U.S. Equity Markets closed mixed on Friday with notable outperformance in the NASDAQ 100 as tech was supported by a strong earnings report from Broadcom (AVGO), seeing the stock rally 24% and supporting the sector. Consumer Discretionary also performed well thanks to upside in Tesla (TSLA) shares while other sectors were flat or red, with underperformance in Communication Services, Materials and Energy with downside in Meta (META) and Google (GOOGL) weighing on comms. T-notes were sold throughout the session to see 10 Year Yields reclaim 4.40% for the first time since November 22nd, the Friday before Trump named Bessent as upcoming Treasury Secretary. In FX, the Dollar was flat with DXY trading on either side of 107 while EUR/USD traded either side of 1.0500 and outperformed FX majors. The Japanese Yen was the laggard on more reports the BoJ are set to skip a hike this week while higher US Treasury yields also weighed. Sterling was sold, particularly vs the Euro, after soft GDP numbers. Crude prices were bid throughout the session supported by geopolitical tensions in Russia and Ukraine while President-elect Trump is also considering options to prevent Iran from being able to build a nuclear weapon, including preventative airstrikes. Gold and silver prices were sold throughout the session. Attention this week turns to a plethora of central bank activity, including Fed, BoJ, and BoE, while US data highlights include US PCE and Retail Sales. US import prices and export prices for November surpassed expectations, with the former surprisingly rising 0.1% (exp. -0.2%, prev. 0.1%) and the latter coming in at 0.0% (exp. -0.2%, prev. 1.0%). For import prices, a larger than forecasted rise in fuel prices (+1%) drove the gain which in itself was driven by higher Natural Gas prices, which were +47.4% M/M. Although, and as Oxford Economics notes, crucially fuel import prices have fallen 8.5% Y/Y, and recent declines in crude oil prices mean that the rise in fuel import prices this month should be partially reversed in December. Moreover and welcomingly, nonfuel import prices were unchanged in November, and remain supportive of slow goods inflation. Looking ahead, OxEco adds, a stronger US dollar in reaction to President Trump’s election victory will weigh on import prices while ongoing deflation at factory gates in China bodes well for nonfuel prices. As expected, the ECB delivered a 25bps cut to the deposit rate to 3.0% last Thursday. The main takeaway from the policy statement was the Governing Council’s decision to drop the reference to “keep policy rates sufficiently restrictive for as long as necessary”. Elsewhere, the ECB stated it will continue to follow a data-dependent and meeting-by-meeting approach. The accompanying macro projections saw a reduction in the HICP forecasts for 2024 and 2025 with the 2026 forecast held below target at 1.9%, whilst growth forecasts were cut across the horizon. At the follow-up press conference, Lagarde was careful to note that the GC is not yet declaring victory on inflation, whilst later adding that risks to inflation are two-sided. With regards to the policy decision, Lagarde noted that all members agreed with the policy proposal. Adding that a 50bps move was discussed, however, this failed to gain any traction. The President stated that whilst not pre-committing to a specific policy path, the direction of travel is clear. Lagarde also refused to engage in discussions of where the GC sees the neutral rate, stating that it was not discussed at the meeting. Overall, ING says that “today’s decision reflects a compromise between growth and inflation worriers, a gut feeling vs a model-based approach and doves against hawks”. In terms of the next steps, given that policy is still seen as restrictive, further rates are clearly on the horizon, particularly when considering the economic fragility of certain core member states and the looming threat of Trump trade tariffs. As it stands, markets price 120bps of easing next year. Following the meeting and Lagarde’s press conference, Reuters sources noted that a handful of policymakers were initially in favour of a 50bps cut and some argued that the ECB is overestimating growth, which could be below 1% next year under Trump tariffs. The Reuters sources further added that policymakers have little appetite for rushing policy amid uncertainty. Later on, Bloomberg sources reported that the ECB is prepared for a quarter-point rate cut at the next two meetings as inflation stabilises at the 2% target and economic growth remains sluggish. BBG sources added a gradual approach to lowering borrowing costs is the most appropriate path forward provided the economy develops in line with current expectations. Elsewhere, Oil closed 0.59% lower while Gold was weak, ending Friday with a loss of 2.1%.
To mark my 3100th issue of TraderNoble Daily Commentary I am offering a special 2-Year rate of Euro 2750 for my Platinum Service which includes 1 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 360 points on Friday and is now ahead by 728 points for December after closing November with a gain of 3049 points having finished October with a gain of 2179 points. September saw a gain of 4402 points following a 301-point loss for August after closing July with a gain of 1918 points while June closed with a gain of 2074 points, having made 1843 points in May. The Platinum Service made 4010 points in 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 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 0.02% lower at a price of 6051.
The Dow Jones Industrial Average closed 86 points lower for a 0.2% loss at a price of 43,828.
The NASDAQ 100 closed 0.76% higher at a price of 21,780.
The Stoxx Europe 600 Index closed 0.53% lower.
This morning, the MSCI Asia Pacific closed 0.4% higher.
This morning, the Nikkei closed 0.03% lower at a price of 39,457.
Currencies
The Bloomberg Dollar Spot Index closed 0.14% lower.
The Euro closed 0.1% lower at $1.0512.
The British Pound closed 0.9% lower at 1.2634.
The Japanese Yen fell 1.1% closing at $153.65.
Bonds
Germany’s 10-year yield closed 11 basis points higher 2.24%.
Britain’s 10-year yield closed 10 basis points higher at 4.42%.
U.S.10 Year Treasury closed 12 basis points higher at 4.39%.
Commodities
West Texas Intermediate crude closed 0.56% lower at $70.59 a barrel.
Gold closed 2.2% lower at $2652 an ounce.
This morning on the Economic Front we have German, Euro-Zone and U.K. Composite PMI at 8.30 am, 9.00 am and 9.30 am respectively. This is followed by Euro-Zone Labour Cost Index at 10.00 am. Next, we have U.S. New York Empire State Manufacturing Index at 1.30 pm and Composite PMI at 2.45 pm. Finally, we have a speech from ECB Member Schnabel at 4.30 pm.
Cash S&P 500
The S&P is torn between the incredibly strong NDX on one hand and the aggressive weakness that we have seen in the Dow over the past seven trading sessions. Internals remain absolutely horrific for December as shown by the McClellan Oscillator which closed at -157 on Friday. Equal Weight has been hammered this month, yet the S&P is basically unchanged for December. This makes trading tricky and does have consequences. While there is no damage on both the S&P and NDX signal charts are moving to oversold based on the sell-off in both the Russell 2000 and NDX. The $NYMO hit -43 INTRADAY Friday before closing at -59. The $NYSI is almost Max oversold yet has had no effect on the S&P or the NDX. The message from a signal front is that the market is building firepower for a Santa Rally and whatever low we get post the FOMC on Wednesday is likely to be the low for the month before we rally into early January. This may change if the Fed do not cut rates as expected given the horrific PPI print last Thursday. There is no ’’Fear’’ in the market which is what I like to see to set up a tradeable bottom. Given how overbought the NDX is trading I have no interest in chasing tech stocks higher but I will look to buy the S&P on any further weakness given how oversold the Dow is trading. The S&P has support below from 6000/6020. I will now raise my buy level to this area with a higher 5985 ‘’Closing Stop’’. Ahead of the Fed on Wednesday I no longer want to be short. If this view changes I will be back with a new update form my Platinum Members. ‘’Closing Stop’’.
EUR/USD
No Change: The boring sideways action in the Euro shows no sign of ending. I am still long the Euro at an average rate of 1.0665. Given how oversold the Euro is I will add to this position on any further move lower to 1.0440 with no stop for now. I will leave my T/P level unchanged at 1.0690. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
I am still flat the Dollar as the market again traded in a narrow range on Wednesday. The Dollar has resistance from 107.20/108.00 where I will be a small seller with the same 108.55 tight ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 106.75.
Cash DAX
The DAX has got to be one of the most frustrating markets that I have found in try to get an edge in for the past three months. One weak economic report after another does not lead to any sell-off in this market. On Friday the DAX traded the whole of my sell range for a 20460 average short position before selling off to my 20430 T/P level and I am now flat. This morning the DAX is trading lower at 20385. We have resistance from 20500/20600 where I will be a small seller with a higher 20705 ‘’Closing Stop’’. If triggered, I will have a T/P level at 20440.
Cash FTSE
I am still flat the FTSE as the market ignored Friday’s weak GDP number by trading sideways for the whole session. We have support from 8180/8250 where I will again be a buyer with an 8095 wider ‘’Closing Stop’’. The FTSE has pretty much ignored a lot of the U.S. Equity Movement so far in 2024. We have a gap below at 8150 which if tagged will see me be a large buyer. If I am taken long, I will have a T/P level at 8305.
Dow Rolling Contract
The Dow has now closed lower for seven consecutive trading sessions which is highly unusual when you see that the S&P has been basically unchanged for the same period. On Thursday the Dow rallied to my 44190 T/P level on my latest 44040 long position. Subsequently, I emailed my Platinum Members to buy the Dow again which I did at a price of 43960. I am still long and I will add to this position on any further move lower to 43710. Given how oversold the Dow is trading plus expectation ahead of the Fed Meeting and Powell press conference on Wednesday I would expect the Dow to be bid ahead of the meeting. I will have a T/P level at 44060 on this position and if any of the above levels are hit I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
I used Thursday’s sell-off in the NDX to exit my 20630 latest short position to exit this trade at my revised 20600 T/P level as emailed to my Platinum Members. Subsequently, I went short again at 20800 before the market traded lower to my 20680 T/P level and I am now flat. The NDX has strong resistance from 21870/22070 where I will again be a seller with a higher 22205 ‘’ Closing Stop’’. If I am taken short, I will have a T/P level at 21750. I still do not want to be long the NDX at this time.
March BUND
Bund Yields are trading 12 basis points higher since Thursday. This is a big move and I no surprise given the fact that Inflation is stubborn to move lower. The Bund has short-term support from 133.50/134.30 where I will be a small buyer with a132.75 tight ‘’Closing Stop’’.
Gold Rolling Contract
I am still flat Gold as thankfully we did not chase the market higher give its $70 fall since Thursday. Gold has support from 2610/2626. I will lower my buy level to this range with a lower 2594 tight ‘’Closing Stop’’. If triggered, I will have a T/P level at 2640.
Silver Rolling Contract
Silver followed Gold lower, trading the whole of my buy range for a now 30.95 average long position. I will leave my 29.45 ‘’Closing Stop’’ unchanged while lowering my T/P level to 31.60. If any of the above levels are hit, I will be back with a new update for my Platinum Members
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