will have a T/P level at 6928. If any of these views change, I will be back with a new update for my Platinum Members.
EUR/USD
A late sell-off in the Dollar saw the Euro hit my second sell level at 1.1780 for a now 1.1745 average short position. I will leave my 1.1835 ‘Closing Stop’ unchanged while raising my T/P level to 1.1740. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
Wrong! Friday’s late sell-off in the Dollar saw my 98.05 ‘Closing Stop’ triggered on my latest 98.70 average long position and I am still flat. This morning the Dollar is trading a further 0.5% lower helped by the further 1% rise in the Japanese Yen. The Dollar Index is soft, having had its worst weekly performance since last June. The Dollar has strong support below from 96.00/96.80 where I will again be a buyer with a 95.35 ‘Closing Stop’. If I am taken long, I will have a T/P level at 97.40.
Russell 2000
My latest 2700 short Russell position worked well as overnight the market sold off to my 2640 T/P level and I am now flat. Today, I will again be a seller from 2680/2750 with the same 2805 ‘Closing Stop’. If triggered, I will have a T/P level at 2630. I still do not want to be long the Russell at this time.
FTSE 100
Overnight the FTSE traded lower to my 10110 T/P level on last week’s 10160 short position and I am now flat. The FTSE has short-term resistance from 10160/10260 where I will again be a seller with the same 10335 ‘Closing Stop’. If I am taken short, I will have a T/P level at 10090.
Dow Rolling Contract
My Dow plan worked well as the market as overnight the market sold off to my 48800 buy level. This morning the Dow is trading higher at 49050 where I have now exited this long position and I am now flat. I will look to buy the Dow again from 48500/48750 with the same 48395 ‘Closing Stop’. Ahead of the FOMC on Wednesday I do not want to be a seller. If I am taken long, I will have a T/P level at 49020.
Cash NASDAQ 100
My NDX position worked well as shortly after the Futures Market re-opened last night the NDX hit my 25280-buy level before rallying to my 25490 T/P level and I am now flat. Today, I will again be a buyer from 25150/25350 with a higher 24995 ‘Closing Stop’. If I am taken long, I will have a T/P level at 25530.
December BUND
Just before the New York close the Bund traded lower to my 127.50 buy level. I am still long with the same 128.10 T/P level. I will continue to look to add to this position at 126.80. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
Wrong! Gold traded the whole of my sell range for a 4900 average short position before stopping me out of this position at 4950 and I am now flat. Given the volatility in both Gold and Silver with both precious metals trading at levels that signal ‘’Armageddon’’ I am going to stay flat until normal conditions return. If this view changes I will be back with a new update for my Platinum Members.
Silver Rolling Contract
Thank God for stops. After Silver traded the whole of Thursday’s sell range for a 97.00 average short position I was stopped out of this trade at 99.05 and I am now flat. Following Friday’s close Silver just exploded and is now trading above $108 this morning. As I alluded to last week maybe the large American Banks have enormous short exposure to Silver and we will trade a good deal higher as these banks are forced to cut their large short exposure. TBD. Anyway as I mentioned in my Gold commentary above I am going to stay flat Silver under normal trading conditions return.
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