U.S. Equity Markets saw plenty of two-way price action on Friday, which coincides with month and quarter-end but ultimately closed in the red. Brief upside was seen in wake of the US PCE data, which ultimately was in line with expectations across the board, but Core PCE, when rounded to 2dp, showed a 0.08% M/M gain, which was on the softer side of expectations. The reaction was typically dovish with Bonds also rising to session highs. However, both the stock and bond upside had pared in wake of a much hotter than expected Chicago PMI print while the Final University of Michigan Consumer Survey for June was revised up, although inflation expectations were revised down. The composition of stocks was negative, with the majority of sectors in the red, led by weakness in Communication Services, Consumer Discretionary and Utilities, while Real Estate, Energy and Financials were green. Consumer Discretionary was weighed on by a dismal Nike (NKE) update, which tumbled 20% after missing on revenue and providing weak guidance. T-notes continued to slide throughout to see 10 Year yields peak at 4.39% with EGB pressure ahead of the French election on Sunday also supporting the move lower in T-notes to see yields bear steepen on the day. The Dollar Index was flat by the end of trade, as was the Japanese Yen, despite initial strength on the announcement that top currency diplomat Kanda is set to be replaced while Tokyo CPI also came in hotter than expected overnight. The Australian Dollar outperformed in FX with momentum continuing from the hot inflation earlier in the week, keeping bets the RBA could hike again alive. This week, attention turns to the results from the French elections yesterday, ISM Manufacturing PMI on Monday, Fed Chair Powell and JOLTS on Tuesday, ISM Services PMI and FOMC Minutes on Wednesday, the UK Election on Thursday and US NFP on Friday. Overall, the PCE data was in line with expectations. Core PCE rose by 0.1% M/M, easing from 0.3% (revised up from 0.2%), with the Y/Y easing to 2.6% from 2.8%. The headline number was unchanged M/M, down from 0.3% prior, with the Y/Y at 2.6%, down from 2.7%. It is worth noting that the unrounded Core PCE number was 0.0828%, on the lower side of analyst estimates that were predicting between 0.08-0.13% after the CPI and PPI data was released. This brought the three-month annualised rate to 2.7% from 3.5%, whilst the six-month annualised rate remained unchanged at 3.2%. Meanwhile, CapEco highlighted that the core services ex housing (supercore) rose by 0.09%. Looking ahead, CapEco suggests there is a good chance Core PCE will fall to 2.5% in June, but unfavourable base effects make a further decline in H2 of this year unlikely. Nonetheless, the desk suggests the 2.8% Fed median view is too pessimistic. Elsewhere in the report, Personal income rose by 0.5%, above the 0.4% forecast and up from the prior 0.3%, while adjusted consumption rose by 0.2%, beneath the 0.3% forecast, but up from the downwardly revised 0.1%. Real consumption rose by 0.3%, paring the prior -0.1% print. CapEco note the weakness of discretionary services spending is a big concern, while adding that Q2 consumption growth is tracking at 1.6%, bringing down their Q2 GDP growth estimate to 1.8%. Nonetheless, slowing growth and easing price pressures will be a welcome sign for the Fed, money markets are pricing in 72% probability of the first cut occurring in September, with a good chance of two rate cuts by year-end, despite the median Fed dot plot for just one rate cut. Meanwhile Fed Member Daly speaking on CNBC post-PCE data, noted inflation data shows it is cooling and policy is working as expected, and while the Fed is not done yet, PCE data is ‘good news’. On policy, Daly reiterated data dependence, and largely reiterated her remarks regarding inflation, stating if it stays sticky or comes down slowly, rates will need to be higher for longer, or if inflation comes down or labour market falters, the Fed can adjust policy. Elsewhere, Oil closed 0.24% lower while after a volatile session, Gold ended Friday with a 0.5% gain.
To mark my 3000th issue of TraderNoble Daily Commentary I am offering a special 2-Year Rate of Euro 2750 for my Platinum Service which includes 1 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 164 points on Friday to close June with a gain of 2074 points, having made 1843 points in May. The Platinum Service made 4010 points in April after ending March with a gain of 2113 points. February closed with a gain of 1606 points, after closing January with a gain of 3675 points. December saw a gain of 1890 points after finishing November with a gain of 1734 points. October ended with a gain of 3184 to 4 updated emails throughout the trading day to demonstrate this value, a points, after closing September with a small gain of 228 points, after finishing August with a gain of 1485 points, following a small gain of 285 points gain in July, after closing June with a gain of 2683 points. 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 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 0.41% lower at a price of 5460.
The Dow Jones Industrial Average closed 45 points lower for a 0.12% loss at a price of 39,118.
The NASDAQ 100 closed 0.54% lower at a price of 19,682.
The Stoxx Europe 600 Index closed 0.23% lower.
Last Friday, the MSCI Asia Pacific closed 0.4% higher.
Last Friday, the Nikkei closed 0.61% higher at a price of 39,583.
Currencies
The Bloomberg Dollar Spot Index closed 0.04% lower.
The Euro closed 0.3% higher at $1.0713.
The British Pound closed 0.2% higher at 1.2644.
The Japanese Yen fell 0.1% closing at $160.89.
Bonds
Germany’s 10-year yield closed 5 basis points higher 2.50%.
Britain’s 10-year yield closed 4 basis points higher at 4.18%.
U.S.10 Year Treasury closed 8 basis points higher at 4.39%.
Commodities
West Texas Intermediate crude closed 0.24% lower at $81.54 a barrel.
Gold closed 0.5% higher at $2326 an ounce.
This morning on the Economic Front we have the U.K. Nationwide Housing Price Index at 7.00 am, followed by German, Euro-Zone and UK Manufacturing PMI at 8.55 am, 9.00 am and 9.30 am respectively. Next, we have German CPI at 1.00 pm. At 2.45 pm we have U.S. Manufacturing PMI. Finally, we have ISM Manufacturing and Construction Spending at 3.00 pm, while following the French Election Results, we have a speech from ECB President Lagarde at 8.00 pm.
Cash S&P 500
Market Vane’s Bullish Consensus has been tracking the views of market advisors since 1964. The study, compiled daily, tracks the buy and sell recommendations of analysts and commodity trading advisors and expresses the percentage who are bullish on a particular market. The bullish percentage jumped to 71 on June 17 and has stayed there since. This is the most optimistic analysts and advisors have been in the past 5½ years, since the high in January 2018, which was the start of Volmaggedon. That is when short-volatility funds blew up because investors bet heavily that the market would continue to rise with little in the way of a volatility pick up. The exact opposite happened. Stocks started swinging back and forth wildly and volatility shot higher, which sunk these funds and their investors. The S&P eventually declined 24% from the January 2018 high to the March 2020 low, with a lot of ferocious market action in between. It is interesting that Friday’s intraday low in the CBOE Volatility Index (VIX) is 11.87, the second lowest intraday reading in 5 years. Investors are highly complacent to the potential for a pickup in volatility and a decline in stock prices, the conditions that precede such a move. Shortly after the PCE data was released on Friday, the S&P rallied to a new intraday high attended by flat breadth. By the end of the session, the intraday extreme could not be sustained, and the Index closed the day down 22 Handles. Both the S&P and the Dow closed the week lower, as did the NASDAQ 100 index by a small margin. The S&P’s closing high remains 5487.03 on June 18. The day ended with a large outside-down reversal range, with a new intraday all-time high and the lowest close since Monday. A market decline will have to fight through a positive seasonal bias that exists in the first part of July. The last time the S&P had a difficult July was in 2011; the second half of July 2007 was also a strong down phase for the Index. And I am certainly old enough to remember the July 2002 decline during a bear market that crashed the NASDAQ. So, we will see if July 2024 is able to join the list as a down month, bucking the seasonal bias. Many indicators are aligned for a trend reversal. Friday’s reversal saw the S&P just miss my 5444-buy level with a 5450 low print before rallying to sit at 5474 as I go to press. Despite the positive seasonality, I will be a small seller on any further rally to 5495/5512 with a 5527 ‘’Closing Stop’’. I will continue to be a small buyer on any dip lower to 5426/5442 with the same 5413 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 5457.
EUR/USD
My latest 1.0680 long Euro position worked well as the market rallied to my 1.0715 revised T/P level and I am now flat. Despite Macron doing worse than expected in yesterday’s First round of the French Elections the Euro is trading higher this morning at 1.0740. The Euro has strong support from 1.0620/1.0690 where I will again be a buyer with the same 1.0555 ‘’Closing Stop’’. I still do not want to be short the Euro at this time.
Dollar Index
I am still short the Dollar at a price of 106.05 with the same 105.60 T/P level. I will add to this position at 106.65 while leaving my 107.05 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash DAX
Thankfully we have had no sell level in the DAX as no matter what the news the market just keeps attracting strong buying on any dip. I will now raise my buy level to 18020/18110 with a higher 17895 wider ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 18170.
Cash FTSE
In contrast to European Markets the FTSE continues to trade heavy. After the market hit my 8170-buy level, we had a small rally to my revised 8187 T/P level and I am still flat. The FTSE has strong support from 8070/8140 where I will be an aggressive buyer with a wider 7995 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 8185.
Dow Rolling Contract
The Dow has traded in a wide range since Thursday’s DC with plenty of two-way price action. The Dow hit a high at 39500 on Friday before falling 500 points and subsequently rallying 200 points off the late afternoon low into the close. The initial move higher saw my 39232 revised T/P level triggered on my latest 38180 long position and I am now flat. The Dow has support from 38700/38950 where I will be a strong buyer with a 38495 wider ‘’Closing Stop’’. Despite Friday’s reversal I still do not want to be short the Dow especially given the positive seasonal bias for the first two weeks of July.
Cash NASDAQ 100
The NDX’s daily closing high is 19,908 on June 18. On Friday afternoon, the Index pushed to 20,077 intraday but could not sustain the rise and closed the day down 106 points. The daily range printed a large outside-down reversal, like the S&P. However, as I have noted many times no KDR has worked since the lows of last October. I am still flat the NDX as the market never came close to Thursday’s buy range. Today, I will continue to be a buyer on any dip lower to 19440/19590 with the same 19355 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 19730. I still do not want to be short the NDX at this time.
September BUND
No Change. I am still long the Bund at a price of 132.00 with the same 132.50 T/P level. I will add to this position at 131.40 while leaving my 130.95 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
Frustratingly, Gold just missed Thursday’s buy range before rallying over $30 and I am still flat. I do not have a strong edge in Gold at this time preferring to only be a buyer on any dip lower to 2269/2285 with the same 2255 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2302.
Silver Rolling Contract
My latest long 28.90 Silver position worked well as the market rallied to my 29.50 T/P post the U.S. PCE print. Subsequently, I emailed my Platinum Members to buy Silver again which I did at a price of 29.10. I will add to this position at 28.40 while leaving my 27.55 ‘’Closing Stop’’ unchanged. I will have a T/P level on this position at 29.60. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
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