The S&P 500 Index climbed to new all-time highs above 5,000 on Friday with the bull ride continuing in lack of an obvious catalyst, gains were even more pronounced in the NASDAQ 100 and Russell 2000, while Bitcoin also surged. However, it is noteworthy that the risk on sentiment has been accompanied by a relief rally in NYCB shares, whose losses earlier in the week had been the macro focus. The highlight on Friday was the US CPI revisions, which on net, leave the inflation picture as it was with 3m and 6m annualised core CPI metrics remaining unchanged after the revisions ahead of Tuesday’s January CPI report. It is possible the lack of any upward surprises in the revisions (unlike last year) supported the equity market, although Treasuries told a different picture, with yields making new Year-To-Date highs after the release, and stocks themselves sold off after the data before reaccelerating higher through the cash session. Fed pricing for the year ahead is little changed after the CPI revisions, remaining around a c. 20% implied probability of a Fed cut in March and just over 110bps of cuts priced across the year. The Dollar Index was little changed, although antipodeans, which have a high beta to US stocks, saw notable outperformance, with Kiwi the G10 outperformer, aided by a hawkish RBNZ call by ANZ. Oil prices were firmer, marking five consecutive days of gains, with Israel’s rejection of the Hamas ceasefire the latest tailwind. The annual seasonal adjustments for CPI did little to live up to the market’s high expectations after the shock seen in the 2022 revisions. Wall Street Journal’s Timiraos labelled the revisions a “nothingburger”. Looking at the most recent readings, the headline December CPI was revised down to 0.2% from 0.3%, and the November and October prints saw 0.1% revisions higher to 0.2% and 0.1%, respectively. Resulting in the Q4 headline rise at 2.7% on an annualised basis, down from 2.8% initially. On the core metrics, December, November and October were all unrevised, leaving the Q4 (3m) core CPI unchanged at a 3.3% annualised increase. Meanwhile, the 6m annualised Core CPI was also unchanged at 3.2%. Looking within, Pantheon Macroeconomics notes the revisions to subindexes are a little more substantive, but they cancel out at the aggregate level. Pantheon highlights CPI of used cars and trucks fell 4.5% at an annualised rate in Q4, rising from the initially reported fall of 6.7%. The Q4 core goods ex used cars were revised to -1.3% from -1.7%, while the quarterly annualised increase in the Q4 rent of shelter CPI was unchanged at 5.2%. From the rent of shelter number, Pantheon assumes that the pace of increase in Q4 core services ex-rents was revised lower. From the Fed’s perspective, while the revisions do not improve the inflation progress seen going into the end of last year, they will provide confidence in the progress reported with some lingering anxiety from last year’s spike in the revisions; Fed’s Waller said in January, “My hope is that the revisions confirm the progress we have seen.” Participants will now be looking to this week’s January US CPI data for a timely update on the current pricing situation and to gauge rate cut expectations from the Fed, who have been increasingly pushing back against a March rate cut. Meanwhile, Fed Member Bostic (voter, hawkish) said there is still a ways to go to return inflation to target and he remains laser-focused on returning it to target, adding data suggests real wage gains will continue for several more months. Elsewhere, Oil closed 0.41% higher while Gold again closed flat.
To mark my 2925th 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 lost 255 points on Friday and is now ahead by 327 points for February 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 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 0.57% higher at a price of 5026.
The Dow Jones Industrial Average closed 54 points lower for a 0.14% loss at a price of 38,671.
The NASDAQ 100 closed 1.01% higher at a price of 17,962.
The Stoxx Europe 600 Index closed 0.09% lower.
Last Friday, the MSCI Asia Pacific closed 0.6% higher.
Last Friday, the Nikkei closed 0.09% higher at a price of 36,897.
Currencies
The Bloomberg Dollar Spot Index closed 0.09% lower.
The Euro closed 0.1% higher at $1.0787.
The British Pound closed 0.1% higher at 1.2638.
The Japanese Yen fell 0.7% closing at $149.28.
Bonds
Germany’s 10-year yield closed 6 basis points higher at 2.38%.
Britain’s 10-year yield closed 10 basis points higher at 4.09%.
U.S.10 Year Treasury closed 4 basis points higher 4.16%.
Commodities
West Texas Intermediate crude closed 0.41% higher at $76.53 a barrel.
Gold closed 0.1% lower at $2025.10 an ounce.
The morning on the Economic Front we have no economic data of note from either the Euro-Zone or the U.S. However, we do have a number of key speeches on both sides of the Atlantic: The ECB’s Lane and Cipollone are speaking at 9.00 am and 3.50 pm respectively, while the Fed’s Bowman and Kashkari are speaking at 2.20 pm and 6.00 pm. Finally, we have a speech from Bank of England Governor at 6.00 pm.
Cash S&P 500
Wrong! Shorting the S&P is an art and requires lots of patience. It is also a frustrating exercise as we have seen over the past 16 months since the October 2022 low at 3434. Any time it looks like the S&P is going to roll-over, either Treasury Secretary Yellen or Fed Chair Powell will come to the rescue. Going forward the only time I will short the markets is if the RSI gets severely extended to the upside like we have now with Friday’s 73 close. I was stopped out of Wednesday’s 4990 average short position at 5020 as emailed to my Platinum Members late Friday and I am now flat. New highs are happening almost every day against a background of weakening internals. In my 30 years of trading the S&P, I have never seen such a scenario. Financial Conditions are as easy as we have ever seen them which in normal circumstances is inflationary, yet the markets have priced in 115 basis point rate cuts for this year. My own view is inflation is still a problem and will become more pronounced as we move through 2024. Given the Yield curve I certainly would not be buying U.S. Treasuries especially as the cost of carry will hurt on a daily basis. The S&P has further resistance from 5035/5050 where I will again be a small seller with a tight 5061 ‘’Closing Stop’’. I will now raise my buy level to 4972/4987 with a higher 4959 tight ‘’Closing Stop’’. If any of these views change, I will be back with a new update for my Platinum Members.
EUR/USD
No Change: I am still long from last week at an average rate of 1.0808. I will leave my 107.15 ‘’Closing Stop’’ unchanged. I will also leave my T/P level unchanged at 1.0835. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
The Dollar has traded in a narrow range since Thursday’s Daily Commentary, and I am still flat. Today, I will lower my sell level 104.60/105.20 with a now lower 105.85 tight ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 104.15.
Cash DAX
No Change: Given how heavy the DAX is trading I will not chase the market higher, leaving my 16700/16790 buy level unchanged with the same 16595 ‘’Closing Stop’’. If triggered, I will have a T/P level at 16760. I still do not want to be short the DAX at this time. If this view changes, I will be back with anew update for my Platinum Members.
Cash FTSE
The FTSE continues to trade heavy, completely ignoring the strength of the American Indexes. Friday’s move lower saw my second buy level at 7560 executed for a now 7595 average long position. I will now lower my T/P level to 7640. I will also raise my ‘’Closing Stop’’ to 7515 on this position. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
The Dow continues to lag the strength of both the S&P and NDX. I am still flat the Dow as the market twice fell shy of Thursday’s buy range before rallying into the New York close on both occasions. I will not chase the Dow higher, leaving my 38250/38500 buy level unchanged with the same 38055 tight ‘’Closing Stop’’. I still do not want to be short the Dow at this time. If this view changes, I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
There is no stopping the NDX as Friday’s latest 1% gain saw the market close at yet another new all-time high. This was expected given my RSI comments from Thursday. The latest two-day rally saw the 14 Day RSI close at 71. My only interest in trying a short position in equity markets this year is when the RSI gets over 72. The NDX has strong resistance from 18050/18200 where I will be a seller with an 18305 ‘’Closing Stop’’. I no longer want to be a buyer of the NDX at this time. If this view changes, I will be back with a new update for my Platinum Members.
March BUND
My Bund plan worked well as the market sold off to my 133.40 buy level before rallying to my revised 133.85 T/P level and I am now flat. Higher Treasury Yields on Friday saw the Bund close at 133.40 in New York. The Bund has support below from 132.10/132.80 where I will be a strong buyer with a lower 131.55 ‘’Closing Stop’’. I still do not want to be short the Bund at this time.
Gold Rolling Contract
I am still flat Gold as the market again traded in a narrow range. I will continue to be a buyer on any dip lower to 1998/2013 with the same 1989 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2022.
Silver Rolling Contract
No Change. The boring price action shows no sign of ending unfortunately. I still believe in the bull case for this precious metal. I will continue to hold my 24.40 average long position with no stop or T/P level for now. This morning, Silver is trading slightly lower at a price of 22.25. I will continue to look to add to my existing long position on any further move lower to 21.50. If this view changes, I will be back with a new update for my Platinum Members.
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