U.S. Equity Markets were bid on Friday with the S&P 500 briefly rising above 6000 before paring into the closing bell. The NASDAQ 100 was the relative underperformer with Tech and communication among the lagging sectors, with only materials also closing in the red. Outperformers were led by Utilities, Real Estate and Consumer Staples. It was primarily post-election Trade as participants continued to react to the Trump win. T-notes continued to flatten after the steepening seen on Trump’s victory, although the Dollar resumed to the upside on Friday after weakness on Thursday. Crude prices were sold throughout the session on a disappointing China stimulus update with a lack of demand measures disappointing investors. In FX, the Japanese Yen outperformed as longer-dated US Treasury yields fell while both the Australian and NZ Dollar lagged on the disappointing China update. There was little data released on Friday but the University of Michigan Consumer Sentiment survey did beat on the headline sentiment, but current conditions fell slightly, but this was more than offset by a jump in forward-looking expectations. Meanwhile, inflation expectations eased to 2.6% from 2.7% in the 1yr but 5yr forecasts rose to 3.1% from 3.0%. Attention this week turns to US CPI and Retail Sales data. The Federal Reserve cut rates by 25bps to 4.50-4.75% last Thursday, in line with market pricing and analyst expectations, and also in a unanimous decision. The statement saw some changes, it removed language that it “has gained greater confidence that inflation is moving sustainably toward 2 percent”. It also adjusted its explanation of why the Fed cut rates, to “in support of its goals, as opposed to “in light of the progress on inflation and the balance of risks”. Fed Chair Powell confirmed in the press conference these changes are not meant to send a signal on policy, but the language beforehand was a test for when the Fed cut rates, but now they have started to ease policy, that test is no longer needed. The statement changes further confirm the Fed’s commitment that they are focused on both sides of the Fed’s mandate, as opposed to just inflation. The Fed maintained language that risks to both sides of the mandate are “roughly in balance” and it still describes inflation as “somewhat elevated” and acknowledged that labour market conditions have generally eased. Fed Chair Powell noted the economy is strong, labour market remains solid, and that inflation has eased substantially. He also kept his options open again, noting they can move more quickly or they can move more slowly, depending on how the economy reacts. Powell believes the Fed is on the “middle path”, noting they have to be careful not to move too quickly, or too slowly. But they will be careful to increase the probability they get the easing process right. When asked about the statement changes, he stressed this was not meant to send a signal, it was just appropriate to adjust language as now the Fed has started the easing process. He spoke strongly on recent data, stating economic activity has been stronger and some downside risks have diminished. On the recent inflation data, he said it was not terrible but it was higher than expected. The Fed Chair was also asked about the recent movement in yields post the Trump victory, he said it is too early to say where bond rates settle, noting financial conditions only tighten when rates are high for long, and they are not yet at the stage where bond rates need to be taken into policy consideration. He noted that bond rates reflect growing growth expectations and not about higher inflation expectations. Meanwhile, as expected, the Bank of England Monetary Committee opted to lower the Bank Rate by 25bps to 4.75%. The decision to do so was made via an 8-1 vote split with arch-hawk Mann the lone dissenter in voting for an unchanged rate. Within the policy statement, the MPC reiterated that it “will ensure Bank Rate is restrictive for sufficiently long until the risks to inflation returning sustainably to 2% target have dissipated further”. Furthermore, it was noted that a gradual approach to removing policy restraint remains appropriate and Governor Bailey remarked that the MPC cannot cut rates too quickly or by too much. The accompanying MPR saw an upgrade to 2025 and 2026 inflation forecasts with the BoE noting that the UK budget is “provisionally expected to boost inflation by just under 0.5ppts at peak between mid-2026 and early 2027”. That being said, ING cautions that there is a big caveat to the forecasts. This being, “that the Bank hasn’t accounted for the market reaction to the latest budget in its new forecasts”. If they had, the upgrades to inflation and growth forecasts would have been more modest. At the follow-up press conference, when questioned on the impact of the UK budget on monetary policy, Governor Bailey remarked that the MPC needs to see how it will impact inflation, however, he does not think that the path of rates will be different to what it would have been otherwise. On the rate path, Bailey refused to provide specifics regarding what “gradual” means when it comes to lowering rates. However, he did note that if progress on inflation continues, the MPC will respond to it. Note, Bailey refrained from providing a view on the potential impact of expectations of tariffs from the incoming Trump government. Overall, the market has judged that the latest UK budget has forced the MPC to adopt a relatively hawkish stance compared to its peers. Accordingly, odds of a December cut sit at just 20% with a total of 65bps of cuts seen by end-2025. Elsewhere, Oil closed 2.61% lower, while despite a stronger Dollar, Gold ended Friday with a gain of 1%.
To mark my 3075th 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 lost 175 points on Friday and is now ahead by 981 points for November having finished October with a gain of 2179 points. September saw a gain of 4402 points following a 301-point loss for August after closing July with a gain of 1918 points while June closed 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 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 0.38% higher at a price of 5995.
The Dow Jones Industrial Average closed 259 points higher for a 0.59% gain at a price of 43,988.
The NASDAQ 100 closed 0.07% higher at a price of 21,117.
The Stoxx Europe 600 Index closed 0.65% lower.
Last Friday, the MSCI Asia Pacific closed 0.6% higher.
Last Friday, the Nikkei closed 0.3% higher at a price of 39,500.
Currencies
The Bloomberg Dollar Spot Index closed 0.42% higher.
The Euro closed 0.1% lower at $1.0715.
The British Pound closed 0.3% higher at 1.2922.
The Japanese Yen rose 1.2% closing at $152.48.
Bonds
Germany’s 10-year yield closed 4 basis points lower 2.37%.
Britain’s 10-year yield closed 12 basis points lower at 4.44%.
U.S.10 Year Treasury closed 13 basis points lower at 4.30%.
Commodities
West Texas Intermediate crude closed 2.61% lower at $70.61 a barrel.
Gold closed 1% higher at $2684 an ounce.
With the U.S. Banks closed for the Veterans Day Holiday there is no Economic data on either side of the Atlantic today.
Cash S&P 500
As the S&P closed at yet another new all-time high driven by optimism and ebullient investors, Warren Buffet has sold so much stock in his portfolio that cash now accounts for 28% of Berkshire Hathaway’s asset value. This is the highest level since 1990, according to a chart in Fridays’ Financial Times. Investors are now very crowded on one side of the trading ledger. The S&P is now ridiculously extended above its Daily Bollinger Band which makes it reckless to pursue new longs at these levels. However, this is not stopping the algos from doing so into trendline resistances. The 14 Day RSI for the S&P closed at an overbought 70 print on Friday night. I have no choice but to continue to sell rallies despite getting stopped out of my latest 5962 short position at 5991 on Friday evening. The S&P has further resistance from 6005/6025 where I will again be a seller with a higher 6041 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 5968. The S&P has left a number of large gaps below the market. As we know all ‘’Open Gaps’’ eventually get filled. If the S&P decides to fill Tuesday’s gap, I will be an aggressive buyer from 5785/5805 with a tight 5769 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 5843.
EUR/USD
My latest 1.0725 average long Euro position worked well as the market rallied to my 1.0790 T/P level. Subsequently, I emailed my Platinum Members to buy the Euro again and I a now long at a price of 1.0700. I will add to this position at 1.0630 while my stop will be at a ‘’Closing Price’’ of 1.0575. Meanwhile, I will have a T/P level at 1.0760 on this position. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
My latest short Dollar position worked well as the market sold off to my 104.25 T/P level on my 104.75 short position and I am now flat. The Dollar has short-term resistance from 105.30/105.90 where I will again be a seller with a higher 106.55 ‘’Closing Stop’’. Despite the positive price action in the Dollar, I still do not want to be long as the Daily Sentiment Indicator is above 75.
Cash DAX
The breakdown of the German Coalition Government last week was sparked by a fundamental disagreement between Chancellor Scholz and his former Finance Minister Linder over the 2025 budget. Scholz was demanding a loosening in the ‘’debt brake’’ to allow for more spending which he argued would bring down energy costs, allow for more investment and maintain support for Ukraine. German growth is on course to be the weakest in the G7 in 2024, for the second consecutive year, as the economy struggles to recover from the energy shock, weak Chinese demand and reduced availability of labour. This increases the possibility of a weaker Euro over the next 12 months due to Germany’s growth and structural concerns. In my opinion it makes absolutely no sense why the DAX is trading close to its all-time high. The DAX has resistance from 19380/19480 where I will be a small seller with a wider 19605 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 19300.
Cash FTSE
In contrast to the American Indexes the FTSE is weak leading the sell-off in Europe since last Tuesday’s Presidential Election. This move lower saw the whole of my buy range triggered for a now 8082 average long position. I will now lower my T/P level to 8130. I will also raise my ‘’Closing Stop’’ to a price of 7975. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
On Friday the Dow Jones Industrial Average swapped out Intel with Nvidia and removed Dow Chemical and replaced it with Sherwin-Williams. Why? Because the Dow Jones Managers’ has performance just nearly every other investor. Take a look at the stock charts of Nvidia and Sherwin-Williams and it becomes abundantly clear that the Dow ‘s purveyors are trying to be stock pickers. Funny thing is that most of the stocks they take out of the Index wind up doing pretty well. Friday’s late surge saw the Dow hit my next sell level at 43900 for a now large 43600 average short position. I am still short with no stop for now. I will have a T/P level at 43350 on this position. If any of the above levels ort my view changes will see me return with an updated email for my Platinum Members.
Cash NASDAQ 100
The NDX also traded the whole of Thursday’s sell range for a now 21000 average short position. I will leave my 21305 ‘’Closing Stop’’ unchanged while raising my T/P level to 20870. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
December BUND
I am still long the Bund from last week at an average rate of 132.10. I have now lowered my T/P level to 132.40 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
Gold just missed my 2630 buy level before rallying $60 off its 2641 low print and I am still flat. I have no interest in chasing the market higher especially as I am still long Silver. Therebefore I will continue to be a buyer on any dip lower to 2610/2630 buy range with the same 2595 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2658.
Silver Rolling Contract
Silver traded lower to my second buy level at 31.80 for a now 32.30 average long position. I will now lower my ‘’Closing Stop’’ to a price of 29.95 while lowering my T/P level to 33.05. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
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