U.S. Indexes closed the final session of the week mixed, but rangebound, as the NASDAQ 100 edged out slight gains while the S&P closed lower by 0.2%. Sectors were predominantly in the red, with only Tech, Materials, and Discretionary in the green, while Consumer Staples and Health lagged. The Dollar closed lower for the fifth consecutive day, which saw mixed performance across G10 FX peers; EUR, GBP, and CHF all gained, while the CAD, NZD, and JPY all saw losses vs. the Greenback as Middle East rhetoric once again dominated the tape. All focus is on the US-Iran talks on Saturday, despite the ever-ongoing differences between the sides, with the latest reports suggesting that Iran said talks with the US to begin if ‘preconditions are accepted’, as there continues to be differing opinions regarding Lebanon and the Strait of Hormuz. Meanwhile, Trump told NYP that US warships are being reloaded with “the best ammunition” to resume strikes on Iran if peace talks in Pakistan fail. As such, WTI and Brent were choppy on Friday, but ultimately settled with losses. In the Euro-Zone morning session, benchmarks saw pressure in the EZ morning amid reports that Ukrainian President Zelensky’s top aide/negotiator Budanov reportedly sees Ukraine nearing a deal with Russian President Putin; note, the interview was conducted on April 4th and in the few minutes after the report, Zelensky suggested Putin is not genuinely seeking peace. Precious metals were mixed as Spot Silver gained, but Gold weakened while Treasuries were lower despite softer-than-expected core CPI. Recapping the inflation metrics, the headline surged, as expected, given the Iranian war, continuing to justify the Fed’s wait-and-see mode, while the University of Michigan preliminary for April was dismal. Fed Member Daly said if the Iran conflict resolves quickly and oil prices come back down, then a rate cut is ‘not out of the question’. However, if inflation stays elevated for longer than anticipated, the Fed would hold steady until we know we are getting the inflation job done. She also notes that persistently high oil prices would hurt growth, and they are already forecasting higher prices show through to the economy, with people pulling back on travel because they are worried about higher costs. Daly puts a lower probability on a rate hike than on a cut or holding steady with current policy, restrictive enough to put downward pressure on inflation; balanced enough to support a steady labour market. Policy in a good place gives the US more time to see how the conflict is resolved and what happens to oil prices. The San Francisco Fed President describes US economic fundamentals as ‘solid, and the labour market as in a steadier place. Risks to the Fed’s goals of full employment and inflation are balanced. University of Michigan prelim figures for April disappointed, highlighted by Sentiment tumbling to 47.6 from 53.3, way beneath the expected 52.0. Conditions fell to 50.1 from 55.8, and Expectations dropped to 46.1 from 51.7. Short-term inflation expectations also dramatically increased, given the Middle Eastern war, as 1-year ahead surged to 4.8% from 3.8% (exp. 4.2%), while 5-Year was more contained at 3.4%, in line with expected but rising from 3.2%. Open-ended comments show that many consumers blame the Iran conflict for unfavourable changes to the economy. Note, 98% of interviews were completed prior to the April 7th announcement of a temporary cease-fire. The report adds that economic expectations will likely improve after consumers gain confidence that the supply disruptions stemming from the Iran conflict have ended and gas prices have moderated. Moreover, one-year expected business conditions plunged by 20%, assessments of personal finances declined 11%, with consumers expressing a substantial increase in concerns over high prices and weaker asset values. Elsewhere, Oil closed 1.3% while Gold ended Friday’s session with a 0.3% fall.
To mark my 3350th 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 253 points on Friday and is now ahead by 2103 points for April after ending March with a massive gain of 9002 points, having closed February with a strong gain of 5482 points after ending January with a gain of 4757 points, having closed December with a gain of 2599 points, after ending the month of November with a gain of 4542 points, after ending October with a nice gain of 5110 points after closing September with a gain of 3774 points while ending August with a gain of 3362 points after closing July with a gain of 3753 points after closing June with a gain of 3530 points, having closed May with a gain of 3606 points, after closing April with a gain of 7685 points after closing March with a gain of 2254 points while closing February with a gain of 4180 points. January ended with a gain of 2768 points while 1997 points were gained in December. October ended with a gain of 2179 points, after closing September with a gain of 4402 points, following a loss of 301 points in August. July gained 1908 points while June saw a gain of 2074 points. The Platinum Service made a record 9619 points in October 2022. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 2300 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 0.11% lower at a price of 6816.
The Dow Jones Industrial Average closed 269 points lower for a 0.56% loss at a price of 47,916.
The NASDAQ 100 closed 0.14% higher at a price of 25,116.
The Stoxx Europe 600 Index closed 0.37% higher.
Last Friday, the MSCI Asia Pacific closed 0.8% higher.
Last Friday, the Nikkei closed 1.84% higher at a price of 56,924.
Currencies
The Bloomberg Dollar Spot Index closed 0.16% lower.
The Euro closed 0.15% higher at $1.1723.
The British Pound closed 0.18% higher at $1.3463.
The Japanese Yen fell 0.22% closing at $159.22.
Bonds
U.K.’s 10-Year Gilt closed 12 basis points higher at 4.77%.
Germany’s 10-Year Bund Yield closed 7 basis points higher at 3.05%
U.S.10 Year Treasury closed 3 basis points higher at 4.32%.
Commodities
West Texas Intermediate crude closed 1.33% lower at $96.57 a barrel.
Gold closed 0.34% higher at $4725.10 an ounce.
This morning on the Economic Front we have no data of note from either the Euro-Zone or the U.K. The only U.S. data on today’s schedule is Existing Home Sales at 3.00 pm.
Cash S&P 500
Despite the wide ranges in the S&P over the past two weeks, stocks are a little bit higher than where they were two weeks ago, but not by much. Oil prices, at least visually speaking, seem to have settled into this low $90 to $95 region — potentially forming a cup pattern after the one big move up to over $112, and now coming back down to around $95. What is clear is that the upper Bollinger Band is acting as resistance, while the 20-day Exponential Moving Average appears to be acting as support. This is important because when we look at what happened last week in equities and other parts of the marketplace, you can clearly see that the market has moved beyond the 20-day exponential moving average. We even cleared the 50-day, and we even cleared the 200-day moving average last week. So, we have cleared a lot of negative moving averages and have been able to advance beyond them. Whether or not we are able to hold above them will be another question especially given the huge gap from 6616 to 6741 below. I think the market, for the most part — even though you are not really seeing oil prices say that the tensions in the Middle East are over or that the worst is behind us — you really cannot say that, in my view. We are still in an uptrend. We have not really seen lower highs get put in yet, and we have not seen lower lows. Right now, the lows are still higher than the previous lows, and we are still seeing higher highs. So, to say that the oil market has seen some sort of major change in trend, I think it is too early. But what clearly stands out is that you are seeing oil implied volatility coming down, which I think is important. Oil implied volatility probably continues to come down because oil is likely going to start finding some sort of natural trading range. This was the kind of volatility that is created around a repricing of risk and a repricing of markets around a major news event. Now we are in a position where we are trying to find a range that we are settling into. Right now, that range is between $85 and $115, and we may find that it continues to condense into a range closer to $95 to $100. We will just have to keep an eye on that. In my view I just cannot see Oil trade below $80 and will keep its risk premium which of course will put upward pressure on inflation. The equity market and credit markets appear to be saying that the worst of all of this is behind us. This is reflected in the fact that you are seeing high-yield credit spreads really come back down toward 346 on the CDX high-yield credit spread index. That is an important indication, because the 370 area in the past is a level I have noticed before as the area where you can see spreads really begin to widen out or stop widening out. In fact, you saw that happen on a couple of occasions in this region. When you look at the comparison between credit spreads and the S&P 500 earnings yield (which is the inverse of the P/E ratio), they follow each other really closely. So, if credit spreads are contracting and financial conditions are easing, the earnings yield of the S&P 500 is going to go lower, multiples are going to expand, and the S&P 500 is going to go higher. The fact that last week you saw oil basically trade lower but stay within that same band, with a pretty material contraction of credit spreads and the easing of financial conditions — it is quite possible that part of what you are seeing last week is the market thinking the worst is behind us. No one really knows. We will actually find out more this week as we see what happens with the peace talks. The other thing that I think is really important to look at is that we saw liquidity really improve rather significantly. Reserve balances at the Fed rose to around $3.2 trillion, which was their highest level since early September. I don’t think this is going to be a newfound level of liquidity that’s likely to persist. One of the reasons is because we saw the TGA drop to around $700 billion. This is tax week, and it means that the TGA is likely to rise anywhere between $300 to $400 billion before this week is over. That could push liquidity back to positions the TGA was at toward the end of October, which is going to drain reserve balances again and potentially push them back to the lower end of their trading range — potentially as low as $2.8 or $2.9 trillion. So this little boost we have had in the equity market has likely been driven by two things: the easing of financial conditions due to some of the pressures the market is looking through when it comes to the war, and also the fact that a little bit of liquidity has come into the marketplace and loosened things enough that the market has been able to rebound potentially a little bit more than it probably otherwise would have. This means the liquidity that we have seen come into the market this past week is likely going to start exiting again, and that is going to potentially be a drain on liquidity as we go through this week. It is something to be aware of. Liquidity feeds into financial conditions as well, so financial conditions could begin to tighten this week. I would not be surprised — unless we get some sort of major breakthrough in the peace talks over the week that allows oil to slip to lower levels. But at this point, it is too early to say that. At least based on the technicals, it looks like oil is trying to find a trading range in that $90 to $95 region. If there is positive talk, maybe we see oil slip back into the mid-$80s, but we will just have to see how that continues to play out. Either way I am still expecting some if not all of the large open gap to be filled sooner rather than later. The peace talks with Iran seemed to have ended on a sour note, sending IG weekend oil prices higher by around 4% and the IG US Tech 100 lower by more than 1%. Clearly, the market was betting on a positive resolution to the war with the stocks up last week and oil prices down. That will now need to unwind some. The one thing we just do not know is what kind of messaging comes across at 7 AM on Monday morning about the great progress being made in talks, or any morning, or afternoon, or evening, or any day of the week. If the war is not over, then, in theory, the entire gap created on April 8 should be filled, and the S&P 500 should move back to around 6,620 over the course of this week, at a minimum. If the index gaps lower at the start of trading on Monday and fails to fill that gap, it would likely result in an island reversal top pattern on the intraday charts. There is little justification for the stock market to be trading at current levels if the conflict continues and oil prices remain at $100 or higher. As I wanted to be flat over the weekend I emailed my Platinum Members to exit my latest 6807 average short position for a small loss at 6813 and I am now flat. The S&P has further resistance from 6840/6865 where I will again be a seller with a higher 6893 ‘Closing Stop’. Meanwhile, I will continue to be a strong buyer on any further dip lower to 6660/6685 with a higher 6639 ‘Closing Stop’. If I am taken short, I will have a T/P level at 6807. If I am taken long, I will have a T/P level at 6703.
EUR/USD
I am still flat as the Euro continues to trade above 1.1680. The Euro has short-term resistance from 1.1750/1.1830 where I will be a small seller with a 1.1905 ‘Closing Stop’. Meanwhile, I will continue to be a strong buyer on any dip lower to 1.1480/1.1560 with the same 1.1425 tight ‘Closing Stop’. If I am taken short, I will have a T/P level at 1.1690. If I am taken long, I will have a T/P level at 1.1620.
Dollar Index
I am still long the Dollar at a price of 98.65 with a now lower 99.20 T/P level. I will continue to look to add to this position at 97.95 while leaving my 97.25 ‘Closing Stop’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Russell 2000
My Russell plan worked well as the market rose to my 2660 sell level before trading lower to my revised 2627 T/P level and I am now flat. Today, I will again be a seller from 2675/2735 with a higher 2785 ‘Closing Stop’. If I am taken short, I will have a T/P level at 2620.
FTSE 100
The FTSE traded weaker than both the European and American Indexes over the past two trading sessions. I will not chase the market lower as I continue to be a seller on any further rally to 10710/10810 with the same 10905 ‘Closing Stop’. If I am taken short, I will have a T/P level at 10630.
Dow Rolling Contract
My Dow plan worked well as the market rallied to my 48200-sell level before trading lower to my revised 48010 T/P level and I am now flat. As I go to post the Dow is predicted to open 600 points lower at a price of 47400. The Dow has short-term support from 46930/47230 where I will be a buyer with a 46695 wider ‘Closing Stop’. If I am taken long, I will have a T/P level at 47590. I no longer 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
After the NDX rallied to my 25070-sell level we had a small sell-off to my revised 24980 T/P level and I am still flat. The NDX is expected to open 300 points lower at 24800 when the Futures Market re-open at 11.00 pm. We have support below from 24450/24680 where I will again be a buyer with a 24295 ‘Closing Stop’. If I am taken long, I will have T/P level at 24870.
December BUND
Thursday’s sell-off saw the Bund hit my 125.95 buy level. I am still long with a now lower 126.40 T/P level. I will continue to look to add to this position at 125.25 while leaving my 124.55 ‘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
No Change: Unfortunately, I have no edge in Gold at this time. Gold had its weakest month (March) since 2008 despite a late rally at the end of the Month that has continued into April. I still do not trust the rally in Gold. My only interest in buying Gold is on a dip lower to 4280/4380 with the same 4195 ‘Closing Stop’. If I am taken long, I will have a T/P level at 4470. If this view changes, I will be back with a new update for my Platinum Members.
Silver Rolling Contract
No Change: I am still flat. I will continue to stay flat Silver until I feel I have a better edge. This is no harm given the extraordinary volatility that we are witnessing at this time. If this view changes, I will be back with a new update for my Platinum Members.
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