U.S. Indexes ended the final trading session of the week lower, with Communication Services, Consumer Discretionary, and Technology the laggards ahead of the start of Mag-7 earnings next week. Energy was the only sector in the green and buoyed by the gains in the crude complex amid continued escalation in US/Iran relations. As such, participants await any weekend updates from the Middle East for any further escalatory actions or path to peace, despite how unlikely the latter seems. In FX, the Dollar was mixed against G10 peers, as the Pound and the Australian Dollar lagged, with the Swiss Franc and Canadian Dollar sitting atop the pile. Precious metals also firmed, while T-notes flattened as front-end yields rose on rising oil and hot import price data ahead of the weekend. On the data front, import and export prices sent mixed signals as export prices declined by more than expected, while import prices rose 0.3% M/M, well above the expected 0.7% decline. Elsewhere, the University of Michigan Consumer Sentiment Index exceeded expectations, while one-year inflation expectations fell to 4.2% from 4.6%, below the 4.3% consensus. However, five-year inflation expectations were unchanged at 3.3%, disappointing expectations for a decline to 3.1%. However, little move was seen to data. Elsewhere, Oil closed higher by a further 1% while Gold was flat.
To mark my 3400th 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 45 points on Friday and is now ahead by 4911 points for July after ending June with a new record of 10527 points after ending May with a loss of 1104 points, having ended April with a gain of 1730 points, after ending March with a massive gain of 9002 points, having closed February with a strong gain of 5482 points after ending January with a gain of 4757 points, having closed December with a gain of 2599 points, after ending the month of November with a gain of 4542 points, after ending October with a nice gain of 5110 points after closing September with a gain of 3774 points while ending August with a gain of 3362 points after closing July with a gain of 3753 points after closing June with a gain of 3530 points, having closed May with a gain of 3606 points, after closing April with a gain of 7685 points after closing March with a gain of 2254 points while closing February with a gain of 4180 points. January ended with a gain of 2768 points while 1997 points were gained in December. October ended with a gain of 2179 points, after closing September with a gain of 4402 points, following a loss of 301 points in August. July gained 1908 points while June saw a gain of 2074 points. The Platinum Service made a previous record 9619 points in October 2022. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 2300 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 1.01% lower at a price of 7457.
The Dow Jones Industrial Average closed 406 points lower for a 0.77% loss at a price of 52,146.
The NASDAQ 100 closed 1.49% lower at a price of 28,592.
The Stoxx Europe 600 Index closed 0.34% lower.
This Morning, the MSCI Asia Pacific closed 0.2% higher.
This Morning, the Nikkei closed 1.49% higher at 68,751.
Currencies
The Bloomberg Dollar Spot Index closed 0.01% lower.
The Euro closed 0.03% lower at $1.1438.
The British Pound closed 0.17% lower at $1.3453.
The Japanese Yen fell 0.08% closing at $162.49.
Bonds
U.K.’s 10-Year Gilt closed 4 basis points higher at 4.97%.
Germany’s 10-Year Bund Yield closed 2 basis points higher at 3.14%
U.S.10 Year Treasury closed 1 basis points higher at 4.56%.
Commodities
West Texas Intermediate crude closed 4.48% higher at $82.49 a barrel.
Gold closed 1.04% higher at $4017.10 an ounce.
Today on the Economic front we have U.K. GDP and Industrial/Manufacturing Production at 7.00 am. Next, we have Euro-Zone Trade Balance at 10.00 am followed by U.S. Retail Sales, Philly Fed Manufacturing Index and Weekly Jobless Claims at 1.30 pm. Finally, we have speeches from Fed Members Logan, Schmid and Jefferson at 5.30 pm, 6.25 pm and 7.00 pm respectively.
Cash S&P 500
It is impossible to overstate the degree of risk in financial markets around the world today. The all-time overpricing of stocks, the all-time overpricing of real estate, the record amount of debt, the record amount of leverage, the record amount of debt and leverage committed to stocks, the record amount of leverage committed to real estate, the record amount of debt committed to cars, the unprecedented precariousness of banks, pension funds and insurance companies while the historic complacency toward risky debt and the highest ever readings of financial optimism are conditions that investors have never seen before and will not see again for centuries. Every investment is at risk of wipeout: bonds, cryptocurrencies, diamonds, commercial and residential real estate, stocks, artworks, you name it. The first four on that list have already topped out and started to move lower. The rest are on brink of rollover and collapse. The degree of danger facing holders of investments is unparalleled. Participants in the markets cannot perceive the risk they have assumed because their optimism is what puts markets in this position in the first place. When optimism melts, so will the markets. The only big question is the ‘’WHEN AND THE WHERE’’. The S&P 500 fell about 1.5% last week, while the NASDAQ 100 dropped around 4%. The SMH, which we have been watching closely, fell about 9%, and XLK dropped 5.5%. Technology and semiconductors have weighed on the overall market, and for the most part, that is not surprising. Liquidity flows have changed materially, and the expectation is that these flows will continue to worsen over the next couple of weeks before beginning to improve around the beginning of September. The flows I am referring to are Treasury bill settlements. This past week alone, bills saw about $65 billion in net new settlements. This week brings another $56 billion on Tuesday (7/21) and $37 billion on Thursday (7/23). These numbers should continue to rise for another week or so into the last week of July, then begin to diminish as we go through August, and eventually flip back into some form of paydowns from early to mid-September, which would add some liquidity back to the market. The draining of liquidity through these settlements seems to have had a pretty powerful impact on markets overall. Using the T-bill settlement calendar I built and maintain, which runs from the beginning of November, there have been 42 T-bill settlement dates. XLK has risen on only 19 of the 42, a 45% win rate, with an average decline of 41 basis points on a settlement date. That compares with 134 non-settlement dates, during which XLK has risen 66% of the time, with an average gain of 26 basis points. The same thing shows up in the S&P 500. On settlement dates, the Index has risen 45% of the time, with an average decline of 22 basis points, whereas on non-settlement dates it has risen 60% of the time, with an average gain of about 14 basis points. The market is not going to fall every day just because it is a settlement date; that is simply what the statistics say. They also tell us that when the market does rise on a settlement date, it gains about 50 basis points, and when it falls, it drops about 83 basis points. On non-settlement dates, the up days average 65 basis points, and the down days average 60 basis points. So even when a settlement date goes well, we would expect the market to rise less than normal, and when it goes down, to fall more. The reason I have been following this goes back to the New York Fed’s reverse repo facility. When that facility rose dramatically, it was, in essence, excess liquidity being drained from the marketplace, pushing reserves held at the Fed lower. If this continues to play out the way it has statistically for almost nine months, the period between now and the beginning of September, maybe even the first couple of weeks of September, will probably be a fairly difficult stretch for markets. We should get a bit of a reprieve in the middle of September, and then probably head back into a heavy T-bill issuance period into year-end, similar to what we saw at the end of last year. The S&P 500 fell about 1% on Friday as the technology sector declined, led by a roughly 2% drop in semiconductor stocks. Semiconductor stocks are approaching their lower Bollinger Band, but their RSI is only around 41 and continues to trend lower, suggesting they are not yet oversold. As a result, the group could continue to decline this week. After the S&P traded the whole of Thursday’s price action for an 7480 average long position we had a small 15-Handle rally. I did not like Friday’s price action and this small rebound saw the market hit my revised 7486 T/P level and I am now flat. The S&P sold off in the last hour of trading and that sell-off continued overnight, trading at a price of 7450 as I go to post. The S&P has short-term support from 7380/7405 where I will again be a buyer with a lower 7359 ‘Closing Stop’. I will now lower my sell level to 7495/7520 with a lower 7561 ‘Closing Stop’. If I am taken long, I will have a T/P level at 7432. If I am taken short, I will have a T/P level at 7470.
EUR/USD
I am still flat. Today, I will continue to be a buyer on any dip lower to 1.1340/1.1410 with the same 1.1275 ‘Closing Stop’. If I am taken long, I will have a T/P level at 1.1475.
Dollar Index
I am still long the Dollar at a price of 100.50 with the same 101.00 T/P level. I will add to this position on any further move lower to 99.80 with the same 98.25 ‘Closing Stop’. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Russell 2000
The Russell sold off to my 2960 T/P level on my latest 3000 short position and I am now flat. Today, I will again be a seller on any further rally to 2990/3060 with the same 3105 ‘Closing Stop’. If I am taken short, I will have a T/P level at 2950.
FTSE 100
No Change: I am still flat. I will not chase the FTSE Market higher preferring to wait for a sell-off before initiating a new long position. Today, I will continue to be a buyer from 10300/10380 with the same 10215 ‘Closing Stop’. If I am taken long, I will have a T/P level at 10460. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
I am still flat. Today, I will lower my sell level to 52450/52750 with a lower 53005 ‘Closing Stop’. If I am taken short, I will have a T/P level at 52180. I still do not want to be long the Dow at this time.
Cash NASDAQ 100
Wrong! The NDX traded the whole of Thursday’s buy range for a 29050 average long position before stopping me out of this trade on Friday at a price of 28695 and I am now flat. This morning, the NDX is trading lower at a price of 28610 having hit an overnight high at 28785. Both the 20-Day and 50-Day Moving Averages (29400) have turned down with every chance the market will test its 200 Day MA – which comes in at a price of 26650 – over the coming days. The 14-Day RSI closed at 41 on Friday meaning there is every chance of a more sustained sell-off ahead. The NDX has short-term resistance from 28750/28950 where I will be a small seller with a 29205 ‘Closing Stop’. I no longer want to be a buyer of the NDX at this time until we get a more sustained move lower. If this view changes, I will be back with a new update for my Platinum Members.
December BUND
No Change: I am still long the Bund from last week at an average price of 125.55. I will look to exit this position for a small loss at 125.30 and reassess if triggered. I will leave my 124.75 ‘Closing Stop’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
My Gold plan worked well as the market sold off to my 3980-buy level before rallying to my revised 4010 T/P level and I am now flat. Gold has support below from 3860/3940 where I will again be a buyer with a lower 3795 ‘Closing Stop’. If I am taken long, I will have a T/P level at 4000.
Silver Rolling Contract
I am still long Silver at a price of 57.50 with a lower 58.30 T/P level. I will add to this position at 54.50 while leaving my 52.95 ‘Closing Stop’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
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