Equity Markets traded in a wild range before getting crushed in the last thirty minutes of trading led by 1.71% fall in the Dow as all three main Indexes closed at new lows for 2022. Markets navigated a session with a lot of economic noise and moving pieces. The Bureau of Economic Analysis’ Personal Consumption Expenditure (“PCE”) reading for August rose 0.3% month over month, faster than the consensus of 0.1%. Elsewhere, final September Consumer Sentiment data collected by the University of Michigan came in at 58.6, lighter than the preliminary 59.5 (which was also the consensus). Corporate headlines continue to turn negative heading into earnings season, with companies like Nike (NKE), Meta Platforms (META), and CarMax (KMX) painting a worsening picture of the state of the consumer. Meanwhile investors look ahead to Friday where they await the latest labour market figures. As I go to press ABC Australia is reporting that a major investment bank is on the brink, citing ‘a credible source’. Most are pointing towards Credit Suisse. It was caught out in the Archegos disaster and since then (Feb 2021) its share price has spiralled to $3.90 from $14.90. Moreover, the credit default swaps are at distressed levels. A memo from the CEO to staff circulated late on Friday: “I know it’s not easy to remain focused amid the many stories you read in the media – in particular, given the many factually inaccurate statements being made. That said, I trust that you are not confusing our day-to-day stock price performance with the strong capital base and liquidity position of the bank,” he wrote. Last night, Fox Business’ Charlie Gasparino reported that: “CEO Ulrich Koerner has been meeting with major institutional investors worried the firm is on shaky financial footing and assuring them the bank has strong capital, liquidity etc. One large investor tells me “the bank and wealth management platform are very valuable, but the investment bank is a disaster.” The CDS’s of the bank have been trading as if a Lehman Moment was about to hit.” This could lead to an ugly open this morning and something far worse if it proves to be true. The bank will have to effective refute this in the strongest possible fashion, otherwise they’ll have clients pulling money and counter-parties cutting credit lines. Rumours like these can be self-fulfilling. We have already got an inflation crisis and an energy crisis. How about a banking crisis too? Within the S&P 500 Index,10 of the 11 sectors finished lower. European Markets closed higher. Markets remain in the grip of intense volatility. Numerous headwinds continue to hit markets, including an increasingly hawkish central bank, tightening financial conditions from a surging Dollar, Europe’s energy crunch, and persistently high inflation. The U.K. Office for Budget Responsibility confirmed it will deliver its first iteration of its economic and fiscal outlook to the Chancellor this week following a volatile week of U.K. fiscal policy uncertainty. Meanwhile, Euro-Zone inflation hit 10% for the first time, further deteriorating the global growth outlook. In Asia, Markets ended Friday mostly lower, taking the negative momentum from the U.S. overnight and selling off into the morning. Markets remain volatile as central bank policy decisions remain heavily weighted among investor decisions. Official data from Japan showed that the central bank currency intervention came in on the low end of expectations. China’s Manufacturing Purchasing Managers’ Index (“PMI”) for September was 50.1, marking the first expansion reading since June. And the Reserve Bank of India raised its benchmark rate by 50-basis points to 5.90%. Elsewhere, Oil fell 2% while Gold closed flat.
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For anyone following my Platinum Service it made 125 points on Friday, ending September with an incredible gain of 6660 points, after closing August with a gain of 2228 points, having made 2660 points in July, following a gain of 3371 points in June. The Service made 3651 points in May, after making 762 points in April, following a gain of 5883 points in March. The Platinum Service made an impressive 5324 points in February, after ending January with a gain of 3878 points, more than making up for December’s 932 points loss. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 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 1.51% lower at a price of 3585.
The Dow Jones Industrial Average closed 500 points lower for a 1.71% loss at a price of 28,725.
The NASDAQ 100 closed 1.73% lower at a price of 10,971.
The Stoxx Europe 600 Index closed 1.30% higher.
This morning, the MSCI Asia Pacific Index rose 0.5%.
This morning, the Nikkei closed 1.07% higher at a price of 26,215.
Currencies
The Bloomberg Dollar Spot Index closed 0.1% higher.
The Euro closed 0.1% lower at $0.9794.
The British Pound closed 0.2% higher at 1.1152.
The Japanese Yen fell 0.3% closing at $144.80.
Bonds
Germany’s 10-year yield closed 7 basis points lower at 2.11%.
Britain’s 10-year yield closed 6 basis points lower at 4.08%.
US 10 Year Treasury closed 4 basis points higher at 3.82%.
Commodities
West Texas Intermediate crude closed 1.99% lower at $79.44 a barrel.
Gold closed 0.1% higher at $1661.10 an ounce.
This morning on the Economic Front we have German, Euro-Zone, U.K. and U.S. Global Manufacturing PMI at 8.55 am, 9.00 am, 9.30 and and 2.45 pm respectively. Finally, we have ISM Manufacturing PMI and Construction Output at 3.00 pm. Speaking wise today, the Fed’s Bostic speaks at 2.05 pm and Barkin at 4.45 pm.
Cash S&P 500
Despite the late flush in the S&P into the close on Friday, I am still seeing positive divergences on a number of charts. Even though 10 of the 11 S&P sectors closed lower, the McClellan Oscillator actually improved on Friday, closing at -212 from Thursday’s -239 print. The last time we saw a bank blow up in 2008 (Lehman Brothers), the stock market rallied 17%. Little attention was played to the huge reversal in the Dollar last week which in my opinion is a mistake. The Dollar is trading at its most overbought level on a Monthly chart since 1981. The strong Dollar has exported massive inflation to both the U.K. and Japan resulting in both Central Banks intervening over the past 10 days. The Bank of England are buying unlimited quantities of UK Gilts to stop pension funds from blowing up with massive margin calls while the week before last the Bank of Japan was forced to spend $20bn supporting the Yen. If the ECB can join the party then we should see a material shift in the Dollar over the coming months which is turn will support the S&P. Even though the S&P closed below 3600, for now the Weekly 200 MA is holding. This support level has held almost every decline since 2000. As a result, I just cannot be a seller at these levels. On top of this the Mid-Term Elections Seasonal chart is bullish from this week. My S&P plan worked well on Friday as the market traded the whole of my buy range for a 3630 average long position before rallying to my 3654 revised T/P level. Today, I will again be a buyer on any dip lower to 3560/3580 with no stop. I am still long at 3733 with no stop and the same 3770 T/P level. If any of the above levels are hit I will be back with a new update for my Platinum Members.
EUR/USD
The Euro traded lower to my .9750 buy level. I am still long with the same no stop and T/P level at .9850.
March Dollar Index
No Change as I need a miracle. I am still short at an average rate of 108.90 with the same 108.10 T/P level. This morning the Dollar is trading at 111.90, two hundred points lower from where I marked prices yesterday morning.
Cash DAX
My DAX plan worked well with the market trading lower to my 11990 buy level before rallying to my 12080 T/P level and I am now flat. Subsequently, the DAX sold off into the New York close. Today, I will again be an aggressive buyer from 11800/11900 with a lower ‘’Closing Stop’’.
Cash FTSE
The FTSE traded heavy all session on Friday, hitting my 6850 buy level. Overnight, the FTSE hit my second buy level at 6780 for a now 6815 average long position. I will leave my 6695 wider ‘’Closing Stop’’ unchanged, while also lowering my T/P level to 6895.
Dow Rolling Contract
The Dow led Friday’s decline closing at new lows for the year. With the14-Day RSI in the mid-20s I just do not want to be short the S&P. The new highs versus new lows closed at its worst month ever, even worse than the 2008 Global Financial Crisis. As a result, I cannot be short markets at these levels. I am not saying markets cannot ultimately go lower but first I am looking for a large bear market rally to work off all these oversold readings before putting on a more macro short position. The $NYSI closed at new lows for the third consecutive week. On Friday, the Dow traded the whole of my buy range for a now 29025 average long position. I will leave my 28695 ‘’Closing Stop’’ unchanged. I will now lower my T/P level to 29300 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
Wrong!! Just before the Chicago close the NDX stopped me out of my latest 11200 long position at 10995 and I am now flat. This morning, the NDX is trading lower at 10940. We have support from 10700/10900 where I will be an aggressive buyer with a wider 10495 ‘’Closing Stop’’.
December BUND
No Change. I am still a buyer on any dip lower to 136.90/137.80 with the same wider 135.95 ‘’Closing Stop’’.
Gold Rolling Contract
Gold has continued to rally off Wednesday’s massive upside ‘’Key Day Reversal’’ I will continue to be a buyer on any dip lower to 1635/1650 with a higher 1623 ‘’Closing Stop’’.
Silver Rolling Contract
No Change. I am still long Silver at 18.40 with the same 19.60 T/P level and no stop. If this view changes I will come back with an update for my Platinum Members.
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