U.S. stocks were mixed as a slide in technology companies offset a rally in bank shares. Treasuries dropped as Federal Reserve officials cast doubt on further Interest-Rate cuts. The S&P 500 Index closed little changed, while the Dow Jones Industrial Average outperformed as Boeing Co. surged. The Nasdaq-100 Index fell. Ten-year yields climbed after Philadelphia Fed President Patrick Harker told CNBC that he is “on hold” right now for further monetary easing. His comments were in line with those of Kansas City counterpart Esther George, who said the U.S. does not need lower rates. Fed Bank of Dallas President Robert Kaplan said that he wanted to be careful about cutting interest rates again “unless we have to.”
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Equities
Markets have been whipsawed amid concern over economic weakness, the path of interest rates and U.S.-China trade tension. Fed Chairman Jerome Powell could provide more guidance on policy when he speaks this afternoon at the annual Jackson Hole symposium. Investors have priced in a Quarter Percentage-Point rate cut next month, but dissenting Fed voices may limit the prospects for the larger move that some have advocated, including President Donald Trump. The S&P 500 was little changed at 2,923. However, overnight the market has rallied trading at 2936 as I go to press. In Europe, the Stoxx Europe 600 Index declined 0.4% while the MSCI Asia Pacific Index fell 0.4%.
Currencies
Here is a summary of the main changes in F.X Markets:
The Bloomberg Dollar Spot Index was little changed.
The Euro was little changed at $1.1081.
The British Pound climbed 1% as expected to $1.2256 as investors seized on hints from European leaders that a Brexit deal could still be reached.
The Japanese Yen strengthened 0.2% to 106.40 per dollar.
Bonds
The yield on 10-year Treasuries increased two basis points to 1.61%.
Elsewhere, most Euro-area government bonds fell as the European Central Bank expressed concern that investors were losing faith in its ability to revive inflation and after a measure of German manufacturers reinforced recession concern. Germany’s 10-year yield gained three basis points to -0.64%, while Britain’s 10-year yield rose four basis points to 0.517%.
Commodities
The Bloomberg Commodity Index dropped 0.5%.
West Texas Intermediate crude fell 0.6% to $55.35 a barrel.
Gold dipped 0.5% to $1,508.50 an ounce and is opening lower this morning at $1495.
This morning on the Economic Front we have U.K BBA Mortgage Approvals at 9.30 am. This is followed at 1.30 pm by Canadian Retail Sales and U.S New Home Sales at 3.00 pm. The Fed’s Mester and Harker are speaking at Jackson Hole at 2.00 pm and 2.30 pm respectively. Finally we have Fed Chair Powell’s speech at 3.00 pm and this will be a market mover.
September S&P 500
My S&P plan worked well yesterday with the market trading lower to my 2914 buy level with a 2904.50 low print before rallying 30 Handles off this low as we wait for Powell’s speech this afternoon. This move higher enabled me to cover this position at my 2922 revised T/P level and I am now flat. Despite the VIX closing 5% higher at 16.63 yesterday I will continue to be a buyer of the S&P on dips as long as we can hold the now key 2850/2870 support area. Today my buy area will be from 2908/2918 with a higher 2899 stop. The 50 Day Moving Average for the S&P is slightly higher at 2948 and I will be a small seller from 2945/2955 with a 2962 tight stop.
EUR/USD
I am still flat the Euro and today I will now lower my buy level slightly to 1.1000/1.1040 with a lower 1.0960 stop. With the Daily Sentiment Index near single digits for the Euro I am expecting a decent rally off my buy range. As a result I still do not want to be short the Euro at this time.
September Dollar Index
No Change as I am still a seller from 98.45/98.85 with the same 99.05 tight stop. As the DSI is now over 90% traders who are long Dollars need to be on the lookout for a significant reversal.
September DAX
I am still flat the DAX as the market just missed my 10670 buy level before opening higher this morning. I am reluctant to chase this market higher from yesterday’s buy level despite the weaker Euro and today I will leave my 11570/11670 buy range unchanged with the same 11515 tight stop.
September FTSE
Finally, the Pound broke and closed over the key 1.2200 resistance level against the US Dollar. This move higher saw the FTSE trade lower to my 7100 buy level before rallying to my revised 7116 T/P level and I am now flat. The FTSE is also opening higher this morning at 7156. Today my only interest in buying the FTSE is again on any dip lower to 7060/7100 with the same 7025 stop.
Dow Rolling Contract
My Dow plan again worked well as the market eventually sold off to my 26100 buy level before rallying to my 26170 T/P level with a 26360 high print and I am now flat. The Dow is now comfortably above its 200 Day Moving Average which comes in at 25616 this morning. Just like the S&P above the Dow needs to break and close over its 200 Day MA for the bulls to feel more confident. After the turmoil earlier this month I feel this will be a difficult task especially on the first time of trying. The 200 Day MA for the Dow is at 26616 and I will be a small seller from 26570/26720 with a tight 26795 stop.
September NASDAQ
No Change as I am still a small seller on any further rally to 7830/7880 with the same 7920 tight stop. I still do not want to be long the NASDAQ at this time.
September BUND
My BUND plan finally worked well with the market trading higher to my 178.90 sell level before falling 100 points as the ramifications from Wednesday’s failed 30 year Bund auction hit the market. This move lower enabled me to cover this position at my 178.60 T/P level and I am now flat. Today I will again look to sell the Bund from 178.45/178.85 with a 179.15 stop.
Gold Rolling Contract
No Change as I am still a small buyer on any dip lower to 1475/1483 with the same 1468 stop.
Silver Rolling Contract
Silver has managed to outperform Gold over the past few days and I am still flat. With Gold under pressure I am reluctant to chase the price of Silver higher and today I will leave my 16.40/16.80 buy level unchanged with the same 16.08 stop. If I am taken long I will have a T/P level at 17.01.
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