U.S. Equity Markets opened on their highs before spending the rest of Friday’s session reversing the June Expiration related gains. Despite closing lower, the VIX was crushed closing over 6% lower at a price of 13.54. Fears are mounting among investors that a global economic recession is inevitable despite the hawkish tone struck by several central bank officials around the globe this past week. The market sentiment reflects emerging doubts regarding policymakers’ ability to prevent a recession in the United States and elsewhere, as yields on U.S. and German 10-year bonds are trading below the rates on two-year securities. The inversion of the Treasury yield curve has slightly deepened, reaching levels last seen almost three months ago during the regional banking crisis. Recent data on retail sales and consumer prices suggest that consumer spending at restaurants is potentially reaching a plateau after the initial surge following the reopening from the pandemic. Inflation-adjusted sales Y/Y fell into negative territory – or a contraction in spending – for the first time since early 2021. U.S. Justice Department prosecutors, as well as officials from other government agencies such as the Securities and Exchange Commission (“SEC”), have reportedly been questioning Goldman Sachs regarding its involvement in the fundraising efforts of Silicon Valley Bank (SVB) as the California-based bank faced financial distress. The scrutiny by the Justice Department’s fraud section and the U.S. Attorney’s Office is part of a wider investigation into the events leading up to SVB’s failure. Micron Technology (MU) has announced its plan to invest approximately $600 million to expand production in China, despite being recently blacklisted by Beijing. The investment will involve a partnership with Taiwan’s Powertech Technology for the use of packaging equipment. Additionally, Micron will construct a new facility in the city of Xi’an for packaging and testing purposes. This move highlights Micron’s commitment to expanding its operations in China, despite the geopolitical challenges it faces. European Markets closed higher. Euro-Zone consumer inflation in May slowed significantly, according to Eurostat, with no change in consumer prices monthly and a year-on-year increase of 6.1%, down from 7.0% in April. Energy prices continue to fall providing downward relief to pricing pressures while food and other related goods became the main driver. The European Central Bank just increased rates to a 22-year high of 3.50% last week and expressed further intent of raising rates next month. Bundesbank President Joachim Nagel, along with other hawkish officials, has cautioned that the European Central Bank’s (“ECB”) ongoing campaign of interest rate hikes may need to extend beyond the summer and into the Autumn. These statements follow the ECB’s recent decision to raise rates by 25 basis points to 3.50%, with ECB President Christine Lagarde indicating that another rate increase in July is highly probable. In Asia, disappointing economic data from China in May has prompted several major banks, including JPMorgan Chase (JPM) and UBS (UBS) to revise down their growth forecasts for the country. The lower-than-expected retail sales growth and fixed asset investment figures have led to concerns about weak domestic demand, particularly in the housing market and private investment. In response to this softness, economists at JPMorgan have lowered their 2023 growth projection for China to 5.5% from 5.9%. The downward revisions in growth forecasts have increased expectations for further policy support from the Chinese government in the coming weeks. Elsewhere, Oil closed 1.16% higher while Gold was flat.
To mark my 2800th 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 flat on Friday and is still ahead by 795 points for June. 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 3164 points in February, 4687 points in January 2054 points in December, 4789 points in November and 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 0.37% lower at a price of 4409.
The Dow Jones Industrial Average closed 108 points lower for a 0.32% loss at a price of 34,299.
The NASDAQ 100 closed 0.67% lower at a price of 15,083.
The Stoxx Europe 600 Index closed 0.53% higher.
Yesterday, the MSCI Asia Pacific closed 0.4% higher.
Yesterday, the Nikkei closed 0.66% higher at a price of 33,706.
Currencies
The Bloomberg Dollar Spot Index closed 0.18% higher.
The Euro closed 0.1% lower at $1.0935.
The British Pound closed 0.2% higher at 1.2818.
The Japanese Yen fell 1.1% closing at $141.86.
Bonds
Germany’s 10-year yield closed 4 basis points lower at 2.46%.
Britain’s 10-year yield closed 2 basis points higher at 4.41%.
U.S.10 Year Treasury closed 6 basis points higher at 3.77%.
Commodities
West Texas Intermediate crude closed 1.16% higher at $71.44 a barrel.
Gold closed 0.1% higher at $1958.10 an ounce.
This morning on the Economic Front we have no data of note from either the U.K. or Euro-Zone. Even though it is Bank Holiday in America, the NAHB Housing Market Index will be released this afternoon at 3.00 pm.
Cash S&P 500
There is no doubt that the last few weeks have been frustrating since I changed tact from been a cautious bull. We have had a fantastic time from the Oct lows until the end of May. The sudden bullish certainty and victory lapping is annoying at this point especially ‘’Financial Houses’’ who were bearish at the lows and have turned bullish in the last two weeks. This move higher has been helped by Fund Managers who have been forced to chase long on top of retail traders piling in which has distorted everything and is causing a big imbalance in the markets. The NDX RSI hit 79 on Friday which is a screaming sell in my opinion. Janet Yellen has been careful to avoid a major liquidity drain so far in refilling the TGA account by mostly using the Reverse Repo Facility. However, we have seen the first dip in reserve balances last week which may just be a warning sign. Markets continue to laugh at the Fed. The claim that financial conditions have been tightening but the S&P and NDX RSIs says the opposite. I am sticking to the sell size as the signal charts are finally all aligning including the $SPBPX now at a 75 RSI and $NYSI which is max overbought. I have no idea whether a top is in, but the seasonal chart is looking for a move lower into the end of June before we enter July. I am still short the S&P at an average rate of 4400. I will continue to have no stop for now with a 4385 T/P level. If this changes I will be back with a new update for my Platinum Members.
EUR/USD
I am still flat as the Euro fell shy of Friday’s sell range by 50 points. Today, I will continue to be a seller from 1.1020/1.1100 with the same 1.1155 ‘’Closing Stop’’. The Euro has short term support from 1.0810/1.0880 where I will be a buyer with a 1.0745 wider ‘’Closing Stop’’.
June Dollar Index
No Change. The Dollar has short-term support from 101.00/101.60 where I will be a buyer with a 100.45 ‘’Closing Stop’’.
Cash DAX
The DAX made a new all-time high at 16443 on Friday before falling 100 points into the New York close. I am glad I have stayed flat the DAX as my edge for now is gone in this market. Given how expensive German Shares are I just cannot be a buyer at current levels. The DAX has short-term resistance from 16420/16520 where I will be a small buyer with a 16605 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 16350.
Cash FTSE
Despite a stronger Pound and higher Gilt Yields, the FTSE continues to trade in narrow ranges almost every day. I am still flat, reluctant to chase the market higher. Today, I will continue to be a buyer on any dip lower to 7490/7560 with the same 7445 ‘’Closing Stop’’.
Dow Rolling Contract
I am still flat. I will now lower my buy level to 33800/34050 with a lower 33595 ‘’Closing Stop’’. I still do not want to be short the Dow at this time.
Cash NASDAQ 100
No Change. I am still short at 15200 with same no stop. I will add to this position at 15350. I will have a T/P level on this position at 15050. If any of the above levels are hit, I will be back with anew update for my Platinum Members.
September BUND
No Change. I am still long at an average rate of 133.35 with the same 133.75 T/P level and 132.35 ‘’Closing Stop’’. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
Gold hit a low at 1945 before having a small $12 Dollar rally into the close. I am still flat as I continue to be a buyer on any dip lower to 1915/1930 with the same 1899 ‘’Closing Stop’’.
Silver Rolling Contract
Silver had a nice rally on Friday, closing higher by 1%, to sit at 24.20 as I go to press. I am still long from last week at a price of 23.93. I will continue to look to add to this position ion any move lower to 23.30 with the same no stop. Meanwhile, I will leave my 24.90 T/P level unchanged. If this changes I will be back with anew update for my Platinum Members.
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