The Bank Index outperformed yesterday following the latest successful stress tests of the banks by the Federal Reserve. The Dow led the gains closing higher by 0.80% as the market finished above 34,100. Equity Markets are still trying to digest Wednesday’s joint appearance in Portugal, where top central bankers including Federal Reserve Chair Jerome Powell, European Central Bank President Christine Lagarde, and Bank of England Governor Andrew Bailey expressed their commitment to addressing high inflation through continued interest rate increases. Jerome Powell acknowledged that the current monetary policy may not be restrictive enough, indicating a willingness to take further actions to curb inflation. Christine Lagarde hinted at an imminent rate increase by the European Central Bank next month, emphasising their determination to combat inflation, while Andrew Bailey pledged to do whatever is necessary to bring inflation back to the target rate of 2% in the United Kingdom. The Biden administration is set to introduce stricter export controls to limit the sales of certain artificial intelligence chips to China. This decision is motivated by concerns about providing advanced technology to a strategic competitor and geopolitical adversary. The proposed changes to export controls, expected to be announced by the Commerce Department in July, would make it more difficult to sell certain chips to China without obtaining a license. One specific chip that the new controls would target is Nvidia’s (NVDA) A800 chip. This chip was developed by the U.S.-based company after the initial export controls were implemented, and its design is positioned just within the limits defined by the previous restrictions. Micron (MU) exceeded expectations with its third-quarter results as the company benefited from strong demand for its memory chips, driven by the rapidly expanding artificial intelligence sector. CEO Sanjay Mehrotra highlighted the increased adoption of generative AI, which has spurred higher-than-anticipated demand for memory and storage in AI servers. However, demand for traditional server applications in mainstream data centres remained subdued. Mehrotra also noted that customers are reducing excess inventory, resulting in better pricing trends and a growing confidence that the industry has moved past the growth and revenue bottom. European Markets closed higher. According to a paper published by the European Central Bank (ECB) on Thursday, a key measure of corporate profitability in the Euro-Zone reached a new all-time high in the last quarter. This sustained high level of corporate profitability is contributing to inflationary pressures and further delaying the expected decline in business margins. Last year, businesses raised prices pre-emptively in anticipation of cost increases. This forced the ECB to implement rapid interest rate hikes in order to moderate demand and compel firms to accommodate higher wage demands. In Asia, Finance Minister Shunichi Suzuki of Japan stated on Thursday that the country would not rule out any options in responding to excessive movements in the currency market. He emphasised that one-sided and unstable fluctuations in the Yen were undesirable. These remarks follow market speculation that Japanese authorities might intervene to support the Yen if it surpasses the threshold of 145 to the dollar. The Japanese government is concerned about a weaker currency as it raises import costs for the resource-poor nation, potentially harming people’s livelihoods and reducing their purchasing power. A Chinese diplomat stated that the United States needs to lift sanctions against China if it desires high-level communication between the armed forces of both countries. Liu Pengyu, the spokesman for China’s Embassy in Washington, emphasised that the difficulties in military-to-military relations between the US and China are primarily a result of unilateral sanctions imposed by the US on China. He argued that these obstacles must be removed before any meaningful exchange and cooperation can occur between the two nations. Elsewhere, Oil rose 0.43% while Gold close lower by 0.1%.
To mark my 2800th 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 75 points yesterday and is now ahead by 2913 points for June. May closed with a gain of 3205 points. April saw a gain of 3354 points while March closed with a gain of 6168 points. The Platinum Service made 3164 points in February, 4687 points in January 2054 points in December, 4789 points in November and a record 9619 points last October. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1900 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 0.45% higher at a price of 4396.
The Dow Jones Industrial Average closed 269 points higher for a 0.80% gain at a price of 34,122.
The NASDAQ 100 closed 0.16% lower at a price of 14,939.
The Stoxx Europe 600 Index closed 0.13% higher.
This morning, the MSCI Asia Pacific closed 0.4% higher.
This morning, the Nikkei closed 0.14% lower at a price of 33,189.
Currencies
The Bloomberg Dollar Spot Index closed 0.39% higher.
The Euro closed 0.4% lower at $1.0871.
The British Pound closed 0.1% lower at 1.2618.
The Japanese Yen rose 0.1% closing at $144.32.
Bonds
Germany’s 10-year yield closed 10 basis points higher at 2.41%.
Britain’s 10-year yield closed 7 basis points higher at 4.39%.
U.S.10 Year Treasury closed 12 basis points higher at 3.85%.
Commodities
West Texas Intermediate crude closed 0.43% higher at $69.86 a barrel.
Gold closed 0.1% lower at $1906.10 an ounce.
This morning on the Economic Front we already had the release of German Retail Sales which rose 0.4% versus 0.0% expected. Final U.K GDP came in as expected at +0.1 while France CPI was lower than expected, printing 4.5%. At 8.55 am we have German Unemployment, followed by Euro-zone CPI at 10.00 am. Next, we have U.S. Personal Income/Spending and PCE at 1.30 pm. Finally, we have the Chicago Purchasing Managers’ Index at 2.45 pm and the University of Michigan Consumer Sentiment Index at 3.00 pm.
Cash S&P 500
So far there is no sign of any rebalancing affecting the market. Bulls remain in control helping the S&P to hit my 4402-sell level overnight. Normally I have no interest in being short ahead of a very long weekend that will see only a half-day’s trading on Monday and the July 4th Holiday on Tuesday. However, there is no fear with the Fear & Greed Index closing at 80 last night which is reading of Extreme Greed. Reality remains that there is zero volatility in this market. The 3% fall in the S&P in June produced no fear, no volatility and was met by aggressive buying as the 4328 August high proved to be excellent support. One thing the market continues to ignore is rising bond yields. Yesterday was a whopper on stronger than expected GDP. The 10-Year rose 12 basis points to close at 3.85%. To me the $TNX chart looks like it is going to break out and drive yields higher. Given the S&P is rising on negative divergence I will stick with this 4402 short position for now. I will have a T/P level at 4388. I will add to this position at 4420 with a 4431 ‘’Closing Stop’’. If this view changes I will be back with a new update for my Platinum Members.
EUR/USD
Higher Bond Yields and weaker Euro-Zone Economic data sees the Euro trading lower at 1.0860 this morning. I am still long at 1.0900 with the same 1.0960 T/P level. I will continue to look to add to this position at 1.0830 while leaving my 1.0785 ‘’Closing Stop’’ unchanged.
June Dollar Index
No Change. I will not chase the Dollar higher, leaving my 102.00/102.60 buy level unchanged with the same 101.35 ‘’Closing Stop’’. If triggered, I will have a T/P level at 103.05.
Cash DAX
I am still flat the DAX as the market again rallied despite an awful GFK Consumer Confidence report. Lower Bund Yields are telling you that a recession is imminent in Germany. However, just like America, nothing matters with all dips being aggressive bought since the lows of last October. I am not going to chase the DAX higher leaving my 15750/15830 buy level unchanged with the same 15685 ‘’Closing Stop’’. I still do not want to be short the DAX at this time.
Cash FTSE
The FTSE continues to struggle in narrow ranges. As I said earlier this month that I have seen a month with such little volatility for the London stock market. Today, I will continue to be a buyer from 7390/7450 with the same 7335 ‘’Closing Stop’’.
Dow Rolling Contract
The Dow led Thursday’s gains helped by the result of the 23 banks that were stress tested by the Federal Reserve. Results showed that the Capital Ratios were higher than last year when 34 banks were tested under a slightly easier scenario. The Bank Index closed higher by 2%. I am still flat the Dow as the market never came close to yesterday’s buy range. I will now raise my buy level to 33500/33750 with a higher 33345 ‘’Closing Stop’’. I still do not want to be short the Dow at this time.
Cash NASDAQ 100
The NDX is up a jaw-dropping 30% for the first half of 2023. This is the strongest start to a year for the NASDAQ since 1993. Markets remain very much extended, but the nonstop action of money flowing into stocks like Apple keeps the drift going. Again, we are seeing new highs in a stock that is contained in over 500 ETFs. Negative Divergence? So far it does not matter, while a steady ascending channel that so far shows no sign of breaking to the downside. Apple is close to a $3 trillion market cap. This is amazing with a share that is seeing declining revenues and earnings growth both in the single digits. Price to Sales 7.6, Forward P/E 28.8. Incredible when you see investors buying at these levels seeing no risk and willing to pay whatever price to own the share. Buying the dips has worked so well since October but it is getting riskier now given the valuations and technical backdrop. I will continue to be a buyer with tight stops such as yesterday when the NDX hit my 14890-buy level before rallying to my revised 14965 T/P level and I am now flat. Ahead of the weekend, I will again be a buyer from 14690/14840 with a tight 14595 ‘’Closing Stop’’. The NDX has resistance at 15250 which is the June high. I will be a small seller from 15180/15300 with a 15405 ‘’Closing Stop’’.
September BUND
I am glad I did not chase the price of the Bund higher as the market hit my 133.50 buy level. I am still long with a now lower 133.95 T/P level. I will add to this position at 132.70 with the same 132.15 ‘’Closing Stop’’.
Gold Rolling Contract
Frustratingly, Gold missed my 1890 buy level by $3 before rallying $17 and I am still flat. Ahead of the weekend I will not chase the price of Gold higher, leaving my 1875/1890 buy level unchanged with the same 1859 ‘’Closing Stop’’. If this changes I will be back with a new update for my Platinum Members.
Silver Rolling Contract
No Change. I am still long at an average rate of 23.63 with the same 24.40 T/P level. I will continue to have no stop on this position. If this changes I will be back with a new update for my Platinum Members.
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