U.S. Equity Markets closed Friday in the green with outperformance in the Russell 2000 on the prospects of a strong US economy in wake of the stellar September NFP report. Sectors closed predominantly in the green, with Financials, Consumer Discretionary and Communication leading the gains, while defensive sectors, Real Estate, Utilities and Health Care underperformed. The September jobs report saw the headline NFP of 252k, above all analyst forecasts (consensus 140k, max estimate 220k), while the unemployment rate dipped and wages accelerated. Stocks caught an immediate bid, as did the Dollar while Treasuries tumbled with the curve bear flattening as 50bps bets were completely unwound, to see just 24bps priced for November. Crude prices settled in the green but off highs after US President Biden suggested Israel should not hit Iranian oil facilities, while Israeli media stated Israel does not want their response to lead to a wider confrontation with Iran, seeing oil prices sell off ahead of the futures settlement. Gold saw choppy price action. The yellow metal initially fell in response to the hot NFP print, but gold and silver saw a notable bid thereafter, before once again selling off to see gold slightly lower, but silver saw moderate gains. The Dollar and Sterling outperformed in FX with the Dollar rallying to see DXY print a high of 102.69 after the jobs report, while the Pound was supported by hawkish commentary from Bank of England Member Pill. The Japanese Yen lagged as US yields surged. The NFP headline print surged above all analyst forecasts, printing 254k, above the 140k forecast and rising from the prior (revised up) 159k (forecast range was between 70-220k). The Unemployment rate ticked down to 4.1% from 4.2% while wages also came in above expectations. M/M rose by 0.5%, above the expected 0.3% and prior 0.2%, with Y/Y rising 3.9%, above the 3.7% forecast and 3.6% prior. Overall, it is a very hot print and eases recent labour market concerns after a string of soft reports. However, some analysts are cognizant of downward revisions to such a large number. The data has wiped out all bets for a 50bp cut in November with now just 24bps of easing priced for the next FOMC, although there is still another jobs report due before that meeting (as well as another CPI and PCE report) to help cement expectations, but many are forecasting a 25bp cut in November after Powell’s guidance earlier in the week. Looking ahead to the October report, Morgan Stanley highlights that it will be harder to read due to strikes and the hurricane, but if this does depress payrolls, it is a temporary interruption rather than underlying cooling in the labour market. Meanwhile, the Fed’s Goolsbee (2025 voter, dove), in a Bloomberg TV interview, said the September NFP was “superb”, adding the end of port strikes is another piece of very good news for the US economy. He did stress that he does not want to react too much to one data point, adding that “If we get more job reports like this, I will be more confident we are settling in a full employment”, and he is “extremely happy” with the jobs report. On rates, the Chicago Fed President said that “a large majority of Fed policymakers feel rates are going to come down a lot over the next year to 18 months”, and that they must be careful keeping rates as restrictive as they are. He noted the Fed needs to try to maintain conditions like they are today, adding they have time and runway to figure out where the settling point on the Fed policy rate is. Goolsbee also stated that “If productivity keeps booming, that implies higher growth and higher neutral rate”. Meanwhile, he warned there are some signs inflation might undershoot the target, and a broad set of data shows the labour market is cooling. In a later interview with Yahoo! Finance, he largely reiterated these remarks but also acknowledged the Fed is transitioning from a focus on cutting the inflation rate to a more balanced approach. Elsewhere, Oil closed 0.91% higher while Gold ended Friday 0.2% lower following a session that witnessed plenty of two-way price action.
To mark my 3075th 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 340 points on Friday and is now ahead by 730 points for October after ending September with a gain of 4402 points following a 301-point loss for August after closing July with a gain of 1918 points while June closed 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 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 0.90% higher at a price of 5751.
The Dow Jones Industrial Average closed 341 points higher for a 0.81% gain at a price of 42,352.
The NASDAQ 100 closed 1.22% higher at a price of 20,025.
The Stoxx Europe 600 Index closed 0.44% higher.
Last Friday, the MSCI Asia Pacific closed 0.8% higher.
Last Friday, the Nikkei closed 0.22% higher at a price of 38,635.
Currencies
The Bloomberg Dollar Spot Index closed 0.49% higher.
The Euro closed 0.5% lower at $1.0974.
The British Pound closed 1.2% lower at 1.3115.
The Japanese Yen fell 1.4% closing at $148.71.
Bonds
Germany’s 10-year yield closed 11 basis points higher 2.21%.
Britain’s 10-year yield closed 10 basis points higher at 4.13%.
U.S.10 Year Treasury closed 18 basis points higher at 3.97%.
Commodities
West Texas Intermediate crude closed 0.91% higher at $74.38 a barrel.
Gold closed 0.2% lower at $2653 an ounce.
This morning on the Economic Front we have German Factory Orders at 7.00 am followed by Euro-Zone Sentix Investor Confidence at 9.30 am and Retail Sales at 10.00 am. Finally, we have speeches from Fed Members Bowman, Kashkari, Bostic and Musalem this afternoon/evening.
Cash S&P 500
There is no doubt that we are in a major frustration phase of this incredible bull market and probably one of the most complex market environments that we have ever faced. Markets are historically extremely valued; charts are stretched with negative divergences everywhere. We are in a seasonally weak period yet the S&P closed just 16 Handles from its all-time high on Friday so justifying new longs makes little sense yet these markets will not drop even as volatility in terms of the VIX is high suggesting we are in the middle of a larger correction yet we are not. But markets are continuing to ignore everything, even again the most geopolitical risk. Why? Markets continue to be drowned in liquidity and easing financial conditions as shown by the $HYG which now has the most overbought weekly RSI in history. We are seeing record debt issuance with last week alone seeing $373 Billion of new debt added in just four days with $204 Billion added on Wednesday alone. Since the ‘’Fiscal Responsibility Act’’ was passed $4.3 trillion of debt has been added in the past 18 months. All this coming four weeks out from the Presidential Election in the seasonally worst time of the year is just mind boggling. Globally we are seeing rate cuts everywhere. Even Japan after one 25 basis point rate rise said it will soon reverse this hike and it is why the Japanese Yen fell over 4% last week. Against this backdrop it is hard to believe that the NFP increased 254K on Friday given the revisions that have followed the NFP all-year. Looking at the Quarterly Chart since the Global Financial Crisis S&P bottom at 666 every Quarterly 5 EMA tag has been met by massive intervention either verbally or by some form of QE. If in the next few weeks, we do get a tag for this Quarterly EMA, the maximum retracement will be a test of 5385/5405. I have no idea when my ‘’Nothing Matters’ theme ends but I just cannot be a buyer against this backdrop. Incredibly the McClellan Oscillator closed negative on Friday (-53) with the market at or near all-time highs while the ‘’Fear & Greed’’ Index continues to print ‘’Extreme Greed’’ and major caution from where I sit. My plan of waiting patiently to sell rips has worked really well over the past few weeks but you have to be quick to take any gain. Post the NFP release on Friday the S&P traded higher to my 5752-sell level before falling over 45 Handles. This move lower saw my 5734 T/P level triggered and I am now flat. Subsequently the S&P made a new intra-day high into the close at a price of 5755. The S&P has further resistance from 5768/5786 where I will again be a seller with a higher 5801 ‘’Closing Stop’’. The S&P has short-term support at last Thursday’s 5675 low print. I will now raise my buy level to 5665/5685 with a higher 5649 ‘’Closing Stop’’.
EUR/USD
The Dollar gathered further momentum on Friday. This move higher saw the Euro hit my second buy level at 1.0970 for a now 1.1015 average long position. I will leave my 1.0915 tight ‘’Closing Stop’’ unchanged while lowering my T/P level to 1.1050. If any of the above levels are hit, I will be back with anew update for my Platinum Members.
Dollar Index
The Dollar surged on Friday, trading the whole of my sell range for a now 102.40 average short position. I will leave my 103.15 ‘’Closing Stop’’ unchanged while raising my T/P level to 102.10. 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 traded in a narrow range since Thursday’s Commentary, and I am still flat. Given the backdrop in the German Economy I have no interest in buying the market. However, with buyers turning up on every sell-off it is difficult to be short. For these reasons I will not chase the DAX lower, continuing to be a seller on any further rally to 19520/19620 with the same 19705 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 19450.
Cash FTSE
The boring action in the FTSE shows no sign of ending . I have no interest in chasing the market higher as I continue to be a strong buyer on any dip lower to 8160/8230 with a higher 8095 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 8280. I still do not want to be short the FTSE at this time
Dow Rolling Contract
No Change: The Dow never came close to Thursday sell range and I am still flat. I have no particular edge in the Dow at these levels. I just cannot be a buyer given how overbought the market is trading while I am not going to chase the market lower. The Dow has resistance from 42600/42850 where I will continue to be a seller with the same 43105 wider ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 42380.
Cash NASDAQ 100
My NDX plan worked well as the market rose to my 20020-sell level on Friday before thankfully selling off to my 19860 T/P level and I am now flat. This morning the NDX is trading higher at a price of 20040. We have further resistance from 20100/20260 where I will again be a seller with a higher 20405 ‘’Closing Stop’’. I still do not want to be long the NDX at this time. If this view changes, I will be back with a new update for my Platinum Members.
December BUND
A much higher than expected NFP print saw Bund Yields close 12 basis points higher on Friday and I am still flat as I had no buy range in Thursday’s commentary. The Bund has support below from 132.40/133.20 where I will be an aggressive buyer with a 131.75 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 133.80. I no longer want to be short the Bund at this time.
Gold Rolling Contract
Gold closed flat again on Friday and I am still flat. As I have said for the past two weeks, I have no interest in chasing the price of Gold higher, preferring to be a buyer of Silver. Gold has short-term support from 2570/2588. I will continue to be a buyer on any dip to this area with the same 2559 tight ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2602.
Silver Rolling Contract
Frustratingly, Silver just missed Thursday’s buy range by a few points before rallying. I will now raise my Silver buy level to 30.70/31.60 with a higher 29.55 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 32.35.
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