Equity Markets closed higher on Friday supported by optimism on US/Sino relations after a phone call with US President-elect Trump and China President Xi, who both expressed desire for a positive start to their relationship when President Trump gets inaugurated on Monday. T-notes meanwhile flattened in likely profit taking after the dovish inflation data and dovish commentary from Waller this week ahead of Trump’s Inauguration where focus will lie on executive orders around tariffs/spending. The long end of the curve was flat by settlement but the front-end saw notable pressure. In FX, the Dollar outperformed, supported by the move in yields and strong IP data with eyes turning to the inauguration, while the Japanese Yen underperformed, although more reports are suggesting a rate hike is to be expected next week from the Bank of Japan. Crude prices settled in the red but finished the week in the green after Russian energy sanctions supported the weekly rally. Gold and Silver prices were sold amid the Dollar strength, while Crypto prices were buoyed with reports suggesting Trump is to plan an Executive Order for Crypto and make it a national priority. Elsewhere, Fed’s Hammack echoed her hawkish remarks and concerns around inflation, while Housing Starts and Building Permits beat, but the surge in starts was due to favourable seasonals. Industrial Production rose 0.9% in December, above the expected 0.3% and high end of analysts forecast range (0.6%), with the prior decline of 0.1% revised up to +0.2%. Manufacturing output grew by 0.6% (exp. 0.2%) from the upwardly revised prior of 0.4% (was 0.2%). Capacity Utilisation jumped to 77.6% above the expected 77.0% (prev. 76.8%, rev. 77.0%) and the highest analyst estimate of 77.4%. Within the report, the output of consumer goods increased 0.5% due to a rise in non-durables production outweighing a broad-based decline in Durables. A 1.9% gain in the energy index supported the 0.7% move higher in nondurable consumer goods, while a strong gain in the production of civilian index helped the index for businesses equipment rise by 1.4%. The Index for materials rose 1.2%, with all components gaining-ex consumer parts, which dropped 1.4%. Oxford Economics points out that when stripping out certain factors (post-strike Boeing recovery and the rebound in utilities and mining output), underlying manufacturing output is still recovering only slowly. The firm expects modest growth in Industrial Production in 2025, anticipating lower interest rates to be a modest tailwind, and the potential for more aggressive use of tariffs and uncertainty around the future of tax credits as a downside risk. Note, in wake of the data, the Atlanta Fed GDP Now tracker for Q4 24 was unchanged at 3.0%. Housing Starts surged 15.8% in December to 1.499 million from 1.294 million, well above the 1.320 million forecast. However, Oxford Economics highlights that this surge is misleading as it was impacted by favourable seasonable factors. The desk notes this improvement does not signal to them that construction is weathering the rise in mortgage rates, and that the balance of risks to the outlook for residential investment this year remain weighted to the downside. Meanwhile, Building Permits fell 0.7% to 1.483 million from 1.493 million, but above the 1.460 million forecast. OxEco also points out that housing starts “are running slightly ahead of permits, which isn’t overly favourable for residential construction over the next couple of months”. Although a strong Housing Starts print, it appears to be driven by seasonals while looking ahead concerns remain due to elevated mortgage rates and potential price increases for builders if building materials are impacted by US President-elect Trump tariffs, who is set to be inaugurated on Monday. In an interview with WSJ, Fed Member Hammack said the US still has an inflation problem, and also the Fed still has a rate-of-change problem that they need to address. Hammack further added that they made amazing progress on it but need to continue to finish the job. The dissenter from December said the central bank can be “very patient” and thinks rates today are only modestly restrictive. Reflecting on last month’s rate cut she added, “for me, that December conversation was really about, did you need to do it now, or could you be more patient and wait and see.” On that meeting, Hammack added just because something’s priced into the market, to her, is an insufficient reason to do it. Elsewhere, Oil closed 0.84% lower at 78.02 while Gold rose, closing 0.2%.
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 made 244 points on Friday and is now ahead by 1320 points for January after closing December with a gain of 1997 points 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 1% higher at a price of 5996.
The Dow Jones Industrial Average closed 334 points higher for a 0.78% gain at a price of 43,487.
The NASDAQ 100 closed 1.66% higher at a price of 21,441.
The Stoxx Europe 600 Index closed 0.69% higher.
Last Friday, the MSCI Asia Pacific closed 0.5% higher.
Last Friday, the Nikkei closed 0.31% lower at a price of 38,451.
Currencies
The Bloomberg Dollar Spot Index closed 0.42% higher.
The Euro closed 0.2% lower at $1.0270.
The British Pound closed 0.5% lower at 1.2163.
The Japanese Yen rose 0.2% closing at $156.29.
Bonds
Germany’s 10-year yield closed 1 basis points lower 2.53%.
Britain’s 10-year yield closed 8 basis points lower at 4.66%.
U.S.10 Year Treasury closed 3 basis points lower at 4.63%.
Commodities
West Texas Intermediate crude closed 0.84% lower at $78.02 a barrel.
Gold closed 0.2% higher at $2702 an ounce.
With U.S. Markets closed for Martin Luther King Holiday and the Trump Inauguration, the only data of note to be released this morning is German PPI at 7.00 am and Euro-Zone Construction Output at 10.00 am.
Cash S&P 500
If there are global concerns about an incoming Trump Presidency in regard to Tariffs or otherwise you cannot see it in the charts. We are witnessing New all-time highs all over the place. Thankfully we had no sell level in the S&P as the market has rallied over 230 Handles off Monday’s 5770 low print. However, the S&P has left a massive Gap to Thursday’s Chicago 5937 close to Friday’s 5978 low print. As we know all gaps eventually get filled. Although the S&P is closed today for MLK and the Trump Inauguration I will start to lean the sell-side of the ledger given how extended the market is short-term. Friday’s move above 6000 was met by a number of negative divergences. The S&P has strong resistance from 6022/6042 where I will be a seller with a higher 6055 ‘’Closing Stop’’. I will be a buyer of the S&P on any initial close of the 5937 gap where mu buy level will be from 5932/5947 with a 5917 tight ‘’Closing Stop’’.
EUR/USD
My Euro plan worked well as the Euro traded lower to mu 1.0260 buy level late Thursday before rallying on Friday to my 1.0330 T/P level and I am now flat. Given the sustained rally in American Indexes over the past few trading sessions, I would have expected the Euro to be higher and the Dollar weaker. The Euro has support below from 1.0190/1.0270 where I will again be a buyer with a higher 1.0215 ‘’Closing Stop’’. I still do not want to be short the Euro at this time
Dollar Index
The Dollar came close to Thursday’s sell range but missed and I am still flat. I will now raise my sell level to 109.70/110.40 with a higher 111.05 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 109.25. I still do not want to be short the Dollar at this time.
Russell 2000
I have decided to stop trading the DAX for now. My edge in this market is gone as I am lost as to why this market keeps making new closing highs despite the political and economic backdrop. I know a market that does not sell-off on bad news have to be respected but I just cannot be a buyer of this market at these levels. On Thursday, the DAX traded the whole of my sell range for a 20585 average short position before stopping me out of this trade at 20705.
I have now replaced the DAX temporarily with the Small Cap Russell 2000. This Index of small stocks has been particularly weak after falling 11% in December. The ticker code is $IWM and the Index closed at a price of 2254 on Friday after making a new all-time high in late November at a price of 2450. Given the Index is trading with a 2000 Handle, in points terms it will be less volatile than the DAX. This will be an interesting Index to trade as over 40% of the companies in the Russell 2000 are unprofitable. If the U.S. economy starts to weaken, bankruptcies will surge which will in turn hit Small Companies hard. The Russell has support at its 200 Day Moving Average (2140) and resistance at its 50-Day MA (2300). This range should contain the Index until the market either breaks higher or lower over the coming days. Today, I will be a buyer of the Russell from 2150/2210 with a 2085 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2270.
Cash FTSE
The FTSE has surged over 250 points since Thursday’s Daily Commentary was posted. The FTSE is now ridiculously extended above the Daily Bollinger Band as the rise was driven by a perfect combination of lower inflation and lower Gilt Yields along with slower growth which is now setting the stage for more aggressive rate cuts from the Bank of England as ‘’Free Money Rules’’. The FTSE closed at a price of 8505 on Friday which is a new all-time high. We have resistance from 8560/8630 where I will be a small seller with an 8705 tight ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 8510.
Dow Rolling Contract
Comments from Bank of America analysts that American Stock Markets have a new ‘’PUT’’ underneath them and will never go down and that the Trump Administration will carry on the same easy Financial Conditions as the previous regime will see ‘’traders’’ continue to buy every dip. The only problem is that we are the highest valuations in history. Friday’s aggressive rally saw the market hit key resistance with a strong negative divergence. This move higher saw the whole of Thursday’s sell range triggered for a now 43550 average short position which is just above the 50 Day Moving Average (43537). The Dow is having a small sell-off on the re-open on Sunday evening, trading at a price of 43450 as I go to post. I have now exited this short position here and I am now flat. The Dow has further resistance from 43600/43850 and I will be a seller on any rally to this range with 44005 ”Closing Stop. If I am taken short, I will have a T/P level at 43420.
Cash NASDAQ 100
Initially my NDX plan worked well as the market rose to my 21340-sell level before selling off to my revised 21216 T/P level as emailed to my Platinum Members. The surge in the NDX saw all the main Moving Averages regained on Friday. This move higher saw my second sell level at 21470 triggered. I have now exited this short position here at 21410 and I am now flat. The NDX has further resistance from 21550/21700 where I will again be a seller with a higher 21855 ”Closing Stop”. If I am taken short, I will have a T/P level at 21430.
March BUND
No Change: Frustrating! I got stopped of the Bund at 130.65 on Tuesday ahead of Wednesday’s CPI print that led to a 120-point rally in which the market rallied without me being involved. The Bund closed at 131.90 on Friday night. The Bund is still oversold despite Wednesday’s rally. We have short-term support below from 130.40/131.20. I will now raise my buy level to this area with a higher 129.65 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 131.90
Gold Rolling Contract
Gold just missed Thursday’s buy range before trading higher on Friday and I am still flat. As I am back long Silver, I have no interest in chasing the price of Gold higher. Gold has support from 2635/2653. I will move my buy level to this area with a higher 2619 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2666
Silver Rolling Contract
While Gold was strong, Silver reversed some of Thursday’s gains by trading lower to my 30.40 buy level. I am still long and I will add to this position on any further move lower to 29.60 while leaving my 28.95 ‘’Closing Stop’’ unchanged. I will now lower my T/P level on this position to 31.00. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
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