U.S. Equity Markets finished the week lower led by the NASDAQ 100 which closed with a loss of 1.44%. Markets were volatile on Friday. August Nonfarm Payrolls showed job growth slightly ahead of consensus. But an increase in the labour participation rate caused the Unemployment rate to rise to 3.7% compared with July’s 3.5%. That led to gains in the first half of the session. That was until 5.00 pm when news came out that Russian energy supplier Gazprom discovered problems in its key pipeline that delivers natural gas supplies. The company said it would not be able to restart operations on Saturday, following routine maintenance, as originally planned. In fact, Gazprom said it was unsure of when operations would restart. This sparked fears that a lack of gas supplies in Europe would force countries there to find alternative supplies even faster than planned. The result could push prices higher in the U.S., causing a rebound in inflation growth. Markets experienced a third-straight weekly decline. Investors will be looking ahead to multiple Federal Reserve speakers this week and the European Central Bank’s (“ECB”) rate policy decision. Within the S&P 500, 10 of the 11 sectors finished lower. European Markets closed higher. Equity markets gained after five consecutive sessions of weaker levels with equities posting the third straight week of declines. Euro-Zone Producer Prices rose to a record high, following the earlier released Consumer Price Index (“CPI”) for July. Euro-Zone consumer inflation expectations remain elevated, which will further the expectation for aggressive rate policy by the ECB. A Bloomberg survey of economists showed the majority think the ECB will hike rates by 75 basis points this week to play catch-up in its fight against inflation. But those gains could be short lived as the Gazprom news came out after the European markets were closed. This morning the Euro-Stoxx is opening lower by 3.2%. In Asia, South Korea’s inflation eased from a 24-year high seen a month ago. Despite slightly easing inflation figures, the Bank of Korea is expected to continue its path for further rate hikes this year. The Japanese Yen is expected to weaken further until the Federal Reserve reverses course on its aggressive rate policy. Chinese property earnings posted the worst figures since 2008, intensifying fears of a major economic slowdown. Elsewhere, Oil closed 0.30% higher while Gold rose 0.86% despite the stronger Dollar.
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For anyone following my Platinum Service it made 260 points on Friday and is now ahead by 780 points for 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 1.07% lower at a price of 3924.
The Dow Jones Industrial Average closed 337 points lower for a 1.07% loss at a price of 31,318.
The NASDAQ 100 closed 1.44% lower at a price of 12,098.
The Stoxx Europe 600 Index closed 2.01% higher.
This morning, the MSCI Asia Pacific Index fell 0.2%.
This morning, the Nikkei closed 0.11% lower at a price of 27,619.
Currencies
The Bloomberg Dollar Spot Index closed 0.6% higher.
The Euro closed 0.3% lower at $0.9924.
The British Pound closed 0.6% lower at 1.1473.
The Japanese Yen fell 0.1% closing at $140.40.
Bonds
Germany’s 10-year yield closed 4 basis points lower at 1.52%.
Britain’s 10-year yield closed 3 basis points higher at 2.91%.
US 10 Year Treasury closed 4 basis points lower at 3.20%.
Commodities
West Texas Intermediate crude closed 0.30% higher at $85.98 a barrel.
Gold closed 0.86% higher at $1711.10 an ounce.
This morning on the Economic Front we have German, Euro-Zone and U.K. Global Services PMI at 8.55 am, 9.00 am and 9.30 am respectively. Next, we have Euro-Zone Sentix Investor Confidence at 9.30 am and Retail Sales at 10.00 am. Finally, we have a speech from Bank of England Member Mann at 4.30 pm.
Cash S&P 500
Following the NFP release the S&P had a nice rally that was textbook based on seasonality. The S&P hit a high of 4018, just below its 50 -Day Moving Average before this resistance level proved insurmountable after news that Russia was keeping gas to Europe shut-off. The reaction was instantaneous in what promised to be a low volume long weekend, turned out to be quite the opposite as the S&P fell over 110 Handles before staging a late 20 Handle rally into the close. The $NYMO improved from Thursday’s -101 print to close Friday lower but still at an extreme -92 print. Although the McClellan Oscillator improved slightly, we still closed Friday at -305. This reading has proved itself numerous times to me over the past 15 years and is the main reason why I will not short markets at this time. Friday’s aggressive turnaround as me long the S&P at an average rate of 3936. I will now lower my T/P level to 3945 while leaving my 3909 ‘’Closing Stop’’ unchanged.
EUR/USD
The Euro got hit hard overnight, trading to a low of .9980 before having a small rally in the last 20 minutes. On Friday, the Euro hit a rebound high at 1.0040 before getting slammed on the Gazprom oil leak. I am still long at an average rate of .9990 with the same no stop and a now lower 1.0030 T/P level. If any of the above levels are hit I will be back with a new update for my Platinum Members.
March Dollar Index
No Change. The Dollar is trading higher at 109.90 this morning on the back Gazprom oil leak and 3% fall in European Equity Markets. My overall view on the Dollar has not changed: The last time the Dollar was this overvalued, at the end of 2016, we quickly saw a 10% decline in the Dollar over the following 12 Months. I am expecting a similar outcome, I just do not know what the catalyst will be. Based on a longer-term outlook, the risk/reward is skewed to the downside. In my view, a key source of prior support has disappeared (strong economic growth) and another is fully discounted and may be on the verge of reversing which of course is a divergence in Central Bank rate hike expectations. I am still short the Dollar at an average rate of 107.50. Given how overbought the Dollar is trading I will have no stop on this position, fully believing that we are close to a reversal in the Greenback. I will continue to leave my T/P level unchanged at 106.80.
Cash DAX
My DAX plan worked well with the market trading lower to my 12650 buy level before rallying to my revised 12710 T/P level and I am now flat. This morning, I will again be a buyer of the DAX on any further move lower to 12480/12580 with a wider 12395 ‘’Closing Stop’’.
Cash FTSE
I am still flat the FTSE as the market never came close to Friday’s buy range despite the rest of the Global Markets falling hard on the Russian Oil leak news. Remember a market that cannot fall on bad news has to be respected. Today, I will raise my buy level to 7130/7190 with a higher 7075 stop.
Dow Rolling Contract
My Dow plan worked well as the market traded lower to my 31380 buy level, before rallying to my revised 31470 T/P level and I am now flat. The price action in the Dow was wild on Friday, as the market hit a high above 32000 before falling 800 points on the Russian oil leak. The 50-Day MA for the Dow comes in at a price of 32170. The Dow needs to break and close above this level for the Bulls to regain control. It needs to break this key resistance level this week before the seasonal strong period ends as we wait for the weak mid-Sept/October time frame. However, with the MO still at -305 I will not press the downside, preferring to keep my strategy of buying dips. This morning, the Dow has support from 31100/31300 where I will again be a buyer with a 30895 wider ‘’Closing Stop’’. Remember the cash markets are closed today for the Labour Day Holiday so trading should be quiet.
Cash NASDAQ 100
The NASDAQ got hit hard late Friday, hitting my buy range. I am now long at 12150 with a now lower 12210 T/P level. I will add to this position at 12000 while leaving my 11895 ‘’Closing Stop’’ unchanged.
December BUND
Frustrating!!. The Bund hit a low of 144.72 – two points above Friday’s buy range before turning around and rallying 190 points. Today, I will raise my buy level to I 144.40/145.10 where I will be a strong buyer with a higher 143.75 ‘’Closing Stop’’. If I am taken long I will have a T/P level at 145.70.
Gold Rolling Contract
My 1696 long Gold position worked well as the market rallied to my 1707 revised T/P level and I am now flat. Gold has support from 1680/1695 where I will again be a buyer with the same 1669 stop.
Silver Rolling Contract
No Change. I am still long and wrong for now at 18.80 with the same 19.25 T/P level. Given how oversold Silver is trading I will continue to hold this position with no stop.
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