US stocks markets have closed with small losses, at least for the S&P500 (-0.1%) and NASDAQ (-0.3%), though the Dow is up 0.2%. Sector wise, a surge in financials (1.8%) led what gains there have been in the Indices, led by a 4.3% gain for BAML after its EPS of 64 cents came in above the top end of the range of analysts estimates and revenue was reported half a billion dollar more than consensus. JP Morgan and Citgroup, whose share prices both fell on Friday despite beating their street estimates on both profits and revenue, gained 4% and 3.7% today respectively. Goldman Sachs reports later today. Most other S&P500 sectors finished in the red. Netflix reported (after the bell) with EPS of 85 cents against 79 cents expected but revenue some 10% less than expected at $3.097bn. The latter has seen its share price crunch 13% lower in after-market trade.
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For anyone following my Platinum Service it made 41 points yesterday and is now ahead by 547 points for July, having made 994 points in June, 1927 points in May, 1657 points in April, 1760 points in March, 2256 points in February, 879 points in January and 946 points in December. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
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Bonds
It continues to be a case of ‘’nothing to seer here’’ as far as the 10-year segment of the US treasury market is concerned. UST10s are again ending the New York session close to 2.85%, continuing to meander within an effective 2.83-2.87% range. 2-year USTs are up again though, by 1.6bps to 2.6% and meaning that the 2/10s curve is almost 2bps flatter on where we left it yesterday morning, though about 1bp steeper on Friday’s NY close. Jay Powell’s Congressional testimony this afternoon will provide the next steer.
Currencies
The Australian Dollar is virtually flat on where it was at Friday’s New York close of 0.7420, confined inside a 0.740-0.7450 range since the weekend. We did see a brief dip yesterday after the China Q2 GDP and June activity reading and where Industrial production slipped to a 6.0% year-on-year growth rate from 6.8% in May and 6.5% expected, losses which were subsequently fully retraced.
Elsewhere, the US dollar is weaker across the board, with the SEK the standout winner (+0.7%) followed by the CHF (0.5%) and NZD (+0.3%). The latter is largely just holding the gains which were chalked up despite a particularly soft NZ BNZ-Business NZ service sector PMI yesterday (52.8 down from 57.1 in May). The DXY dollar index is down 0.17% on Friday’s close.
GBP/USD lost half a cent (retracing an earlier half cent gain). This is after Theresa May accepted four amendments to the Customs Bill from her Conservative Brexiteer contingent. It is not an exaggeration to say UK politics is a shambles. Only last week, the UK released its White Paper outlining what it wanted from a future trading relationship with the EU. But amidst cabinet resignations and what was likely to have been a rebellion among Brexiteers to her bill, May has shifted stance already. The key amendment she accepted was that the UK would not collect duties or VAT on behalf of the EU (one of the cornerstones of her ‘’facilitated customs arrangement’’) unless the EU reciprocated. May claims the amendment is still consistent with the White Paper, but the view of the Brexiteers is that the EU would never agree to such a demand and that the proposal contained within the White Paper is now unworkable.
Commodities
Oil has been a big mover, down more than 4% on reports that Saudi Arabia is offering more supply to some Asian customers (following through on its pledge to increase production for OPEC) while speculation continues to swirl that the US is considering releasing barrels from its Strategic Petroleum Reserve ahead of the US mid-term elections. This follows news last week that Libyan supply was set to resume after ports were re-opened. Brent crude fell to its lowest level since April although it still remains up almost 7% this year.
Elsewhere there was virtually no movement in precious metals while industrial metals are all lower bar aluminium (+1.2%) led by a 4% drop in zinc. The LMEX index is down 0.8%, bringing its loss since its 7th June year to date high to almost 15%.
Economics
US data was a mixed bag. Headline Retail Sales came in as expected at 0.5% but with core sales disappointed expectations but prior months were revised up. The Atlanta Fed GDPNow estimate of Q2 growth (released next week) rose from 4.1% to a very healthy 4.5% after the Retail Sales release, with the upward revisions dominating. The US Empire Manufacturing Survey dipped to 22.6 from 25.0, better than the 21.0 expected though the detail was not so flash.
This morning on the Economic Front we have UK Unemployment and Average Earnings at 9.30 am. This is followed at 2.15 pm by US Industrial Production and Capacity Utilization. Finally at 3.00 pm we have the NAHB Housing Market Index and Fed Chair Powell’s Semi-Annual Testimony before the Senate Panel.
September S&P 500
It took a while but finally the S&P traded lower to my 2796 buy level before rallying. As I wanted to be flat ahead of the Trump/Putin press conference I emailed my Platinum Members to exit any long S&P position at 2798.50 and I am still flat. Yesterday, while the Dow rose the NASDAQ had a bad close as Netflix reported leading to a 13% drop in their shares and the move lower in the NASDAQ has dragged the S&P lower also in after- hours trading. As I mentioned yesterday as long as the S&P can hold the key 2760/2770 support area then the S&P will continue to be a buy on dips. Today I will again look to buy the S&P on any dip lower to 2779/2786 with a 2774 stop. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer on any further dip lower to 2661/2769 with the same 2754 wider stop. I still do not want to be short the S&P at this time despite the weakening internals and low volume moves over the past couple of trading sessions.
EUR/USD
No change as I am still a seller on any rally higher to 1.1785/1.1825 with the same 1.1855 stop. I will now raise my buy level to 1.1640/1.1680 with a 1.1595 stop. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer from 1.1490/1.1540 with a 1.1460 stop.
September Dollar Index
I am still flat the Dollar and today I will lower my buy level slightly to 93.40/93.75 with a 93.10 stop. Despite the weakening Dollar I still do not want to be short the market at this time especially ahead of Fed Chair Powell’s Testimony to the Senate this afternoon.
September DAX
Surprisingly the DAX held in yesterday despite the firmer Euro and weakening US Market. I am still flat and today I will continue to be a buyer of the DAX on any dip lower to 12380/12450 with a 12330 stop. I still do not want to be short the DAX at this time.
September FTSE
The FTSE traded the whole of my buy range yesterday. As a result I bought the market at 7560 and 7520. As I wanted to bank some points for yesterday’s session I emailed my Platinum Members to exit their second 7520 buy level for a small gain at 7536. I am still long my first buy at 7560 and today I will now lower my T/P level on this position to 7570. I will also look to add to this position on any further move lower to 7500 with a 7470 stop. If any of the above levels are hit I will be back with a new update for my Platinum Members.
Dow Rolling Contract
Despite the McClellan Oscillator closing in negative territory (-41) the Dow managed to close higher yesterday as for once it outperformed both the S&P and NASDAQ. I am still flat the Dow as the market again just missed my buy level before rallying into the close. Today I will continue to be a buyer on any dip lower to 24740/24920 with the same 24630 stop. I still do not want to be short the Dow at this time as the market is still trading well below its key 25400 resistance area.
September NASDAQ
For much of yesterday the NASDAQ traded in a narrow range. After the Cash NASDAQ closed at 9.00 pm, Netflix reported its earnings which disappointed and this led to a 80 point sell-off in the September Contract. This move lower saw me buy the NASDAQ at 7310 and today I will only add to this position on any further move lower to 7270 with a 7245 tight stop. I will now lower my T/P level on this position to 7340 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
September BUND
No change as I am still flat the Bund and my only interest in selling this market is still on a rally higher to 163.20/163.50 with a 163.85 stop.
Gold Rolling Contract
Yesterday Gold closed at its lowest level of the year so far. Managed Money Accounts are only net-long 3230 Gold Futures Contracts, which is near historic lows for this data set. The Daily Sentiment Index is at 13% bulls which is just above the July 2 extreme reading of 7%. In my opinion everything is setup for a major move higher in Gold and we just have to be patient as we wait for this move higher to start. I am still flat Gold and today I will continue to be a buyer on any dip lower to 1225/1233 with the same 1219 stop.
Silver Rolling Contract
Silver also closed at its lowest level for the year to date. I am still long at an average rate of 15.90 with the same 15.45 stop and 16.00 T/P level. Trader sentiment is also bearish to an extreme as we wait for some signs to see that Silver is going to finally rally. If any of the above levels are hit I will be back with a new update for my Platinum Members.
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