U.S. Indices (SPX +0.4%, NDX +0.7%, RUT -0.2%, DJIA +0.1%) had an upward bias on Friday with sectors following. Communications was the clear outperformer and buoyed by a stellar Netflix (NFLX) (+11.1%) report. Energy, Consumer Staples, and Financials were the only ones in the red with the former weighed on by the weakness in the crude complex which has seen heavy selling all week. The Middle East was sparse on Friday after Hamas leader Sinwar was killed on Thursday, although US President Biden, when heading onto the Air Force, stated he has an understanding of how and when Israel is going to respond to the missile attacks by Iran but declined to give any details. As such, Israel’s retaliation against Iran still looms, but we are still no clearer on the timing. In FX, the Dollar trimmed its weekly gains as it saw a third consecutive week of strength with the Japanese Yen outperforming following firmer-than-expected Japanese CPI metrics on Friday morning. T-Notes bull flattened with the curve supported by soft housing data, more specifically building permits. On the Fed footing, Bostic (2024 voter) said the neutral policy rate is in the 3-3.5% range (on 23rd Sept. he said he feels neutral is in the 3-3.25% range, and Fed median dot plot for neutral rate suggested 2.9%), and he expects to get 2% inflation near the end of 2025. Building Permits fell 2.9% to 1.428 million in September, beneath the 1.46 million forecast and down from the prior 1.47 million. Within the permits data, single-family authorisations rose 0.3% to 970k from 967k, while multi-unit buildings were at 398k. Housing starts fell 0.5% M/M to 1.354 million, albeit above the 1.35 million forecast while the prior was revised up to 1.361 million from 1.356 million. Single family starts rose 2.7% to 1.027 million from 1.00 million, while multi units were at 317k. Analysts at Pantheon Macroeconomics note that this report was not meaningfully affected by Hurricane Helen. Pantheon adds that the recent single family construction upturn likely reflects the boost from the drop in long-term interest rates since the Spring, but for October the impact of the Hurricanes will likely lead to a sharp fall in starts. The desk expects renewed falls in long-term rates relatively soon but suggests the impact on the housing market will be limited as the average interest rate on stock of existing mortgages is just 3.9%, well below current market rates. Meanwhile, the Fed’s Bostic (2024 voter) said the Fed needed to move the policy rate because risks had shifted, and that the neutral policy rate is in the 3-3.5% range. Note, on 23rd September he said he feels neutral is in the 3-3.25% range (median dot plot for neutral rate suggested 2.9%). Thereafter, Bostic noted he is not in a rush to get too neutral and will be patient. On inflation, the Atlanta Fed President expects to get to 2% inflation near the end of 2025, and that should be the timetable for getting rates to neutral. Regarding the 50bps rate cut, Bostic said an outsized first [rate cut] was appropriate and was very comfortable with that, as the Fed had kept rates high for a long time, so a big first step was appropriate. Furthermore, Bostic noted that still a lot of uncertainty on prices and consumer spending, and the job on inflation is not done and need to stay vigilant. As expected, last Thursday, the ECB opted to cut the Deposit Rate by 25bps. Despite the bank seemingly positioning itself for an unchanged rate in the wake of the September meeting, soft outturns for inflation and survey data forced the hand of the Bank into easing policy. Accordingly, the ECB reaffirmed its data-dependent credentials and reiterated that it will keep policy rates sufficiently restrictive for as long as necessary. The only minor tweak in the policy statement was that the Bank now sees inflation at 2% in the course of 2025 vs. previous guidance of H2 2025. At the follow-up press conference, Lagarde noted that there will be a lot more data available before the December 12th meeting, which suggests that there is not a preset expectation on the GC over what happens at the final meeting of the year. Furthermore, Lagarde stated that she has not opened the door to another rate reduction in December. That being said, she noted that there is no question that policy is currently restrictive. With regards to Thursday’s decision, the President noted that it was a unanimous one on the GC. Overall, the ECB remains in the midst of its rate-cutting cycle, however, is remaining as flexible in its guidance as it can when it comes to the specific policy path it will undertake. Market pricing fully prices another 25bps rate cut in December with a further 115bps of easing seen in 2025. In wake of the meeting, Reuters ECB sources suggested a December cut is to be expected, unless economic data shows a marked turnaround. The sources specified that policymakers expect a further move at the December 12th meeting barring a major rise in data such as core and services inflation, or in indicators of economic growth. They also added that US elections and threat of fresh trade tariffs if Trump is elected were seen as a major source of uncertainty. In addition, Bloomberg sources largely echoed this, saying ECB officials see a December cut very likely with the 2% goal nearer. Elsewhere, Oil closed Friday with a loss of 2.05% while Gold surged to a new all-time high with a gain of 2.1%.
To mark my 3075th 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 515 points on Friday and is now ahead by 1300 points for October after ending September with 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 0.40% higher at a price of 5864.
The Dow Jones Industrial Average closed 36 points higher for a 0.09% gain at a price of 43,275.
The NASDAQ 100 closed 0.66% higher at a price of 20,324.
The Stoxx Europe 600 Index closed 0.21% higher.
Last Friday, the MSCI Asia Pacific closed 0.6% lower.
Last Friday, the Nikkei closed 0.18% higher at a price of 38,981.
Currencies
The Bloomberg Dollar Spot Index closed 0.35% lower.
The Euro closed 0.1% higher at $1.0866.
The British Pound closed 0.5% higher at 1.3051.
The Japanese Yen rose 0.2% closing at $149.50.
Bonds
Germany’s 10-year yield closed 1 basis points higher 2.20%.
Britain’s 10-year yield closed 3 basis points lower at 4.05%.
U.S.10 Year Treasury closed 6 basis points higher at 4.08%.
Commodities
West Texas Intermediate crude closed 2.05% lower at $69.22 a barrel.
Gold closed 2.1% higher at $2721 an ounce.
This morning on the Economic Front we have German PPI at 7.00 am. We have no other data of note due today on either side of the Atlantic. Meanwhile, Fed Members Kashkari and Schmid are speaking at 4.00 pm and 8.00 pm respectively.
Cash S&P 500
On Friday the S&P made a new closing high at 5864 but not a new intraday high, which occurred last Thursday, October 17, at 5878. With the S&P closing up 23 Handles, Friday’s NYSE advance/decline ratio closed at a pedestrian 1.18:1. As for NYSE volume, 58.1% was up volume and 41.9% was down volume. There has been no big breakout move, either to the upside or downside. If the S&P completed a meaningful high at 5878 the Index will start a persistent decline this week with expanding downside breadth and down volume relative to up volume. Should that occur, I will be looking for a print below 5767 to confirm a market turn to the downside that has much greater bearish potential. In contrast, further new highs on expanding upside breadth and volume will indicate that a move to new highs above 5900 has commenced. Last week’s buy the dip off the 5804 low print proves yet again that the one-way buying machine shows no sign of ending anytime soon. Prices have pushed further and further into its upper Daily and Weekly Bollinger Bands on more negative divergences. I will continue to patiently sell rallies on rips and be quick to take any gains that arise. This strategy worked well again last week. On Thursday the S&P traded the whole of my sell range for a 5867 average short position before selling off to my 5849 T/P level. Subsequently, I emailed my Platinum Members to sell the S&P again at a price of 5868 before selling off to my 5848 T/P level. Late Friday the S&P rallied to my third sell level at 5869 before having a small sell-off to my revised 5859 T/P level and I am now flat. Today, I will again be a seller from 5876/5894 with a 5911 ‘’Closing Stop’’. If triggered, I will have a T/P level at 5856. With just over two weeks to go to the Presidential Election I just cannot see the market not have a meaningful sell-off over the coming weeks.
EUR/USD
After closing lower for 14 of the previous 15 trading sessions the Euro finally eked out a small rally on Friday. The Euro is severely oversold and due a bounce. I am still long at 1.0865 from last week. I will continue to look to add to this position on any further move lower to 1.0795 while leaving my 1.0745 ‘’Closing Stop’’ unchanged. I will now lower my T/P level to 1.0930. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
My Dollar plan worked well as the market rose to my 103.85 sell level before trading lower on Friday to my revised 103.50 T/P level and I am now flat. Today, I will again be a seller from 103.80/104.60 with the same 105.25 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 103.40.
Cash DAX
Germany in Recession – no problem as the DAX closed at yet another new all-time high on Friday. I for one do not believe that inflation is beaten despite numerous analysts saying 2% sustained inflation is only a matter of time. I firmly believe that the Fed’s recent 50 basis point rate cut was wrong as the Bond Market is telling you this with the yield on 10-Year T-Notes rising over 35 basis points since the Fed’s announcement. Thankfully we have only attempted to sell the DAX on a few occasions over the past six weeks as just like the S&P above buyers are buying every dip. This morning the DAX is trading at a price of 19670. We have short-term resistance from 19810/19910 where I will again be a small seller with a 20005 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 19720.
Cash FTSE
The FTSE never came close to Thursday’s buy range by rallying to close near the 8400 round number resistance and pivot point. I have no interest in chasing the FTSE higher from here. We have short-term resistance from 8440/8520 where I will be a small seller with a wider 8605 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 8380.
Dow Rolling Contract
The Dow hit my sell level at 43100. I am still short. I will only add to this trade on any further move higher to 43400 while leaving my wider 43605 ‘’Closing Stop’’ unchanged. I will now raise my T/P level to 42960. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
I am still flat the NDX. The NDX traded in a narrow range over the past few trading sessions despite both the S&P and Dow making and closing at new all-time highs. The NDX has resistance at 20440 which is the high from last Monday. Today, I will be a small seller from 20430/20590 with a tight 20705 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 20315. I no longer want to be long the NDX at this time. If this view changes I will be back with a new update for my Platinum Members.
December BUND
No Change: The Bund never came close to Thursday’s buy range, following the latest 25 basis point rate cut by the ECB. I have no interest in chasing Bunds when the yield is so low at 2.20% as there in no value in my opinion in Bunds at these levels. The Bund has support from 132.40/133.10. where I will continue to be a buyer with the same 131.75 ‘’Closing Stop’’.
Gold Rolling Contract
Gold has surged since Thursday closing at a new record high above $2710 and I am still flat. I will now raise my buy level to 2650/2676 with a higher 2639 tight ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2625.
Silver Rolling Contract
Wow! Silver is trading 6% higher since I last marked prices. This should come as no surprise as I am extremely bullish of Silver as I eventually look to see the market rally back to the May 2011 high at $51. Silver has support from 32.00/33.20. I will now raise my buy level to this area with a now higher 30.55 ”Closing Stop’’. If triggered, I will have a T/P level at 34.30.
Recent Comments