U.S. Equity Markets closed higher after another volatile trading session. The NDX 100 again led the gains, closing higher by 1%. The primary driver of stock market activity was Friday’s economic data. The BEA numbers for income, spending, and inflation all pointed to a slowing economy. This takes the pressure off of the Federal Reserve to keep raising interest rates. The NAR home-sales data points to a potential housing market rebound as a future catalyst for economic output. The housing industry and the related ancillary businesses account for almost 20% of gross domestic product (“GDP”) annually. As money managers try to lock in high yields in anticipation of the Fed ending the current rate-hike cycle, the yield on 10-year U.S. Treasurys is falling. That rate is an important benchmark for home loans. As it keeps declining, housing affordability should improve, boosting the demand outlook for homes. Former U.S. Treasury Secretary Larry Summers warned the Fed against signalling more rate hikes after this week’s monetary policy announcement. He said such a move could hurt already fragile economic growth. Within the S&P 500 Index, 6 of the 11 sectors finished higher. European Markets closed higher. European stocks rallied once more on global growth optimism. Spain is the region’s fourth-largest economy. And the stronger-than-expected economic output for the Fourth Quarter boosted optimism that Europe can weather the recent storm created by high inflation and rising interest rates. At the same time, investors are encouraged by the recent rally in the Euro. The European Central Bank has signalled that it will keep raising interest rates into the summer. This comes as the Fed appears close to done with raising rates. A falling Dollar and rising Euro typically bode well for risk assets like stocks. In Asia, Markets closed higher to finish the week. Investors continue to be optimistic about the potential for a Chinese economic rebound. They expect a positive reaction when mainland markets reopen next week after the Lunar New Year holiday. Investors also await positive reports on travel and spending numbers from last week. Technology stocks continued to rally. Investors looked beyond the disappointing results and guidance from semiconductor manufacturing giant Intel (INTC). The weak numbers were viewed as being a company-specific problem. Instead, analysts were optimistic about the sales potential in the back half of this year as customers work down inventory. Australia’s Fourth Quarter PPI growth was down from the third quarter, easing the need for the Reserve Bank of Australia to keep raising interest rates. Elsewhere, Oil fell 1.94% lower while Gold closed flat.
To mark my 2700th 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 277 points on Friday and is now ahead by 3703 points for January, after finishing December with a gain of 2054 points. November ended with a gain of 4789 points, while finishing October with a record gain of 9619 points, making 6660 points in September, 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 0.25% higher at a price of 4070
The Dow Jones Industrial Average closed 28 points higher for a 0.08% gain at a price of 33,978.
The NASDAQ 100 closed 0.96% higher at a price of 12,166.
The Stoxx Europe 600 Index closed 0.26% higher.
This morning, the MSCI Asia Pacific fell 0.4%.
This morning, the Nikkei closed 0.19% higher at a price of 27,433.
Currencies
The Bloomberg Dollar Spot Index closed 0.1% higher.
The Euro closed 0.1% higher at $1.0873.
The British Pound closed 0.2% higher at 1.2397.
The Japanese Yen rose 0.2% closing at $129.83.
Bonds
Germany’s 10-year yield closed 1 basis points higher at 2.23%.
Britain’s 10-year yield closed 1 basis points lower at 3.32%.
U.S.10 Year Treasury closed 2 basis points lower at 3.51%.
Commodities
West Texas Intermediate crude closed 1.94% lower at $79.81 a barrel.
Gold closed 0.06% lower at $1922.10 an ounce.
This morning on the economic front we have the release of German GDP at 9.00 am. Next, we have Euro-Zone Economic Sentiment Indicator and Consumer Confidence at 10.00 am. Finally, we have the Dallas Fed Manufacturing Business Index at 3.30 pm.
Cash S&P 500
The S&P made a new high for January at 4094 before having a small sell-ff into the close. This sell-off has continued overnight as traders become nervous ahead of Wednesday’s FOMC Statement and Powell press conference. There is no doubt that the Fed are frustrated as every bearish comment from them has been aggressively bought by traders all-month. 66% of SPX stocks are now trading above their 200 Day Moving Average, while the NYSE common stock only Advance-Decline line has risen to the highest level in five months. A Golden Cross is the technical name given when the 50 Day Moving Average exceeds its 200 Day Moving Average. While the S&P has not achieved this goal as yet four market sectors have already experienced ‘’Golden Crosses’’, namely Financials, Industrials, Energy and Materials. There is no doubt we are now at an important crossroads in the market. We are seeing a strong disconnect between improving market action and an aggressive Fed that seems determined to keep hiking rates until inflation is finally brought under control. In addition, inverted yield curves continue to predict the likelihood of an economic recession. This has been my view for most of the past six months but maybe I am wrong on this view as the U.S. Economy appears to be a lot stronger than I expected. House Prices where I have my home in Florida have just hit a new all-time high despite mortgage rates above 6%. Steel prices alone have risen over 25% since the end of December, while the well-watched Copper has risen over 15% this month alone. With so many technical signals severely overbought the risk reward is now to be a seller of strength in the S&P as the Fed could still surprise with a higher rate hike than the 25 basis points that is priced in for Wednesday. Friday’s move to 4094 saw my 4091-sell level triggered, before selling off to my 4076 T/P level and I am now flat. I will now raise my buy level to 4015/4032 with a higher 3999 ‘’Closing Stop’’. The S&P has resistance from 4095/4110 where I will again be a seller with a 4127 ‘’Closing Stop’’.
EUR/USD
No Change. I will continue to be a buyer from 1.0710/1.0780 with the same 1.0645 ‘’Closing Stop’’. The Euro has resistance from 1.0910/1.0980 where I will be a strong seller with a 1.1035 ‘’Closing Stop’’.
March Dollar Index
No Change. I am still long at an average rate of 102.10 with the same 101.35 ‘’Closing Stop’’. I will leave my T/P level unchanged at 102.45. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash DAX
No Change. The DAX continues to struggle above 15200. I am reluctant to be a seller given the positive price action over the past three months. The DAX has support from 14880/14960. I will continue to be a buyer in this area with the same 14795 ‘’Closing Stop’’. If I am taken long I will have a T/P level at 15030.
Cash FTSE
This morning’s S&P sell-off sees the FTSE hit my buy level at 7715. I will add to this position at 7645 while leaving my 7595 ‘’Closing Stop’’ unchanged. I will have a T/P level at 7755 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
Dow Rolling Contract
My Dow plan worked well as Friday’s aggressive rally saw the market hit my 34100-sell level before selling off to my revised 33995 T/P level and I am now flat. Today, I will continue to be a buyer from 33350/33600 with the same 33195 tight ‘’Closing Stop’’. The Dow has resistance from 34050/34300 where I will be a small seller with a 34505 ‘’Closing Stop’’.
Cash NASDAQ 100
The strategy of buying all dips in the NDX this year following the aggressive tax based selling in December continues to pay nice dividends. Apple shares alone are up 17% this month as the pain trade for technology stocks shows no sign of ending. However, with the $NYSI and $NYMO maximum overbought this is not the time for chasing the NDX higher from here. Given the bullish momentum in the NDX I will not go short despite my concerns, preferring to be a buyer of dips. I am still flat the NDX. We have support from 11770/11920. I will now raise my buy level to this area with a higher 11595 ‘’Closing Stop’’.
March BUND
Just as I posted on Friday, the Bund sold off to my 137.10 buy level. This morning the Bund is trading higher at 137.80, but unfortunately I covered this long position at 137.32 and I am still flat. Today, I will again be a buyer from 136.50/137.20 with the same 135.75 ‘’Closing Stop’’.
Gold Rolling Contract
No Change. Gold continues to outperform Silver and I am still flat. Gold continues to find strong resistance above 1940. I will not chase the market higher leaving my 1890/1905 buy level unchanged with the same 1879 ‘’Closing Stop’’.
Silver Rolling Contract
Silver sold off to my 2330 initial buy level on Friday. I am still long with a now lower 23.80 T/P level. I will add to this position at 22.70 with the same no stop policy.
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