U.S. Indices closed mixed on Wednesday, with tech taking a hit while small caps outperformed. The day was filled with mixed messaging around geopolitics, but tech stocks were hit by software names on more private credit redemption caps from Apollo and Ares, while Claude also released a new tool, sparking renewed AI disruption concerns. Crude prices settled well in the green, paring some of the weakness on Monday, as attacks on or near Iranian nuclear sites and reports of Troop deployment added to the concerns, while there is still uncertainty about negotiations. President Trump continued to sound optimistic, noting they are having tremendous success in Iran, and they are talking to the right people who want to make a deal. He suggested Iran is talking sense, and he went as far as to say he thinks they can call the new leaders a regime change, while also stating Iran sent the US a significant gift to do with the Strait of Hormuz, but without elaborating. Reports in Axios suggested that high-level US/Iran talks could take place on Thursday. Treasuries were lower across the curve, paring some of the gains on Monday, with higher oil prices weighing on the curve, while the 2-year auction was also woeful. In FX, it was a Dollar story which was largely supported by the rebound in US Treasury yields and crude mixed geopolitical updates. Data saw a chunky revision higher to US Unit Labour Costs and mixed Flash S&P Global PMI readings, but the focus was largely on US/Iran. Gold and Silver finished little changed, while Bitcoin was hit. The Final Q4 Unit Labour costs rose 4.4%, well above the 2.8% forecast and versus the prior 1.8% decline. Nonfarm productivity, meanwhile, rose 1.8%, below the 2.8% forecast and down from the prior 5.2%. The rise in unit labour costs was led by a 6.3% increase in hourly compensation and a 1.8% increase in productivity. The increased productivity was due to a 1.5% increase in output while hours worked declined by 0.2%. The Final Q4 report may raise some fears about inflation through higher wages due to the 4.4% increase in unit labour costs, largely due to the 6.3% increase in hourly compensation. However, Fed officials continue to highlight how inflation is not being driven by employment. The main risk at the moment is a prolonged war and the impact of sustained, higher energy prices. OxEco summarised the data by saying “The upward revision to unit labor costs nudged the annual trend higher, but given the pace of productivity, they are unlikely to be a source of inflationary pressure. The depressed rate of hiring, particularly after accounting for the war in Iran, means this measure is unlikely to accelerate in the near-term.” Elsewhere, Oil closed higher by 4% while Gold was flat following another volatile trading session.
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For anyone following my Platinum Service it made 1216 points yesterday and is now ahead by 6967 points for March having closed February with a strong gain of 5482 points after ending January with a gain of 4757 points, 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 whe 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 0.37% lower at a price of 6556.
The Dow Jones Industrial Average closed 84 points lower for a 0.18% loss at a price of 46,124.
The NASDAQ 100 closed 0.77% lower at a price of 24,002.
The Stoxx Europe 600 Index closed 0.43% higher.
Yesterday, the MSCI Asia Pacific closed 0.8% higher.
Yesterday, the Nikkei closed 1.43% higher at a price of 52,252.
Currencies
The Bloomberg Dollar Spot Index closed 0.47% higher.
The Euro closed 0.15% lower at $1.1584.
The British Pound closed 0.27% lower at $1.3383.
The Japanese Yen fell 0.31% closing at $158.95.
Bonds
U.K.’s 10-Year Gilt closed 9 basis points higher at 4.95%.
Germany’s 10-Year Bund Yield closed 4 basis points higher at 3.03%
U.S.10 Year Treasury closed 4 basis points higher at 4.39%.
Commodities
West Texas Intermediate crude closed 4.01% higher at $91.66 a barrel.
Gold closed 0.15% lower at $4402.10 an ounce.
This morning on the Economic Front we have U.K. CPI and PPI at 7.00 am. At the same time we will see the latest German IFO Survey. Next, we have the U.S. MBA Mortgage Applications Report at 11.00 am, followed by the Current Account at 12.30 pm. Finally, we have a Five-Year Treasury Auction at 5.00 pm.
Cash S&P 500
The past two trading sessions have been rather confusing, with oil prices swinging wildly. The only real takeaway as of right now is that oil appears to have found support around its 20-day moving average. At some point, when the war premium fades and oil prices pull back, the question becomes how far they actually fall. My guess is that we probably do not revisit the lows from before all of this started. There is likely a new structural premium baked into the market now, given the event. One thing I find really interesting is that the back end of the oil futures curve — specifically the December 2027 contract — is trading higher today than it did back in February 2022, when oil prices peaked. That may imply the market is pricing in structurally higher energy costs going forward. Something worth watching. I guess the bigger question is whether a decline in oil prices would actually lift stocks in a way that lasts more than a few days. If you were to set the news aside and look only at the charts, I would say that something in the market has changed materially. The most obvious example is the 2-year rate, which has broken out higher. This is a setup that has been forming for months — well before anyone had a thought about a war between the US and Iran. The 2-year probably needs to consolidate around current levels but based on the change in trend in the RSI, I would think the next move is higher, not lower especially after Tuesday’s awful 2-Year Treasury Auction. Meanwhile, the software sector continues to perform horribly, falling sharply yesterday. That weakness seems to be trading entirely independent of oil prices. Financials have also been really weak, well before anything happened with the war. And the S&P 500 itself has been in a distribution pattern for a long time, too. So, whatever has been bothering the market started some time ago. Sure, I do not doubt the Indexes can rebound, but the technical charts alone don’t look good, in my view. I am still long the S&P at an average rate of 6530 from last Friday having missed the opportunity to exit for a decent profit on Monday. The Israeli announcement that Trump wants a one-month ceasefire has spiked the market higher in the after-hours and the question is whether this will hold or be sold into. There is no doubt that the rise in Treasury Yields across the globe has everybody worried given the level of debt that needs to be re-financed. I will now lower my T/P level on this position to 6620 while still having no stop. If my T/P level is triggered I will be back with a new update for my Platinum Members.
EUR/USD
I am still flat. Today, I will continue to be a buyer on any further dip lower to 1.1450/1.1520 with the same 1.1385 ‘Closing Stop’. If I am taken long, I will have a T/P level at 1.1590.
Dollar Index
I am still flat. Today, I will continue to be a small seller from 100.10/100.90 with the same 101.55 ‘Closing Stop’. If I am taken short, I will have a T/P level at 99.50.
Russell 2000
Frustratingly the Russell missed Tuesday’s buy range by just two points before rallying 50 points off its 2462 low print into the close. Today, I will raise my buy level to 2400/2470 with the same 2335 ‘Closing Stop’. If I am taken long, I will have a T/P level at 2510.
FTSE 100
My FTSE plan worked well as the market traded lower to my 9870-buy level before rallying over 120 points. This move higher saw my revised 9915 T/P level and I am now flat. It was important that the FTSE rose yesterday considering Gilt Yields closed near 5% which may be signalling that a near-term bottom is close. Today, I will again be a buyer from 9800/9880 with the same 9725 ‘Closing Stop’. If I am taken long, I will have a T/P level at 9960.
Dow Rolling Contract
My Dow plan worked well as the market traded lower to my 45780-buy level before rallying to my revised 49136 T/P level and I am now flat. Today, I will again be a buyer on any dip lower to 45520/45820 with a 45365 tight ‘Closing Stop’. If I am taken long, I will have a T/P level at 46240.
Cash NASDAQ 100
My NDX call worked well as the market hit my 23940-buy level before rallying to my revised 24105 T/P level and I am now flat. The NDX traded heavy on Monday in comparison to the other main American Indexes. Today, I will again be a buyer on any further dip lower to 23650/23900 with a higher 23425 ‘Closing Stop’. If I am taken long, I will have a T/P level at 24140.
December BUND
The Bund reversed most of Monday’s gains, trading lower to my 126.00 buy level. I will look to add to this position at 125.20 with a now lower 124.45 ‘Closing Stop’. I will now lower my T/P level to 126.70. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
In after hours trading Gold has spiked higher on the back of the Israeli announcement that Trump wants a one-month ceasefire. As I go to post Gold just hit my 4495 T/P level on my latest 4430 average long position and I am now flat. Today, I will again be a buyer on any dip lower to 4280/4380 with a lower 4195 ‘Closing Stop’. If I am taken long, I will have a T/P level at 4470. If this view changes, I will be back with a new update for my Platinum Members.
Silver Rolling Contract
I am still flat. I will continue to stay flat Silver until I feel I have a better edge. This is no harm given the extraordinary volatility that we are witnessing at this time. If this view changes, I will be back with a new update for my Platinum Members.
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