U.S Equity Markets were choppy on Friday and ultimately little changed after gyrating between the Middle East conflict and soft U.S. PPI data, whilst Treasuries sustained big bull-steepening. The benchmark Equity Futures saw losses accumulate in the European morning, coinciding with oil prices hitting their peaks in the aftermath of the U.S. and U.K. striking targets in Yemen in response to Houthi attacks on shipping vessels. The Indices then surged after the December PPI metrics came in beneath expectations, with estimates for the Fed followed PCE data being revised down as a result, seeing Fed cut pricing ramp even further to near 170bps of cuts prices across 2024 vs 150bps before the data, with a March implied cut probability rising to near certainty. The cash open saw better selling develop in stocks, despite yields hugging lows and oil prices unwinding their earlier rip, taking the S&P 500 back to flat later in the New York afternoon. The Dollar Index closed with a mild bid after bouncing off the lows seen in wake of the PPI data. In stocks, the Q4 earnings season got underway with banks largely lower after their results, United Healthcare (UNH) was hit on a rising medical care cost ratio, while airlines were hit after Delta (DAL) gave poor guidance. Luxury names were hit after Burberry (BURB LN) issued a profit warning for a sector that has largely been resilient until now. PPI was cooler than expected in December. Headline PPI declined 0.1% M/M, despite expectations for a 0.1% gain, matching the prior month’s decline. Y/Y was also cooler than expected at 1.00% (exp. 1.3%), but up from the revised down 0.8%. The core measure was also cooler than expected and was unchanged M/M, matching the prior read despite expectations for a 0.2% gain, while the Y/Y rose 1.8%, beneath the 1.9% forecast and 2.0% prior. The super-core (ex food, energy and trade) rose 0.2%, accelerating from 0.1%, while Y/Y rose 2.5%, up marginally from the downwardly revised 2.4% in November. In headline goods, prices fell .4% led by a 1.2% fall in energy and 0.9% fall in food, ex food and energy prices were flat. In services, prices were unchanged, matching the November and October read. The net cooler-than-expected report is another sign of progress in the inflation battle and likely helps offset at least some concerns after the slightly hotter-than-expected CPI on Thursday, although there are still concerns the road back to 2% may be bumpy. On PPI, Oxford Economics notes that “While the potential for supply disruptions from goods and materials traversing the Red Sea or Panama Canal offer upside risk to producer prices, we still forecast a period of subdued gains in H2 2024 as weak goods demand offsets higher services prices”. For the Fed-followed PCE data, due Jan 26th, Goldman says “we estimate that the core PCE price index rose 0.17% in December, corresponding to a YoY rate of +2.93%. We expect that the headline PCE price index increased 0.17% in December, or increased 2.60% YoY”. The hot CPI data was the highlight on Thursday which initially sparked a typical hawkish reaction – Equity and T-note futures tumbled while the Dollar jumped. However, the moves gradually pared throughout the US session with both Goolsbee (non-voter) and Barkin (voter) noting the data was in line with expected although Mester (voter, retiring) stressed that it shows the Fed’s job is not done yet, but progress on inflation is not stalling. Aside from CPI, the Jobless Claims data continued to show signs of a tight labour market with initial claims hugging the 200k handle. Elsewhere, Oil ended Friday with a 0.92% gain while Gold was bid, closing higher by 1.1%.
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 made 682 points on Friday and is now ahead by 1930 points for January. 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 0.08% higher at a price of 4783.
The Dow Jones Industrial Average closed 118 points lower for a 0.31% loss at a price of 37,592.
The NASDAQ 100 closed 0.07% higher at a price of 16,832.
The Stoxx Europe 600 Index closed 0.77% higher.
This morning, the MSCI Asia Pacific closed 0.4% higher.
This morning, the Nikkei closed 0.91% higher at a price of 35,901. – This is a new 34-year high for the Nikkei.
Currencies
The Bloomberg Dollar Spot Index closed 0.16% higher.
The Euro closed 0.2% lower at $1.0949.
The British Pound closed 0.1% higher at 1.2751.
The Japanese Yen rose 0.4% closing at $144.85.
Bonds
Germany’s 10-year yield closed 7 basis points lower at 2.15%.
Britain’s 10-year yield closed 3 basis points lower at 3.80%.
U.S.10 Year Treasury closed 7 basis points lower 3.96%.
Commodities
West Texas Intermediate crude closed 0.92% higher at $72.68 a barrel.
Gold closed 1.1% higher at $2045.10 an ounce.
This morning on the Economic Front we already had the release of German Wholesale Price Index which fell 0.6% versus -0.2% expected. Next, we have Euro-Zone Trade Balance and Industrial Production at 10.00 am. With the American Markets closed today, there is no U.S. Economic data of note due to be released.
Cash S&P 500
The S&P continues to hold the now key 4730/4740 support area. Following Thursday’s higher than expected CPI print the S&P fell 60 Handles, hitting a low at 4738 before again attracting buying with the S&P trading at 4785 as I go to press. If liquidity continues to expand and nothing else seems to matter then we may see new highs above 4818 before a more meaningful correct finally ensues. My one concern is still the VIX which closed 2% higher at 12.70 on Friday. I have a target level above 17 on this key indicator. If this happens, I will then be a strong buyer of the S&P. We have had a strong start to the year so we can afford to be patient waiting markets to hit our buy ranges. Since Thursday’s Daily Commentary, I did two S&P trades, buying at 4760 and 4742 before exiting both of these positions at 4771 and 4551 respectively. With the American Markets closed today for the Martin Luther King Holiday, trading will be subdued. The S&P has resistance from 4808/4822 where I will continue to be a small seller with a lower 4835 ‘’Closing Stop’’. The S&P has support from 4752/4767 where I will also be a small buyer with a 4739 ‘’Closing Stop’’. If this view changes I will be back with a new update for my Platinum Members.
EUR/USD
The Euro again traded in narrow ranges over the past two trading sessions and I am still flat. I will now raise my buy level to 1.0850/1.0920 with a higher 1.0795 ‘’Closing Stop’’. I still do not want to be short the Euro at this time. If I am taken long, I will have a T/P level at 1.0960.
Dollar Index
I am still flat the Dollar. I will now raise my buy level to 101.50/102.20 with a higher 100.95 ‘’Closing Stop’’. I still do not want to be short the Dollar at this time. If this view changes, 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 16640 buy level before rallying to my revised 16692 T/P level and I am now flat. This morning, the DAX is trading higher at 16700. The DAX has support from 16510/16610 where I will again be a small buyer with a lower 16445 ‘’Closing Stop’’. Even though the price action for the DAX has been bearish for the past three weeks, I will not chase the market lower.
Cash FTSE
My FTSE plan worked well as the market sold off to my 7575 buy level late Thursday before rallying Friday morning to my 7645 T/P level and I am now flat. This morning, the FTSE is trading lower at 7625. We have short-term support from 7510/7580 where I will again be a buyer with the same 7475 tight ‘’Closing Stop’’. Given how oversold the FTSE is trading, I no longer want to be short the Market at this time.
Dow Rolling Contract
My Dow plan worked well as yet again buying the dip continues to pay dividends. Post the CPI print the Dow traded lower to my 37440 buy level before rebounding to a Friday high at 37820 high print. This move higher saw my 37550 revised T/P level triggered and I am still flat. The Dow subsequently sold off on Friday, trading at 37570 as I go to press. We have support from 37000/37250 where I will again be a buyer with a lower 36855 ‘’Closing Stop’’. I will now lower my sell level to 37950/38200 with a lower 38355 ‘’Closing Stop’’.
Cash NASDAQ 100
My NDX plan worked well as post Thursday’s CPI Print, the NDX traded lower to my 16750 buy level before rallying to my 16825 T/P level with a 16900 high print. Subsequently, the NDX sold off to my second buy level at 16690 as emailed to my Platinum Members before rallying to my 16785 T/P level and I am now flat. This morning, the NDX is trading at 16860. The NDX has strong support from 16570/16720 where I will again be a buyer with a 16355 wider ‘’Closing Stop’’. The NDX has strong resistance from 17030/17180 where I will continue to be an aggressive seller with the same 17305 ‘’Closing Stop’’. If this view changes, I will be back with a new update for my Platinum Members.
March BUND
The Bund traded in a narrow range over the past two trading sessions, just missing my initial 134.70 buy level before rallying 80 points and I am still flat. Today, I will raise my buy level slightly, to 134.30/135.00 with a higher 133.65 ‘’Closing Stop’’. I still do not want to be short the Bund at this time.
Gold Rolling Contract
My Gold plan worked well as the market traded lower to my 2014 buy level before rebounding to a Friday high at 2062. This move higher saw my 2022 T/P level triggered and I am still flat. Today, I will again be a buyer on any dip lower to 2015/2030 with a 1999 ‘’Closing Stop’’. I still do not want to be short Gold at this time.
Silver Rolling Contract
No Change. 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. If this view changes, I will be back with a new update for my Platinum Members.
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