U.S. Equity Markets finished the week in the green (SPX +1.1%, NDX +1%, RUT +1.7%, DJIA +1.6%), while Treasuries were bid across the curve despite initial two-way action on US PCE, but eventually saw strength in wake of US PCE. The data itself saw core slightly above consensus, with headline in line, but it did little to change the Fed narrative. For the record, Final University of Michigan Consumer Sentiment for July saw the headline revised slightly higher to 66.4 from 66.0, with conditions and expectations revised lower and higher, respectively. 1 Year ahead was left unchanged at 2.9%, with the longer-term 5 Year ticking up to 3.0% from 2.9%. Sectors were exclusively in the green with Industrials outperforming and buoyed by 3M (MMM) (+23%) earnings impressing. WTI and Brent ended the day, and week, with losses as focus continues to be on sluggish China demand. In FX, the Dollar was flat and largely sideways in thin ranges as the aforementioned PCE data had little baring on the Greenback. The Japanese Yen initially saw notable upside, ahead of the Bank of Japan this week, whereby Bloomberg sources noted that the MoF reportedly wants to BoJ to cut bond purchases gradually, but it pared somewhat throughout the day. Looking ahead, this week is a huge risk week with the BoJ, FOMC, Quarterly Refunding, BoE , ISM Manufacturing PMI all scheduled, in addition to mega-cap earnings from the likes of AAPL, AMZN, INTC, MSFT, and META. On the Fed, it is widely expected to leave rates on hold, but we will be looking to see how they frame the recent cooling economic data and see if they open the door to a widely expected cut in September, although Powell will likely stress data dependence. Core PCE in June rose by 0.2% M/M, above the prior revised 0.13% and forecast of 0.1%. When unrounded, PCE rose by 0.18%, so only marginally above expectations. The Y/Y print rose by 2.6%, matching the prior month pace but above the 2.5% forecast. The annualised metrics saw the 3 Month tick down to 2.3% from 2.9%, 6 Month rise to 3.4% from 3.3%. Headline numbers were in line with expectations, rising 0.1% M/M and 2.5% Y/Y. The data does little to change the narrative for the Fed with analysts and money markets looking for the first rate cut to occur in September, with plenty of data due between now and then. Nonetheless, the July meeting this week will be viewed to see the Fed’s view on recent inflation developments and whether they explicitly commit to a September move. The Fed’s closely watched core services ex-housing measure rose just 0.18% M/M, in line with the prior 0.17%. Analysts at Pantheon Macroeconomics note that “The underlying drivers of core inflation – wage growth, margins, supply chains, rents, oil prices and food prices – are all now under control and will continue to feed into lower core inflation across the remainder of this year and into 2025.” Elsewhere, real consumption rose 0.2%, easing a touch from the prior 0.4%, while the adjusted metric rose 0.3%, in line with forecasts. Personal income rose by 0.2%, beneath the 0.4% forecast while the prior was revised down to 0.4% from 0.5%. Pantheon highlights the drop in Personal Income was due to the drop in the wages and salaries component, while the drop in consumption was softer than they expected based on the Q2 GDP report and the June retail sales report. The Final University of Michigan Consumer Sentiment Survey in July saw headline sentiment revised up to 66.4 from 66.0, despite expectations for this to be left unchanged. The upside was led by a rise in forward looking expectations to 68.8 from 67.2, although current conditions slipped to 62.7 from 64.1. The report highlights that sentiment has lifted 33% above the June 2022 historic low, but it remains guarded as high prices continue to drag down attitudes, particularly for those with lower incomes. It also adds that labour market expectations remain relatively stable, providing continued support to consumer spending. However, continued election uncertainty is likely to generate volatility in economic attitudes in the months ahead. Inflation expectations saw the 1 Year unchanged from the preliminary print of 2.9% while the 5 Year saw a slight revision up to 3.0% from 2.9%, albeit unchanged from June’s reading. Elsewhere, oil closed Friday with a 1.43% loss while Glod ended the day with a 0.8% Gain.
To mark my 3025th 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 875 points on Friday and is now ahead by 1360 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 1.11% higher at a price of 5459.
The Dow Jones Industrial Average closed 654 points lower for a 1.64% gain at a price of 40,589.
The NASDAQ 100 closed 1.03% higher at a price of 19,023.
The Stoxx Europe 600 Index closed 0.83% higher.
This Morning, the MSCI Asia Pacific closed 0.8% higher.
This Morning, the Nikkei closed 2.13% higher at a price of 38,468.
Currencies
The Bloomberg Dollar Spot Index closed 0.04% lower.
The Euro closed 0.1% higher at $1.0853.
The British Pound closed 0.2% lower at 1.2861.
The Japanese Yen rose 0.1% closing at $153.60.
Bonds
Germany’s 10-year yield closed 4 basis points lower 2.41%.
Britain’s 10-year yield closed 6 basis points lower at 4.10%.
U.S.10 Year Treasury closed 3 basis points lower at 4.19%.
Commodities
West Texas Intermediate crude closed 1.43% lower at $77.16 a barrel.
Gold closed 0.8% higher at $2385 an ounce.
This morning on the Economic Front we have U.K. Consumer Credit and Mortgage Approvals at 9.30 am. The only other data of note on either side of the Atlantic is the Dallas Fed Manufacturing Business Index which will be released at 3.30 pm.
Cash S&P 500
Incredible two-way price action since I posted on Thursday morning. Some of the sell-offs are scary especially if you are long but we are experienced enough now to know that markets will not stay weak for any length of time. The S&P was deeply oversold following last week’s 170 Handles rout, trading well below the bottom of its Daily Bollinger Band. The S&P has a large ‘’Open Gap’’ from 5375/5400. Thursday’s 100 Handle sell-off into the close saw the S&P hit a low at 5392 which is the low so far of this recent sell-off. On the top side the S&P has large ‘’Open Gap’’ at 5555 from July 23. As we know all ‘’Open Gaps’’ get filled the problem is the ‘’When’’ and the ‘’Where’’. What is clear from the 10% decline in the NDX is the lack of buybacks. These buybacks will come back with a vengeance in August, making it difficult to be short markets. Despite the stubbornly high inflation the economic data is weak enough that the Fed may cut rates on Wednesday. Powell wants to cut especially as the Next Fed Meeting is not for another two months. My S&P plan worked well on Thursday as the market traded lower to my 5402-buy level before rallying to a rebound high at 5489. This move higher saw my 5440 T/P level triggered. Subsequently, the S&P sold off almost 100 Handles into the close. This move lower saw me buy the S&P at an average rate of 5416 as emailed to my Platinum Members before rallying to my 5428 T/P level and I am now flat. This morning, we are seeing another potential ‘’Open Gap’’ with the S&P trading at 5483. I have no interest in pressing the downside given the number of key earnings reports this week and of course the Fed Meeting on Friday. The 50-Day Moving Average comes in at a price of 5436. Therefore, I will be a buyer from 5424/5440 with a 5409 higher ‘’Closing Stop’’. I still do not want to be short the S&P at this time.
EUR/USD
The boring sideways price action in the Euro shows no sign of ending. I would have expected the Dollar to have been stronger based on the American Equity rout, but this did not happen and I am, still flat. The Euro has support from 1.0770/1.0830 where I will be a small buyer with a higher 1.0705 ‘’Closing Stop’’.
Dollar Index
The last six trading sessions have seen the Dollar trade in a 30-point range. This I find incredible given the vast two-way price action in Dollar/Yen. This morning, the Dollar is trading at a price of 104.30. I am still flat the Dollar as I continue to be a buyer on any dip lower to 103.20/103.90 with the same 102.45 ‘’Closing Stop’’. I still do not want to be short the Dollar at this time.
Cash DAX
Frustratingly, the DAX missed my initial 18030 buy level with a low of 18090 before surging to sit at 18500 this morning. Thankfully, we have had no sell levels in this market as every dip no matter how scary is bought. I will know raise my DAX buy level to 18230/18310 with a higher 18135 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 18390.
Cash FTSE
The price action in the FTSE since Wednesday’s low has been very impressive. We have just seen a bullish outside reversal candle with follow through this morning. The FTSE has support from 8200/8280. I will now raise my buy level to this area with a higher 8145 tight ‘’Closing Stop’’.
Dow Rolling Contract
There is no stopping the Dow. The Market is now trading over 800 points higher from where I marked prices on Thursday morning at a price of 40780. I will now raise my buy level to 40230/40480 with a higher 40095 ‘’Closing Stop’’. Ahead of this week’s FOMC Meeting I still do not want to be short the Dow at this time.
Cash NASDAQ 100
Following Thursday’s expensive loss, the last two days have worked well for my NDX calls. Shortly after I posted on Thursday the NDX traded lower to my second buy level at 18900 for an 18995 average long position before rallying to my 19130 revised T/P level. Subsequently, I emailed my Platinum Members to buy the NDX again at a price of 19030 which was filled late Friday. This morning the NDX rallied to my 19160 revised T/P level and I am now flat. The tape feels decidedly bearish since we had a 10% correction in 11 days on the Index. Psychology is funny. Everyone was begging for a 10% correction to buy, now that it is here everyone is scared. This week we have massive tech earnings and month-end markups to go with Wednesday’s Fed Meeting so we should expect the two-way price action to continue. The NDX has support from 18890/19040 where I will again be a buyer with an 18795 ‘’Closing Stop’’. If triggered, I will have a T/P level at 19170.
September BUND
The Bund never came close to last week’s buy range, and I am still flat. Ahead of so much Treasury Supply this week I am reluctant to chase the Bund higher. The Bund is expensive following the rally over the past 10 days. We have short-term resistance from 133.50/134.30 where I will be a small seller with a 135.05 ‘’Closing Stop’’. I no longer want to be long the Bund at this time.
Gold Rolling Contract
My Gold plan worked well. The market sold off to my second buy level at 2355 for a 2363 average long position before rallying to my revised 2375 T/P level on Friday and I am now flat. This morning, Gold is trading higher at 2389 having hit an overnight high at 2403. Gold has support from 2350/2366 where I will again be a buyer with a 2339 ‘’Closing Stop’’.
Silver Rolling Contract
No Change: I am still long Silver from last week at a price of 29.80. This morning Silver is trading at 28.05 as I go to press. I will now cancel my stop on this position and instead I will look for a spot to add to my Silver portfolio over the coming days. If this view changes, I will be back with a new update for my Platinum Members.
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