The equity slide continued on Friday with a global IT outage sparked by a CrowdStrike (CRWD) update weighing on sentiment while President Biden’s re-election chances continue to dwindle. T-notes also continued to slide with the 10 Year yield matching Monday’s peak at 4.25%. The upside in yields and risk off trade supported the Dollar which weighed on activity currencies, although the Japanese Yen was flat. Crude prices tumbled throughout the session as the risk environment and Dollar strength weighed. Stock weakness was broad based with the majority of sectors closing in the red, aside from the haven sectors Health Care and Utilities. Tech, Energy and Financials saw the greatest losses. Communication only saw marginal losses despite the weakness in Netflix (NFLX) post earnings. Out of the mega caps, Apple (AAPL), Meta (META) and Google (GOOGL) were flat but Microsoft (MSFT) was hit by outages sparked by CRWD. Amazon (AMZN) only saw slight losses. Meanwhile, the chip rout also continued with Nvidia falling another 2.5% with SOXX -3%. The U.S. Dollar continued to extend on Thursday’s gains, with the Dollar Index nearing printing a high of 104.42, as risk-off sentiment persisted amid a global IT issue sparked by an update issue at CrowdStrike and also a growing number of Democratic Representatives and Senators calling on President Biden to quit the race. With a Trump Presidency looking more and more likely, this also weighed on T-notes and the upside in yields supported the buck. Elsewhere, the US newsflow was lacking, with no data releases and little Fedspeak, as Bostic did not discuss his rate or economic outlook, and Williams added little new. Attention next week turns to Core PCE data as well as Q2 advance GDP. Of note, the Fed blackout started last Saturday. As expected, the ECB opted to stand pat on rates on Thursday following the 25bps reduction in June. In the accompanying policy statement, the Governing Council reaffirmed that it would keep policy rates sufficiently restrictive for as long as necessary to achieve its goals. Furthermore, policymakers will continue to maintain a data-dependent approach and not pre-commit to a specific policy path. At the follow-up press conference, President Lagarde said incoming data points to the economy growing in Q2, though likely slower than Q1. On the inflation front, this is expected to fluctuate around current levels for the remainder of the year before declining towards the target over H2-2025 owing to weaker unit labour costs and other factors. In the Q&A segment, Lagarde noted that the discussion on the Governing Council was very much a case of “on the one hand” and “on the other hand”, with the ultimate policy decision being a unanimous one. Lagarde was also keen to stress that the ECB is data-dependent but not specific data point-dependent. Regarding the path ahead, Lagarde kept her cards close to her chest, suggesting that the September meeting is “wide open”. In terms of market pricing, a September rate cut is priced at around 68% with 44bps of easing seen by year-end. Overall, the ECB will see where the data guides them ahead of the September meeting with ING making the point that given that the Euro-Zone is not in recession, this is not a typical rate-cutting cycle, and therefore the ECB will not be on autopilot. Sources in the wake of the meeting were mixed, Bloomberg reported that ECB officials are considering if only one more cut is feasible in 2024, and added that with inflation pressures still lingering, officials are becoming less confident that a path for two further reductions is realistic. BBG sources further added they do not want investors to assume that a move in September is a done deal. Nonetheless, Reuters sources suggested that ECB hawks are open to a September rate cut, provided upcoming data confirm disinflation is underway. Both Reuters and Bloomberg sources mentioned that after the ECB’s strong commitment in June to lower rates, the ECB wants to refrain from committing to a September move, stating that all options are on the table for that meeting. Elsewhere, Oil fell 3.25% while Gold also got hit hard on Friday, ending the session with a 2.2% fall.
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For anyone following my Platinum Service it made 666 points on Friday and is now ahead by 1065 points for July after closing June 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 to 4 updated emails throughout the trading day to demonstrate this value, a points, 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 0.71% lower at a price of 5505.
The Dow Jones Industrial Average closed 377 points lower for a 0.93% loss at a price of 40,287.
The NASDAQ 100 closed 0.93% lower at a price of 19,522.
The Stoxx Europe 600 Index closed 0.77% lower.
This Morning, the MSCI Asia Pacific closed 0.4% lower.
This Morning, the Nikkei closed 1.16% lower at a price of 39,599.
Currencies
The Bloomberg Dollar Spot Index closed 0.18% higher.
The Euro closed 0.4% lower at $1.0882.
The British Pound closed 0.6% lower at 1.2914.
The Japanese Yen fell 0.8% closing at $157.46.
Bonds
Germany’s 10-year yield closed 5 basis points higher 2.47%.
Britain’s 10-year yield closed 4 basis points higher at 4.12%.
U.S.10 Year Treasury closed 9 basis points higher at 4.24%.
Commodities
West Texas Intermediate crude closed 3.25% lower at $80.13 a barrel.
Gold closed 2.2% lower at $2402 an ounce.
This morning on the Economic Front we have no data of note from either the U.K. or the Euro-Zone. At 1.30 pm we have the Chicago Fed National Activity Index. Finally, we have a Six-Month T-Bill Auction at 6.00 pm.
Cash S&P 500
On Wednesday the S&P closed at a price of 5669 with an RSI of 83. 48 hours later it is all doom and gloom with the S&P falling 160 Handles, closing at 5505. This move lower saw the VIX hit an intra-day high on Friday at a price of 17.19 which is just below my 18.50 target level. This move higher in the VIX saw its RSI close at 76 on Friday which is a three-year high and not a time to be short the S&P in my opinion. Typically, when we get such a high RSI print we tend to see a VIX crush. But nothing is typical about this market and so that everyone is clear that we still have risk to my 18.5 target level which is an ‘’Open Gap’’ from many months ago. After the initial sell-off the S&P traded in a narrow range for the last four hours of trading on Friday. Th tape felt more awful versus the actual damage which was only 25 Handles lower versus Thursday’s Chicago close. But this sell-off actually packs a bit of a punch as tech is down 6% in five consecutive down days. The last time we saw five down days was going into year-end and beginning of 2024. That was a low then. However, new lows on a Friday are never comforting and we may see new lows this week. We had plenty of nerves going into the weekend, not only because of the global IT outage (supposedly fixed), but also the drama surrounding President Biden, is he staying in or not, if not who will be on the ticket and what does that then imply about the election outcome? Now that Biden has pulled out of the election this creates more uncertainty until we find out who is on the ticket. Overnight markets have reacted positively to this news. After the S&P traded the whole of Thursday’s buy range for a 5556 average long position the market rallied to my revised 5565 T/P level. Subsequently, I emailed my Platinum Members again to buy the S&P at a price of 5524 before the market thankfully rallying to my 5543 T/P level into the close. On Friday the S&P traded lower to my third buy level at 5512. This morning on the Biden announcement the S&P has rallied to my 5524 T/P level, and I am now flat. With the VIX cooked enough to allow a counter rally, I am happy to be a buyer of dips. The S&P has strong support from 5489/5505 where I will be a strong buyer with a 5473 ‘’Closing Stop’’. I no longer want to be short the S&P at this time.
EUR/USD
The Euro reversed some of Thursday’s gains on Friday and I am still flat. The Euro has strong resistance from 1.0980/1.1060 where I will be an aggressive seller with a 1.1115 ‘’Closing Stop’’. Meanwhile, I will continue to be a buyer on any dip lower to 1.0770/1.0840 with the same 1.0695 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 1.0920. If I am taken long, I will have a T/P level at 1.0890.
Dollar Index
My latest 103.70 long Dollar position worked well with the market trading at 194.40 this morning. This move higher saw my revised 104.01 T/P level and I am now flat. Today, I will again be a buyer on any dip lower to 103.20/103.90 with a higher 102.45 ‘’Closing Stop’’. I still do not want to be short the Dollar at this time.
Cash DAX
The DAX never came close to any of my sell levels last week before continuing to trade heavy. This morning the DAX is trading at a price of 18250. The DAX has strong support below from 18010/18100 where I will be a buyer with a 17895 wider ‘’Closing Stop’’. Ahead of this week’s blockbuster of tech earnings from America, I do not want to be short the DAX at this time. If this view changes I will be back with a new update for my Platinum Members.
Cash FTSE
The FTSE again traded in narrow ranges before finally selling off to my 8150-buy level. This morning the FTSE is trading higher at 8200. I have now exited this latest long position at this price, and I am now flat. The FTSE has support from 8100/8160 where I will again be a buyer with a higher 8035 ‘’Closing Stop’’. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
On Thursday the Dow made a new all-time at 41380 before a strong reversal saw the market fall over 1200 points. This move lower saw the Dow hit my 40840 T/P level on my 40955 average short position and I am now flat. The Dow has resistance from 40700/40950 where I will be a small seller with a 41105 ‘’Closing Stop’’. The Dow has support from 39600/39850. I will be a strong buyer on any dip to this area over the coming days. If I am taken short, I will have a T/P level at 40330. If I am taken long, I will have a T/P level at 40200.
Cash NASDAQ 100
One of the biggest falls in the NDX in points terms in just six trading sessions now has me aggressively long the market. Thursday’s sell-off saw the NDX hit my third buy level at 19750 for a now 19950 average long position. Thankfully we made some nice points over the past few days which makes it easier to hold this position. This morning, the NDX is trading at 19640. I will look to exit this position on any further move higher to 19900. I will still have no stop on this position. If this view changes, I will be back with a new update for my Platinum Members.
September BUND
The Bund never came close to yesterday’s buy range as it continues to build value above the key 130.50 support level. Today, I will continue to be a buyer on any dip lower to130.90/131.60 with the same 130.05 ‘’Closing Stop’’. If triggered, I will have a T/P level at 132.15.
Gold Rolling Contract
Gold was slammed on Friday, trading the whole of my buy range for a 2403 average long position. As I am also long Silver, I emailed my Platinum Members to exit their long Gold position at my revised 2410 T/P level. Overnight, Gold hit a high at 2412 and I am now flat. Gold has further support from 2370/2386 where I will again be a buyer with a lower 2359 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2398.
Silver Rolling Contract
Silver was weak again on Friday. This latest move lower saw the market hit my second buy level at 29.40 for a now 29.80 average long position. I will leave my 28.55 ‘’Closing Stop’’ unchanged while lowering my T/P level to 30.30. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
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