With American Markets closed yesterday and only open for a half-day today, trading was subdued across the board. European Markets closed higher, led by the 0.70% gain in the German DAX, while the FTSE again struggled which is no surprise given the ramp higher in Sterling. Bund Yields fell a sizeable 10 Basis points, helping the positive mood while Dollar remained weak. Inflation growth should slow further in November. Ever since the BLS’ CPI began to explode higher in April 2021, energy prices have played a major role. In June 2022, inflation growth rose 9.1%, hitting a near-term peak. However, energy prices – which account for about 9% of the CPI – jumped 41.6% on a year-over-year (“YOY”) basis. The change in energy prices had the largest effect on the overall index. Food prices rose 10.4% while all items less food and energy increased 5.9%. Now, many economists would argue that food and gas prices are not representative of overall inflation because they are so volatile. But these essentials are what we want to pay the most attention to right now. Changes in food and gas prices are taking the biggest toll on households and businesses. I would argue higher gas prices are worse than a tax increase. And given the outsized jump in gas prices relative to the move in food costs, that is where we will notice the largest shift in the inflation trend. In fact, ever since June, gasoline prices have remained in a steady downtrend. Recent data indicates the price at the pump continues to drop. The change points to easing inflation growth. That will act as a tailwind for the S&P. Gasoline is an easy metric to follow because we can receive prices as recently as yesterday. After all, it is difficult for most rural households to do anything without employing the use of an automobile. So, by keeping track, we can get a sense of what costs look like for average Americans. According to data from the American Automobile Association (“AAA”), the national average price for a gallon of regular unleaded gasoline in October was $3.76 compared with $3.40 a year ago. That is an increase of 10.6% on a YOY basis. The nationwide average month-to-date in November has held steady at $3.76. Like October, that compares with the same $3.40 per gallon from a year ago, signalling costs continue to slide. Now recall, in June, the peak daily price for gas exceeded $5 per gallon. Furthermore, the national average was $4.92 per gallon that month compared with $3.07 per gallon during the same period in 2021. In other words, the month of June experienced 60.3% growth on a YOY basis. In July, those numbers jumped 44%. Those changes drove the CPI higher. Again, gas price data is updated in real-time, while CPI data is not. Based on the up-to-date numbers from AAA, there has been a sharp and steady pullback in fuel costs. That would indicate easing inflation growth. The BLS’ CPI figures for November are due on December 13. The October numbers showed the pace of growth slowed to 7.7% YOY, the lowest level since January. The current data would lean toward inflation growth cooling when the numbers are released. Anything below last month’s result would signal to the Fed that its rate hikes are successfully dampening inflation. A drop in price growth would also support slowing the pace of interest-rate increases going forward. Considering the central bank announces its final policy adjustment for the year on December 14, all eyes will be on the CPI numbers. A steady decline in inflation growth and a change in Fed policy direction would act as a long-term tailwind for the S&P 500. Elsewhere, Oil was closed while Gold rose 0.2%
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For anyone following my Platinum Service it was flat yesterday and is still ahead by 3963 points for November, after finishing October with a record gain of 9619 points, making 6660 points in September, after closing August with a gain of 2228 points, having made 2660 points in July, following a gain of 3371 points in June. The Service made 3651 points in May, after making 762 points in April, following a gain of 5883 points in March. The Platinum Service made an impressive 5324 points in February, after ending January with a gain of 3878 points, more than making up for December’s 932 points loss. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 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 0.59% higher at a price of 4029.
The Dow Jones Industrial Average closed 95 points higher for a 0.28% gain at a price of 34,194.
The NASDAQ 100 closed 0.97% higher at a price of 11,838.
The Stoxx Europe 600 Index closed 0.45% higher.
Yesterday, the MSCI Asia Pacific Index rose 0.6%.
Yesterday, the Nikkei closed 0.95% higher at a price of 28,383.
Currencies
The Bloomberg Dollar Spot Index closed 0.2% lower.
The Euro closed 0.1% higher at $1.0402.
The British Pound closed 0.4% higher at 121.14.
The Japanese Yen rose 0.9% closing at $138.55.
Bonds
Germany’s 10-year yield closed 7 basis points lower at 1.84%.
Britain’s 10-year yield closed 3 basis points higher at 3.04%.
U.S.10 Year Treasury closed 7 basis points higher at 3.69%.
Commodities
West Texas Intermediate crude closed 4.34% lower at $77.82 a barrel.
Gold closed 0.20% higher at $1755.10 an ounce.
This morning on the Economic Front we have German GDP at 7.00 am. The only other item of note is a speech from ECB Member De Guindos at 5.00 pm.
Cash S&P 500
This week saw the S&P close over 4000 for the first time in two months. Breaking this key resistance saw bulls drive the S&P higher even on low volume. The 200 Day Moving Average (4059) still looms higher. If bears are lucky we may well see a larger pullback in early December which would be no surprise given how overbought the S&P is now. I cannot buy the market when we have the $NYSI max overbought as every time this signals records an overbought condition the markets sell-off. With the markets only open until 6.15 pm this evening, I would expect little or no price action unless we get a surprise news event. With the yield curve at its most inverted since October 8 1981, it is interesting that the S&P did not bottom until August 12, 1982. In my opinion this bear market is not over and I expect to see a more aggressive sell-off in Q1, 2023. The S&P has resistance at its 200-Day MA. I will continue to be a strong seller from 4048/4065 with the same 4081 ‘’Closing Stop’’. My only interest in buying the S&P is still on a dip lower to 3945/3965 with a 3929 ‘’Closing Stop’’.
EUR/USD
The Euro rallied to my second sell level at 1.0440 for a now 1.0400 average short position. I will now raise my T/P level to 1.0355 while leaving my 1.0495 ‘’Closing Stop’’ unchanged.
March Dollar Index
The lower Dollar saw my second buy level at 105.60 triggered for a now 106.00 average long position. I will now lower my T/P level to 106.30 while leaving my 105.25 ‘’Closing Stop’’ unchanged.
Cash DAX
Frustratingly, the DAX missed my initial 14580 sell level by 5 points before falling 80 points and I am still flat. Ahead of the weekend, I will now raise my sell level to 14630/14730 with the same 14805 ‘’Closing Stop’’. My only interest in buying the DAX is still on a dip lower to 13970/14070 with a higher 13895 ‘’Closing Stop’’.
Cash FTSE
The boring action in the FTSE continues. The FTSE again missed my 7500 sell level before trading lower into the London close. Today, I will still be a seller from 7510/7570 with a 7615 tight ‘’Closing Stop’’. I still do not want to be long the FTSE at this time.
Dow Rolling Contract
No Change. I am still flat the Dow. The Dow has resistance from 34420/34670 where I will be a seller with a 34805 ‘’Closing Stop’’. With the 14 Day RSI at 70, I do not want to be long the Dow at this time.
Cash NASDAQ 100
I am still flat. I will continue to be a buyer on any dip lower to 11600/11750 with the same 11495 ‘’Closing Stop’’. If I am taken long I will have a T/P level at 11840
December BUND
The Bund surged yesterday and I am still flat. The Bund has short-term support from 140.00/140.90. I will move my buy level to this area with a higher 138.95 ‘’Closing Stop’’.
Gold Rolling Contract
I am still flat. I do not like the price action. As a result, I will not chase the market higher, leaving my 1710/1722 buy level unchanged with the same 1699 ‘’Closing Stop’’.
Silver Rolling Contract
No Change. I will continue to be a buyer of dips with no stop. My buy level will remain at 20.20/20.90. If triggered, I will have a T/P level at 21.50.
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