Following a much higher than expected CPI Print, U.S. Equity Markets got slammed across the board led by the 3.76% fall in the NASDAQ 100, in what turned out to be a brutal trading session. The U.S. Bureau of Labour Statistics’ Consumer Price Index data for May jumped 8.6% year over year compared with Wall Street’s projected 8.3% rise and the previous month’s increase of 8.3%. On a month-over-month basis, those same figures gained by 1% versus the estimated 0.7% and April’s rise of 0.3%. This suggests the pace of inflation growth is not slowing. And with these figures, analysts and economists are now wondering how much higher costs will rise on top of the metrics we’ve seen over the past year. In turn, this may force the U.S. Federal Reserve to raise interest rates even faster than Wall Street had initially expected. Within the S&P 500, all 11 sectors finished lower. European Markets closed lower. The International Atomic Energy Agency said Iran was removing surveillance cameras at nuclear facilities, threatening to derail the revival of the 2015 nuclear accord. European Central Bank Governing Council member Francois Villeroy de Galhau said the Central Bank should target interest rates of 1% to 2% as inflation is too high and broad. European Central Bank President Christine Lagarde said it will tighten monetary policy at a gradual pace, leaving the door open for changes in economic activity to slow. Italian Industrial-Production data for April unexpectedly expanded, signalling that Europe’s third-largest economy has remained relatively resilient despite surging energy costs. In Asia, Bank of Korea Governor Rhee Changyong said more interest-rate hikes may hurt the economy near term, but it will negate the damage done by rising inflation long term. Chinese President Xi Jinping said the country must adhere to its Zero-COVID policy to stop infections but encouraged local governments to do all they can to support economic growth. Japanese Producer Price Index growth for May was weaker than anticipated compared with April and is easing as government subsidies soften due to rising energy costs. Chinese Consumer Price Index growth for May was weaker than expected, holding steady with April, and leaving room for central-bank stimulus. Elsewhere, Oil fell a further 1% on weak Chinese demand, while Gold rose 1.1% on little news.
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For anyone following my Platinum Service it lost 598 points on Friday and is now ahead by 1083 points for June after making 3651 points in May, having made 762 points in April, following a gain of 5883 points in March. The Platinum Service made an impressive 5324 points in February, after ending January with a gain of 3878 points, more than making up for December’s 932 points loss. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 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 2.91% lower at a price of 3900.
The Dow Jones Industrial Average closed 880 points lower for a 2.73% loss at a price of 31,392.
The NASDAQ 100 closed 3.56% lower at a price of 11,832.
The Stoxx Europe 600 Index closed 1.8% lower.
This morning, the MSCI Asia Pacific Index fell 1.5%.
This morning, the Nikkei closed 2.87% lower at a price of 27,026
Currencies
The Bloomberg Dollar Spot Index closed 0.8% higher.
The Euro closed 1% lower at $1.0518.
The British Pound closed 1.6% lower at 1.2310.
The Japanese Yen fell 0.4% closing at $134.35.
Bonds
Germany’s 10-year yield closed nine basis points higher at 1.52%.
Britain’s 10-year yield closed 12 basis points higher at 2.45%.
US 10 Year Treasury closed 12 basis points higher at 3.16%.
Commodities
West Texas Intermediate crude closed 1% lower at $118.47 a barrel.
Gold closed 1.1% higher at $1869.10 an ounce.
This morning on the Economic Front we already had the release of U.K. GDP which fell 0.3% versus +0.1% expected. The only other data of note on either side of the Atlantic is a speech from FED Member Brainard at 7.00 pm.
Cash S&P 500
Even though U.S. CPI came in just 0.3% higher than expected, it was the highest CPI print in more than forty years, pushing stock prices sharply lower on the day and that trend continued overnight with the S&P now trading at 3830 as I go to press – 330 Handles lower than where we were trading on Thursday morning. Not helping the S&P this morning is the melt-down in Crypto Currencies where Ethereum tumbled over the weekend and has now fallen 26% since Thursday while Bitcoin is trading at $25,000 after falling over 17% in the last five days. Clearly, my view that we are close to a temporary top in inflation got hammered on Friday as shelter and energy trumped any declines in other commodities, while Consumer Sentiment got obliterated adding to the negative sentiment. I bought the S&P at an average rate of 3985. The S&P has strong support at the May low of 3811 which most hold or else we risk a further acceleration. However, with the FOMC on Wednesday and the June Contracts expiring on Friday we will see plenty of two-way price action. I will add to my long S&P position on any further move lower to 3775/3805. If I am taken long at this level, I will come back with a new update for my Platinum Members. The McClellan Oscillator closed at -128 on Friday so we may need a bit more downside for this indicator to give a strong buy signal.
EUR/USD
The Equity sell-off saw the Dollar soar. This move higher saw my 1.0575 stop level triggered on Thursday’s 1.0640 long position and I am now flat. The Euro has strong support from 1.0430/1.0480 where I will again be a buyer with a 1.0375 stop. If I am taken long I will have a T/P level at 1.0540.
March Dollar Index
My Dollar plan did not work well as the market rallied to my second sell level at 103.55 for a 1.0325 average short position before stopping me out of this trade at 104.05. The Dollar is trading higher at 104.40 this morning and I have gone short here in small size with a 105.05 stop. My T/P level is at 103.80 and if any of the above levels are filled I will be back with a new update for my Platinum Members.
Cash DAX
The DAX has had a bad week, trading over 1200 points lower from where we were last Monday. Thankfully, after the DAX hit my 13960 buy level on Friday we had a small rally, enabling me to exit this long position at my revised 13993 T/P level and I am still flat. This morning the DAX is opening lower at 13500. We have strong support from 13250/13350 where I will an aggressive buyer with a 13145 wider stop.
Cash FTSE
The Global sell-off saw the FTSE stop me out of my long 7473 position at 7385 and I am still flat. This morning the FTSE is trading lower at 7250. We have strong support from 7100/7180 where I will be an aggressive buyer with a 6995 wider stop. If triggered, I will have a T/P level at 7245. If any of the above levels are hit I will be back with anew update for my Platinum Members.
Dow Rolling Contract
The Dow is trading over 2100 points lower from where we were on Thursday morning resulting in one of the most aggressive sell-off’s in points terms in just three trading sessions. After the Dow traded the whole of my buy range on Friday for a 31900 average long position I was stopped out of this trade at 31575. Subsequently, I emailed my Platinum Members to buy the Dow again at 31433 before being able to take a small gain on this position at 31610 and I am still flat. The market is at an interesting conundrum as the Dollar and 10-Year Treasuries did not make a new high while two and five year Treasuries screamed higher. All this points to short-term rate hike expectations being increased while longer -term rate cuts being accelerated. As John Templeton famously said ‘’Bull Markets are born on pessimism’’ and we certainly are in that scenario now. The Dow has support from 30550/30850 where I will again be a buyer with a 30295 ‘’Closing Stop’’. If I am taken long I will have a T/P level at 31200.
Cash NASDAQ 100
The NDX got slammed on Friday, hitting my 12050 average buy level before stopping me out of this position on the re-open last night at 11735. The carnage in Tech Stocks is incredible with over 80% of NASDAQ stocks trading below their respective 200-Day Moving Averages. My signal charts are again at levels that are telling me to be an aggressive buyer. We will see a lot of margin selling when the Cash Markets open this afternoon. As I am still long the S&P I will not add to my existing NDX position as I want to see how the market reacts to this latest sell-off this afternoon. If this changes I will be back with a new update for my Platinum Members. Meanwhile I will leave my 14327 long position unchanged with the same 13400 exit level
September BUND
The Bund rallied tom my 148.25 T/P level shortly after I posted on Friday morning. Post the CPI, the Bund got hit hard and I am now long again at a price of 147.20. with a 145.95 wider ‘’Closing Stop’’. I have a T/P level at 147.75 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
Gold Rolling Contract
I am still flat as Gold missed my 1823 buy level by $1 before rallying to sit higher at 1870 this morning. I will now raise my buy level to 1825/1840 with an 1809 higher stop.
Silver Rolling Contract
Silver rallied to my 21.80 T/P level on my 21.60 long position and I am still flat. This morning Silver is trading unchanged at 21.60. We have support from 20.60/21.20 where I will again be a buyer with a 19.95 stop.
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