Both Equity Markets and the U.S. Dollar started Monday’s session in the red with Trump announcing tariffs on the non-US film industry, which hit names like NFLX, DIS, and AMZN. However, it was later clarified that no final decision has been made, and Trump will be meeting with executives in the industry to discuss it. Both equities and the Dollar began to pare the earlier weakness in the wake of the ISM Services PMI report, which beat all analyst expectations on the headline, although Prices Paid surged. The report alleviated some of the economic growth fears after a downbeat Q1, although uncertainty does remain ahead. Equity prices closed red but were off the pre-data lows. Longer-dated T-Notes were hit on the report with the curve steepening while attention turns to the FOMC on Wednesday. Meanwhile, there was a plethora of corporate issuance (AAPL, CMCSA, PLD, GM) alongside the 3-year note auction, which saw an improvement from the post-Liberation Day offering. Crude prices were hit but settled off lows with the downside seen in the wake of OPEC+ accelerating production hikes. In FX, the Dollar was ultimately flat while havens and antipodes outperformed. On trade (aside from the aforementioned movie updates), US President Trump said he will not be speaking with Chinese President Xi this week, but the US is meeting with many countries, including China, on trade deals. He also said he is willing to lower tariffs on China at some point, but he would need to keep at least some tariffs in place to convince businesses to move production to the US. The President also replied “could be” when asked if any trade deals are coming this week. Regarding Japan, Kyodo reported the US has refused Japan’s full exemption from not only a 10% “reciprocal” tariff but a country-specific tariff in recent negotiations, according to sources. The headline Services PMI rose to 51.6 in April from 50.8 in March, above the 50.2 forecast, signalling expansion within the US services sector. Business activity, however, did decline to 53.7 from 55.9 but new orders rose to 52.3 from 50.4. Employment improved to 49.0 from 46.2 but remained sub 50 – the line that separates expansion and contraction. Prices Paid also saw a chunky rise to 65.1 from 60.9. Overall, the data was welcomed as it helped quell some recent fears about an economic slowdown after the -0.3% contraction seen in Q1 in the economy overall. The better-than-expected print and rising prices paid components bolster the case for the Fed to stay on hold for longer as it shows the economy can currently withstand current policies while with a still “modestly restrictive” monetary policy stance while the Fed aims to get inflation back to target. However, although a welcomed report – it is still too early to digest the full impact of Trump’s tariff and immigration policies, and uncertainty remains ahead. The report highlights that a services PMI of 51.6 corresponds to a one-percentage-point increase in real GDP on an annualised basis. On Friday we had the release of Non-Farm Payrolls. The April US jobs report saw 177k jobs added in the month, above the 130k forecast and down from the prior 185k (which was revised down from 228k). The unemployment rate was steady at 4.2%, in line with expectations and beneath the year-end median FOMC projection of 4.4%. Overall, it was a strong report and will allow the Fed to continue being patient, despite some concerns from Governor Waller that if they wait to see an impact in the hard data from new administration policies, the Fed runs the risk of acting too late. However, the hard data continues to signal the economy is withstanding the recent volatility and uncertainty. Looking ahead to June, WSJ’s Timiraos says “For now, it means the Fed doesn’t have to say anything on June at next week’s meeting “; adds “The April jobs report makes a June rate cut less likely … as there will only be one more employment report before then”. Both Barclays and Goldman Sachs pushed back their Fed rate cut calls to July from June in the wake of the report. Elsewhere in the NFP dataset, government payrolls rose by 10k, down from the prior 15k, while those employed by the federal government declined by 9k in April. Earnings were soft, with M/M rising 0.2% (exp. 0.3%, prev. 0.3%), while Y/Y rose by 3.8%, beneath the 3.9% forecast, maintaining the 3.8% pace in March. Although the Fed has stated the labour market is not a source of inflation, the softer wage data will be seen as a positive. Elsewhere, oil closed 2% lower while Gold surged, ending Monday with a near 3% rise.
To mark my 3175th 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 1183 points on the first trading session of May after closing April with a gain of 7685 points after closing March with a gain of 2254 points while closing February with a gain of 4180 points. January ended with a gain of 2768 points while 1997 points were gained in December. October ended with a gain of 2179 points, after closing September with a gain of 4402 points, following a loss of 301 points in August. July gained 1908 points while June saw a gain of 2074 points. The Platinum Service made a record 9619 points in October 2022. 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 0.64% lower at a price of 5650.
The Dow Jones Industrial Average closed 98 points lower for a 0.24% loss at a price of 41,218.
The NASDAQ 100 closed 0.67% lower at a price of 19,967.
The Stoxx Europe 600 Index closed 0.16% higher.
This Morning, the MSCI Asia Pacific closed 0.5% lower.
This Morning, the Nikkei closed 1.04% higher at a price of 36,830.
Currencies
The Bloomberg Dollar Spot Index closed 0.10% lower.
The Euro closed 0.22% lower at $1.1305.
The British Pound closed 0.32% lower at 1.3273.
The Japanese Yen fell 0.43% closing at $144.20.
Bonds
Germany’s 10-year yield closed 8 basis points higher at 2.53%.
Britain’s 10-year yield closed 8 basis points higher at 4.52%.
U.S.10 Year Treasury closed 9 basis points higher at 4.35%.
Commodities
West Texas Intermediate crude closed 2.18% lower at $57.02 a barrel.
Gold closed 2.79% higher at $3330.10 an ounce.
This morning on the Economic Front we have German, Euro-Zone and U.K. Composite PMI at 8.55 am, 9.00 am and 9.30 am respectively. Next, we have Euro-Zone PPI at 10.00 am, followed by U.S. Trade Balance at 1.30 pm. At 2.45 pm we have Composite PMI. Finally, we have a 10-Year Treasury Auction at 6.00 pm.
Cash S&P 500
On Friday, the S&P closed higher for nine consecutive trading sessions which is the longest winning streak since 2004. I was amazed reading this stat given the bullish markets that we have had over the past 21 years. Ten consecutive positive sessions has not occurred since 1996. Yesterday, it looked like the S&P would hit ‘’10’’ before a late sell-off into the close saw the market close lower. This sell-off has continued overnight with the S&P now trading at a price of 5630 as I go to post. From a stock market perspective, Monday’s session was relatively uneventful. However, the FX market told a different story. The Japanese Yen strengthened by about 80 basis points, and the Swiss franc gained 50 basis points. Most notable was the Taiwan dollar, which appreciated by 5.1% yesterday, following a move of more than 4% on Friday. The Taiwan dollar has strengthened by over 9% in just two days. When looking at the S&P 500, I still believe it is well-positioned to give back its recent gains. The rally appears to have been driven more by put option decay and falling implied volatility than by any fundamental catalyst. The index is currently sitting near the 61.8% retracement level, with the 200-day moving average just above at 5,745, and the July 2024 highs nearby at 5,671. This area presents significant technical resistance. There is also still the gap from Friday’s opening. Gaps that follow sharp moves lower into the close typically fill relatively quickly, so it would not be surprising to see that gap filled by Tuesday or Wednesday. Additionally, the gap at 5,289 remains open and could still be targeted. In the short-term ahead of the FOMC Statement tomorrow the S&P could firm. However, I have no interest in buying the market here, preferring to sell the rally. Remember, the S&P has rallied almost 20% off its April 7 low and is short-term fried to the upside. When we get the Weekly $NYSI Report later this morning there is every chance that this signal will be close to maximum overbought. The S&P has resistance from 5670/5700 where I will be a seller with a 5725 ‘Closing Stop’. We have had an excellent start to May, so we do not need to take undue risk as we wait for our levels to get triggered. If I am taken short, I will have a T/P level at 5642.
EUR/USD
I am still flat. The Euro has traded in a narrow range since falling 100 points early Thursday morning. The market is hoping for some clarity from tomorrow’s FOMC Statement and Powell press conference. The Euro has support below from 1.1150/1.1230 where I will continue to be a buyer with the same 1.1085 ‘Closing Stop’. Meanwhile, I will continue to be a seller on any further rally to 1.1420/1.1520 with the same 1.1605 ‘Closing Stop’. If I am taken long, I will have a T/P level at 1.1305. If I am taken short, I will have a T/P level at 1.1340.
Dollar Index
I am still flat as the Dollar has hardly moved since Thursday’s Daily Commentary was posted. Today, I will again be a buyer on any dip lower to 98.60/99.40 with the same 96.95 ‘Closing Stop’. If I am taken long, I will have a T/P level at 100.20. I still do not want to be short the Dollar at this time.
Russell 2000
My latest 1925 long Russell position worked well as the market rallied to my 1978 T/P level and I am now flat. This morning, the Russell is trading higher at a price of 1997. We have strong support below from 1890/1960 where I will again be a buyer with a higher 1825 ‘Closing Stop. If I am taken long, I will have a T/P level at 2010. Given how much the Russell is underperforming the rest of the American Indexes, I still do not want to be short the market at this time.
FTSE 100
The FTSE traded the whole of Thursday’s sell range for a now 8590 average short position. I will now raise my T/P level to 8550 while leaving my 8685 ‘Closing Stop’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
On Thursday the Dow rallied to my 41140-sell level before trading lower to my revised 41035 T/P level. Subsequently, on Monday afternoon the Dow traded higher to my second sell level at 41420 as emailed to my Platinum Members before trading lower to my 41300 T/P level and I am now flat. Overnight, the Dow is weak, trading at 41130 as I go to post. The Dow has short-term resistance from 41420/41700 where I will again be a small seller with a tight 41905 ‘Closing Stop’. If I am taken short, I will have a T/P level at 41180. I still do not want to be long the Dow at this time.
Cash NASDAQ 100
The NDX hit my second sell level at 20000 for a 19900 average short position. Yesterday’s early sell-off saw the market hit my revised 19895 T/P level as emailed to my Platinum Members. Subsequently, the NDX rallied and I went short again at a price of 20080. A late sell-off saw the market trade lower to my 19920 T/P level and I am now flat. Today, I will again be a seller on any further rally to 20060/20260 with the same 20405 ‘Closing Stop’. If I am taken short, I will have a T/P level at 19930. I still do not want to be long the NDX at this time
December BUND
The Bund is trading 130 points lower from Wednesday’s close. The Bund has resistance from 131.80/132.70 where I will be a small seller with a tight 133.55 ‘Closing Stop’. If I am taken short, I will have a T/P level at 131.80. I still do not want to be long the Bund at this time.
Gold Rolling Contract
My latest 3230 long Gold position worked well as the market rallied to my 3252 T/P level and I am now flat. This morning, Gold is trading higher at 3350. Gold has short-term support below from 3240/3270 where I will again be a buyer with a higher 3215 ‘Closing Stop’. If I am taken long, I will have a T/P level at 3295.
Silver Rolling Contract
Silver traded lower to my 32.20 buy level before rallying this morning to my 32.90 T/P level and I am now flat. Today, I will again be a buyer on any dip lower to 31.60/32.50 with a higher 30.45 ‘Closing Stop. If I am taken long, I will have a T/P level at 33.20.
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