U.S. Equity Markets were sold on Friday with Iran fears and poor bank earnings weighing into the weekend, with small caps suffering the most. Treasuries saw strong gains, paring some of the week’s losses amid the Iran concerns and risk aversion. JP Morgan saw heavy selling after investors were let down by the lack of guidance increase to its NII, while WFC and C performed relatively better. Chip names saw particular pressure amid Wall Street Journal reports China had told telecom carriers to phase out foreign chips. Bitcoin and crypto saw heavy losses amid the risk aversion. It was a rollercoaster session for Oil and Gold, with the pair of them having made fresh peaks on a slew of reporting in the New York morning of an imminent Iran response (which turned out to be correct as we now know), only to reverse lower into the close with many traders expecting a response that does not threat an escalation. The Dollar saw strong gains with the Iran fears underscoring the policy divergence of the Fed vs other central banks, particularly in Europe, who are seemingly much closer to beginning rate cuts. In data, the highlight was the University of Michigan survey’s consumer inflation expectations, which both saw an unwelcome rise, albeit to levels that are consistent with post-COVID ranges, but that saw little price reaction. We also had a slew of Fed Speak from Collins, Schmid, Daly, and Bostic, who are all expressing caution in rushing into rate cuts, something which money markets have already adjusted to. Fed Member Daly noted that with last week’s CPI report, it is a good time to remind people that the Fed is not data-point dependent. But on rates, the San Fran President said there is absolutely no urgency to adjust the policy rate, saying there is too much discussion of how many rate cuts, rather than what the Fed is trying to accomplish. Daly added the Fed will maintain policy stance as long as necessary. Meanwhile, Bostic, reaffirmed his hawkish tones noting he is “not in a hurry to cut interest rates” and still sees one rate cut towards the end of the year. The University of Michigan Consumer Sentiment for April fell to 77.9 from 79.4, and shy of the expected 79.0. Current Conditions and the forward-looking Expectations Indices fell to 79.3 (prev. 82.5, exp. 82.2) and 77.0 (prev. 77.4, exp. 77.6), respectively. Looking at the inflation expectations, both 1yr and 5-10yr ahead rose to their highest since November 2023, printing 3.1% (prev. 2.9%) and 3.0% (prev. 2.8%), respectively. On the data, Oxford Economics notes, “The significant improvements to confidence seen from November to January have officially waned and consumers views are stabilising. Falling inflation should continue to support confidence, but we expect a slowdown in Durable Goods consumption and a slight rise in the unemployment rate will keep a lid on sentiment.” Last Thursday, as expected, the ECB opted to stand pat on rates once again. The policy statement reaffirmed guidance that rates will be kept sufficiently restrictive for sufficiently long. Furthermore, policymakers will continue to follow a data-dependent and meeting-by-meeting approach and will not pre-commit to a particular rate path. That being said, and what was a new inclusion for the statement, it was noted that if the Governing Council was to gain further confidence that inflation is converging to the target in a sustained manner, it would be appropriate to reduce the current level of monetary policy restriction. The ECB stopped short of explicitly mentioning June given previous errors in pre-announcing policy, however, the updated guidance was perceived as a green light to expect a cut at the next meeting. In the follow-up press conference, when questioned about a potential rate cut in June, Lagarde reiterated that the ECB will have a lot more data by the time of the June meeting. In terms of the unanimity of Thursday’s announcement, Lagarde stated that “a few” dissenters felt “sufficiently confident” about altering policy at the meeting, however, they ultimately rallied around the consensus. This could potentially be in-fitting with source reporting in the wake of the previous meeting which suggested some policymakers floated the idea of a second cut in July to win over a small group still pushing for an April start. Elsewhere, given Wednesday’s U.S. CPI report and subsequent Fed repricing, Lagarde was questioned what impact this could have on the ECB’s easing plans, to which Lagarde stressed the ECB’s independence on policymaking. Overall, with Lagarde getting a relatively easy ride in the press conference, the policy statement gave the greatest clues as to what comes next and reaffirmed market views heading into the release. Market pricing for a June reduction is near-enough pre-announcement levels of circa 68% with a total of circa 3 cuts seen by year-end. Later on, ECB sources, via Reuters, said policymakers still expect to cut rates in June but some think the case for pausing at their following meeting is becoming stronger given a continued rebound in US inflation, energy and geopolitics. These sources added doves are looking for cuts in June and July amid benign labour market. On July, said while the July decision was not explicitly debated, some policymakers argued that a delayed start to the Fed’s own cutting cycle warranted caution from the ECB. Elsewhere, Oil closed 0.75% higher while Gold had one of the biggest one-day reversals in history falling $100 from its afternoon high at $2432.
To mark my 2975th 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 was made 221 points on Friday and is now ahead by 1824 points for 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 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 1.46% lower at a price of 5123.
The Dow Jones Industrial Average closed 475 points lower for a 1.24% loss at a price of 37,983.
The NASDAQ 100 closed 1.66% lower at a price of 18,003.
The Stoxx Europe 600 Index closed 0.14% higher.
Last Friday, the MSCI Asia Pacific closed 0.4% lower.
Last Friday, the Nikkei closed 0.21% higher at a price of 39,523.
Currencies
The Bloomberg Dollar Spot Index closed 0.69% higher.
The Euro closed 0.8% lower at $1.0641.
The British Pound closed 0.7% lower at 1.2450.
The Japanese Yen fell 0.2% closing at $153.22.
Bonds
Germany’s 10-year yield closed 9 basis points lower at 2.36%.
Britain’s 10-year yield closed 1 basis points lower at 4.14%.
U.S.10 Year Treasury closed 3 basis points lower at 4.52%.
Commodities
West Texas Intermediate crude closed 0.75% higher at $85.66 a barrel.
Gold closed 0.6% higher at $2342.10 an ounce.
This morning on the Economic Front we have Euro-Zone Industrial Production at 10.00 am. Next, we have U.S. Retail Sales and the New York Empire State Manufacturing Index at 1.30 pm. Finally, we have Business Inventories and the NAHB Housing Market Index at 3.00 pm.
Cash S&P 500
I had wide parameters on the S&P for the last few days. This was a good strategy given the huge volatility witnessed across most asset classes since Thursday’s commentary. Friday’s sell-off saw the S&P test its 50-Day Moving Average at 5111. We had a small bounce off and this rally has continued overnight despite the expected negative reaction by investors to Iran’s attack on Israel yesterday morning. Friday’s tag of the 50 MA was the first test since early November. I would prefer to see the S&P have a further sell-off to my 5000/5050 major support zone where I will be a buyer at different points within this support level with no stop or T/P level if triggered. After the S&P hit my 5117 buy level we rallied to my revised 5128 T/P and I am now flat. I have no interest in being short the S&P as a number of my technical signals are now oversold. I know this makes no sense after a 2% decline but this is the environment that we live in. Short-term the S&P has support from 5093/5109 where I will be a buyer with a tight 5077 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 5123.
EUR/USD
Wrong! The Euro has fallen over 2% since Wednesday, back to levels not seen since last November. This move lower stopped me out of my 1.0798 latest long position at 1.0653 and I am now flat. The Euro is severely oversold as shown by the Daily Sentiment Indicator which closed with a 9 print on Friday. The Euro has support from 1.0550/1.0620 where I will again be a buyer with a wider 1.0495 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 1.0685. I still do not want to be short the Euro at this time.
Dollar Index
Wrong! Last week’s 2.3% gain in the Dollar saw my 105.95 stop triggered on my latest 104.90 average short position and I am now flat. While the Dollar may rise further, the fact that the Daily Sentiment Index closed at 91 on Friday, means we are close to at least a temporary top in the market. This morning the Dollar is trading higher at 106.05. I have now sold the Dollar here with a 105.60 T/P level. I will add to this position at 106.85. Meanwhile, I will have a ‘’Closing Stop’’ at 107.35 on this position. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash DAX
My DAX plan worked well as the market traded lower to my 17880-buy level before rallying to my 17970 T/P level with a rebound high at 18100. Subsequently, the DAX sold off late Friday, and is trading at 17900 this morning as I go to press. The DAX has support from 17670/17770 where I will be a small buyer with a 17565 wider ‘’Closing Stop’’. Despite the negative price action, I still do not want to be short the DAX at this time.
Cash FTSE
My FTSE plan worked well as the market traded lower to my 7890 buy level on Thursday before rallying above 8000 on Friday. Unfortunately, I covered this long position too early at 7930 and I am still flat. This morning, the FTSE is trading lower at 7935. We have strong support from 7800/7870 where I will again be a buyer with a lower 7745 ‘’Closing Stop’’. I still do not want to be short the FTSE at this time. If this view changes, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
The Dow got hit hard on Friday following much weaker than expected earnings from JP Morgan. This move lower saw the whole of my buy range triggered for a 38000 average long position. Expecting the Dow to be down 200/300 points on the re-open last night, I was relieved to see the Dow trading at 38030. I emailed my Platinum Members to exit any long position at this price level and I am now flat. The Dow is now trading comfortably below both its 20-Day Moving Average and 50 Day MA at 38891 and 38881 respectively. Any rally in the market will find it difficult to break these now key resistance levels. In my opinion it is only a matter of time before both the S&P and NDX break their key 50 Day MA’s. The Dow has short-term support from 37550/37800 where I will be a strong buyer with a 37395 wider ‘’Closing Stop’’. I still do not want to be short the Dow at this time.
Cash NASDAQ 100
Despite the sell-off in both the Dow and S&P, the NDX never came close to my initial 17870 buy level and I am still flat. With the NDX trading close to its 50-Day MA, I have no interest in chasing the market higher. Today, I will continue to be a strong buyer on any dip lower to 17720/17870 with the same 17595 ‘’Closing Stop’’. Despite the negative price action, I still do not want to be short the NDX at this time.
March BUND
The Bund rallied to my 131.95 T/P level on my latest 131.60 long position ahead of Thursday’s ECB Meeting announcement. I am still flat. The Bund has support from 131.30/132.10 where I will again be a buyer with a higher 130.65 ‘’Closing Stop’’.
Gold Rolling Contract
I am glad we stayed out of Gold over the past few days especially given the $100 rally and reversal on Thursday and Friday. Such a large intra-day swing on Friday indicates a short-term high has occurred. While investors may perceive Gold to be a ‘’safe haven’’, the metal trades like any other freely traded financial asset, tracing out waves of optimism and pessimism. Any decline in Gold over the coming weeks should see strong support at the 2060/2090 support zone. I do not think Gold will fall that far but this is a level where I would be an aggressive buyer. Gold has resistance from 2390/2410 where I will be a very small seller with no stop or T/P level if hit. If this view changes, I will be back with a new update for my Platinum Members.
Silver Rolling Contract
Silver hit a high at 29.83 on Friday before following Gold lower with a fall of 200 points. I am still flat. I will now raise my Silver buy level to 27.00/27.80 while leaving my 25.95 ‘’Closing Stop’’ unchanged. I still do not want to be short Gold at this time.
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