U.S. Equity Markets closed in the green on Wednesday with the Dow outperforming while the Russell 2000 lagged. Sectors were predominantly firmer with Health, Technology and Industrials leading; Financials also saw decent gains ahead of the start of earnings. Utilities, Communications and Real Estate lagged. Communication weakness was weighed on by Google (GOOGL) after the Department of Justice indicated it is mulling a Google breakup. Meanwhile, China ADRs were hit with participants still sceptical about the actual impact fresh policy will have on the economy; the China Finance Ministry is to hold a press briefing on October 12th to introduce details of intensifying its fiscal policy. Out of the US saw commentary from Fed Vice Chair Jefferson who stuck to the script, while Fed’s Logan said she supported the recent rate cut but she supports a more gradual pace of easing ahead. The FOMC minutes revealed little new but highlighted how some participants would have preferred a 25bps cut at the September meeting, but the substantial majority backed a 50bps move. Elsewhere the US data saw disappointing Wholesale Sales data, but the Atlanta Fed GDPNow tracker was unchanged at 3.2%. T-notes sold off across the curve with lows seen after a mixed 10 Year Auction, while the move higher in yields supported the Dollar and weighed on the Japanese Yen. Elsewhere, the New Zealand Dollar underperformed the Australian Dollar after the RBNZ cut rates by 50bps as expected. Crude prices settled in the red with weakness seen in the wake of the inventory data showing a smaller build than the private report on Tuesday while participants are still wary of Israel’s response to Iran. Biden and Netanyahu had a conversation today to discuss the response but few details were revealed, although ABC reported that “members of the Biden administration were still relatively satisfied with the level of detail that was shared and felt the Israeli government was receptive to their arguments for sticking to conventional military targets rather than nuclear or oil production sites”. Attention turns to US CPI & Jobless Claims on Thursday, as well as the ECB minutes. The minutes in the FOMC highlighted the differences of opinion at the Fed, similar to the range of views seen in the Summary of Economic Projections. The minutes noted the 50bps rate cut was supported by a “substantial majority”, however some would have preferred to cut rates by 25bps, and a few others indicated they could have supported 25bps, while others noted there had been a plausible case for a 25bps cut in July. The arguments for a 50bp move were that the recalibration of the policy stance would bring it into better alignment with recent indicators on inflation and the labour market, and it would also help sustain the economic strength and labour market while continuing to promote progress on inflation. Some had also noted there had been a plausible case for a 25bp rate cut at the July meeting, and that inter-meeting data had provided further evidence that inflation was on a sustainable path towards 2% while the labour market continued to cool. Meanwhile, several said a 25bp cut would be in line with a gradual path of policy normalisation, and it would allow policymakers time to assess the degree of policy restrictiveness as the economy evolved, while a few added such a move could signal a more predictable path of policy normalisation. Meanwhile, some emphasise reducing policy restraint too late or too little could risk unduly weakening economic activity and employment, but several said reducing by too soon or too much could risk stalling or reversing progress on inflation. On the neutral rate, some said uncertainty about the longer-term neutral rate level complicated the assessment of the degree of restrictiveness, making it appropriate to reduce restraint gradually. On the balance sheet, several discussed the importance of communication QT could continue for some time, even as rates are reduced. On the economy, almost all participants agreed upside risks to inflation had diminished, and almost all judged risks to achieving the Fed’s goals were roughly in balance. Nonetheless, members viewed the economic outlook as uncertain and agreed that they were attentive to the risks to both sides of the Committee’s dual mandate. Elsewhere, Oil closed lower by 0.34% while a stronger Dollar weighed on Gold which ended Wednesday with a 0.5% fall.
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 lost 207 points and is now ahead by 703 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 0.71% higher at a price of 5792.
The Dow Jones Industrial Average closed 431 points higher for a 1.03% gain at a price of 42,562.
The NASDAQ 100 closed 0.80% higher at a price of 20,268.
The Stoxx Europe 600 Index closed 0.66% higher.
Yesterday, the MSCI Asia Pacific closed 0.5% higher.
Yesterday, the Nikkei closed 0.87% higher at a price of 39,277.
Currencies
The Bloomberg Dollar Spot Index closed 0.36% higher.
The Euro closed 0.3% lower at $1.0937.
The British Pound closed 0.2% lower at 1.3068.
The Japanese Yen fell 0.7% closing at $149.29.
Bonds
Germany’s 10-year yield closed 1 basis points higher 2.26%.
Britain’s 10-year yield closed 1 basis points lower at 4.18%.
U.S.10 Year Treasury closed 5 basis points lower at 4.06%.
Commodities
West Texas Intermediate crude closed 0.34% lower at $73.32 a barrel.
Gold closed 0.53% lower at $2607 an ounce.
This afternoon on the Economic Front we have the ECB Minutes from last Months’ Meeting at 12.30 pm. Next, at 1.30 pm we have U.S. CPI and Weekly Jobless Claims. This is followed by speeches from Fed Members Cook and Williams at 2.15 pm and 4.00 pm respectively. Finally, we have a 30-Year Treasury Auction at 6.00 pm and the Monthly Budget Statement at 7.00 pm.
Cash S&P 500
Wrong! Unfortunately, the S&P missed my 5728 T/P level with an overnight low at 5732 before rallying to my revised exit level at 5775 as emailed to my Platinum Members on yesterday’s 5742 average short position and I am now flat. The S&P closed at a new all-time high at 5792 as the ‘’Nothing Matters’’ theme gathered further pace on Wednesday. Note the daily Bollinger bands are beginning to narrow and tighten, this the result of the price compression in the past 3 weeks. Let’s be clear: This market is setting up for a larger move. The election is coming closer and closer. All election seasonality history suggests weakness is coming, the fact that it appears very much delayed during perhaps the most contentious election in history with emotions very high also appears to make little sense, unless perhaps markets perhaps sense a clear election winner and hence little uncertainty. I cannot even begin to speculate on that. All I know is that both candidates are making promises that would accelerate the deficit even higher and one can argue about the degree. Hey maybe that is the entire message here: Fiscal impulse will remain with us, Yellen or no Yellen, and will only get even more aggressive. The debt party must continue. Consequence free of course. Look, I am just speculating here in the face of highly unusual market behaviour. I do not like the risk/reward to the long side here at all, but fully cognizant of the factors at play as outlined above. For the S&P and the Dow to close at a new all-time high is making me look silly but I have to stick to my technical signals. This afternoon’s CPI data will be key as to whether the S&P continues to rally from here. The S&P rally is occurring on lagging upward momentum. Although the S&P can rally further from here my view is that this is an ending rally and not the start of a further meaningful move higher. The S&P has resistance from 5810/5830 where I will again be a seller with a higher 5844 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 5785. I still do not want to be long the S&P at this time. If this view changes, I will be back with a new update for my Platinum Members.
EUR/USD
The Euro again traded in a narrow range on Wednesday and I am still flat. I am still long at an average rate of 1.1015 with the same 1.0915 tight ‘’Closing Stop’’ I will now lower my T/P level to 1.1035. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
No Change: I am still short the Dollar from last Friday at an average rate of 102.40 with the same 103.15 ‘’Closing Stop’’. Meanwhile, I will leave my 102.10 T/P level unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members
Cash DAX
Yesterday, the German Economics Minister announced that Germany’s GDP growth for 2024 will hit -0.2% and the DAX rallies over 200 points from where I marked prices early Wednesday morning. It is incredible as the buy everything rally shows no sign of ending. The Market believes that inflation is dead as shown by Bund Yields sub 2.25%. What if the market is wrong and inflation starts to gather upside momentum. From where I live in Florida there is no easing in inflation especially in the super-markets. Yesterday’s move higher saw the DAX trade the whole of Wednesday’s sell range for a now 19275 average short position. I will leave my 19405 ‘’Closing Stop’’ unchanged while raising my T/P level to 19200. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash FTSE
My long 8215 long FTSE position worked well as the market rallied to my 8260 T/P level and I am now flat. Despite both the Dow and S&P closing at new all-time highs the FTSE I struggling to gain any upside momentum. Despite how heavy the FTSE is trading I have no interest in shorting the market. Today, I will again be a buyer on any dip lower to 8130/8200 with a lower 8065 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 8250.
Dow Rolling Contract
After the Dow hit my initial 42500 sell level we had a small sell-off to my revised 42422 T/P level and I am now flat. Although the Dow closed at a new all-time high it is still below the intra-day high of 42628 from September 27. Meanwhile, Breadth was only modestly positive on Wednesday with the NYSE advance/decline ratio closing at 1.34:1. This appears to be a tame reading for a market that closed up 431 points. However, a benign CPI print this afternoon should see a new intra-day high for the Dow. We have short-term resistance from 42780/43030 where I will again be a seller with a higher 43305 wider ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 42510.
Cash NASDAQ 100
The NDX never came close to yesterday’s buy range as thankfully we again had no sell level in this market and I am still flat. Ahead of CPI, I will not chase the NDX higher as I continue to be a buyer on any dip lower to 19560/19720 with the same 19395 ‘’Closing Stop’’. If triggered, I will have a T/P level at 19880.
December BUND
I am still flat as the Bund again traded in a narrow range. Today, I will continue to be a buyer on any further dip lower to 132.10/132.90 with the same 131.55 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 133.50. I still no longer want to be short the Bund at this time.
Gold Rolling Contract
I am still flat Gold as I continue to be a small buyer on any further move lower to 2570/2588 with the same 2559 tight ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2602.
Silver Rolling Contract
I am still long Silver at an average price of 31.05 with the same 31.70 T/P level. I will leave my 29.55 wider ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Please Note: There will no Daily Commentary tomorrow. Any of my calls that are not hit today will see me return on Friday with updated emails for my Platinum Members.
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