U.S Equity Markets closed higher on Wednesday with a lack of major news or data to go off ahead of this afternoon’s key CPI data. Tech was an outperforming sector with the NDX outperforming the SPX. All three main Indexes closed higher, led by the 0.69% gain in the NASDAQ 100. Meanwhile, the small-cap Russell 2000 Index was a relative underperformer, and perhaps that was exhibitive of some hedging/caution ahead of the expected rise in US CPI on Thursday, with the Index perceived most at risk to higher yields currently. Treasuries themselves were choppy on the day and ultimately slightly lower with an average 10year auction and plenty of corporate and sovereign supply globally preventing any recovery attempts – Bloomberg reported Euro issuance has totalled a record EUR 108bln for the week so far. Fed’s Williams (voter) spoke late in the day, saying the Fed “will need to maintain a restrictive stance of policy for some time”; Fed pricing is little changed, with 140bps of cuts priced for 2024 and a March implied cut still at 70%. The Dollar Index was little changed, although the Japanese Yen was a standout underperformer with USD/JPY back above 145 and closing in on 146 already, with aforementioned pre-CPI positioning and a notable decline in the Japanese wage data for November. Oil prices were lower after another massive build in US energy inventories were reported. Bitcoin was choppy after the SEC officially approved Spot BTC ETFs. Fed’s Williams (voter), in a speech, stressed that the Fed’s work to bring inflation back to 2% is not done. He said, “I expect that we will need to maintain a restrictive stance of policy for some time, and it will only be appropriate to dial back the degree of policy restraint when we are confident that inflation is moving toward 2% on a sustained basis.” He noted the outlook is still uncertain and rate decisions will be made meeting-by-meeting and driven by the totality of data. He noted that risks to the economy are two sided, while he also provided us with his economic forecasts. The New York Fed President sees 2024 GDP at around 1.25% (beneath Fed median Dec SEP of 1.4%), 2024 unemployment at 4% (beneath Fed median of 4.1%), 2024 inflation at 2.25% (beneath Fed median of 2.4%) and 2% in 2025 (beneath Fed median of 2.1%). He noted things are looking very good on the jobs front and the inflation situation has improved quite a bit, adding the Fed forecasts meaningful progress in restoring economic balance. On the balance sheet, he said the wind down is working as planned, and noted the Fed will slow and then stop the balance sheet runoff when reserves are somewhat above the level consistent with ample reserves, although “we don’t seem to be close to that point”, he added. In the Q&A, Williams said the Fed must be ready to react to unexpected events, but fears of inflation getting stuck at a high level are not coming to fruition. On rate cuts, he said he cannot say when the Fed will lower rates, but the timing depends on the economy. He said the Fed’s forecasts for the rate cut outlook (three 25bp cuts in 2024 seen in the December SEPs) make sense. Elsewhere, Oil closed 1.2% lower while Gold again closed flat.
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For anyone following my Platinum Service it made 35 points yesterday and is now ahead by 1248 points for January. December saw a gain of 1890 points after finishing November with a gain of 1734 points. October ended with a gain of 3184 points, 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 0.57% lower at a price of 4783.
The Dow Jones Industrial Average closed 170 points higher for a 0.45% gain at a price of 37,695.
The NASDAQ 100 closed 0.69% higher at a price of 16,793.
The Stoxx Europe 600 Index closed 0.18% lower.
This morning, the MSCI Asia Pacific closed 0.6% higher.
This morning, the Nikkei closed 1.77% higher at a price of 35,049. – This is a new 34-year high for the Nikkei.
Currencies
The Bloomberg Dollar Spot Index closed 0.21% lower.
The Euro closed 0.3% higher at $1.0971.
The British Pound closed 0.2% higher at 1.2740.
The Japanese Yen fell 0.9% closing at $145.67.
Bonds
Germany’s 10-year yield closed 3 basis points higher at 2.22%.
Britain’s 10-year yield closed 5 basis points higher at 3.83%.
U.S.10 Year Treasury closed 2 basis points higher 4.03%.
Commodities
West Texas Intermediate crude closed 1.20% lower at $71.37 a barrel.
Gold closed 0.2% higher at $2024.10 an ounce.
This morning on the Economic Front we have Euro-Zone Economic Bulletin at 9.00 am. This is followed by U.S. CPI and Weekly Jobless Claims at 1.30 pm. 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
Unfortunately, the S&P just missed yesterday’s 4745 buy level by a few handles before surging to sit at 4800 this morning. The S&P is now within touching distance of its 4818 all-time high. A benign CPI print this afternoon will see this level tested. However, with the VIX closing just 0.5% lower at a price of 12.69 last night it is difficult to make a strong case for buying the S&P at these levels as I do not expect the VIX to stay this low in Q1 especially now that share buybacks are virtually gone from the markets. In February we will see a few tech share buybacks but overall, this added liquidity is now finished. Yesterday’s move higher- which has continued overnight- is coming against a backdrop of a number of negative divergences. Thankfully we have stayed away from shorting this market over the past few weeks as short positions have again been runover ever since Yellen’s ‘’Soft Landing’’ comments last Friday. The S&P has resistance from 4815/4830 where I will be a small seller with a tight 4841 ‘’Closing Stop’’. I will now raise my S&P buy level to 4750/4765 with a tight 4739 ‘’Closing Stop’’. If this view changes I will be back with a new update for my Platinum Members.
EUR/USD
No Change. Apart from some volatility in the Japanese Yen, it has been a dull start to the Year for both the Euro and Dollar Index. Ahead of the all-important CPI this afternoon, l will stay flat. I will not chase the Euro higher, keeping my 1.0820/1.0890 buy level unchanged with the same 1.0765 ‘’Closing Stop’’. I still do not want to be short the Euro at this time. If I am taken long, I will have a T/P level at 1.0960.
Dollar Index
The Dollar traded in a narrow 30-point range for the second consecutive trading session and I am still flat. The Dollar has strong support from 101.00/101.70 where I will still be a buyer with the same 100.65 ‘’closing Stop’’. I no longer want to be short the Dollar. If this view changes, I will be back with a new update for my Platinum Members.
Cash DAX
Despite yesterday’s rally in both the S&P and NDX, the DAX underperformed by trading sideways yesterday. However, this morning the DAX is opening higher at a price of 16800. We have resistance from 16970/17070 where I will be a small seller with a 17175 ‘’Closing Stop’’. I will now raise my buy level to 16550/16650 with a higher 16475 ‘’Closing Stop’’.
Cash FTSE
The FTSE continues to trade heavy, trading in a narrow 40-point range. I am still flat. as the market never came close to Yesterday’s buy/sell ranges. I have never seen such a quiet start to the year for the FTSE which is surprising given how steady Sterling is trading while Gilt Yields continue to trade below the key 4.00/4.20% resistance level. Today, I will leave my sell level unchanged at 7750/7820 with a lower 7875 ‘’Closing Stop’’. The FTSE has short-term support from 7520/7590. I will now lower my buy level to this area with a 7475 tight ‘’Closing Stop’’.
Dow Rolling Contract
I am still flat the Dow as the market looks to test yesterday’s sell range. However, ahead of CPI this afternoon I do not want to be short. I will now raise my sell level to 38050/38300 with a higher 38455 ‘’Closing Stop’’. The Dow has support from 37200/37450. I will now raise my buy level to this area with a higher 37055. If I am taken short, I will have a T/P level at 37870. If I am taken long, I will have a T/P level at 37685.
Cash NASDAQ 100
Just like the S&P above, the NDX missed yesterday’s 16620 buy level by 30 points before rallying hard, sitting at 16900 this morning. I will now raise my buy level to 16600/16750 with a higher 16495 ‘’Closing Stop’’. The NDX has strong resistance from 17030/17180 where I will be an aggressive seller with a wider 17305 ‘’Closing Stop’’. If this view changes, I will be back with a new update for my Platinum Members.
March BUND
Just before the New York close the Bund traded lower to my 134.95 buy level before rallying this morning to my revised 135.30 T/P level and I am now flat. The Bund has further support below from 134.00/134.70 where I will again be a buyer with a lower 133.35 ‘’Closing Stop’’. I still do not want to be short the Bund at this time.
Gold Rolling Contract
No Change. Gold traded in a narrow range yesterday and I am still flat. Today, I will continue to be a buyer on any dip lower to 2000/2015 with the same 1999 ‘’Closing Stop’’. I still do not want to be short Gold at this time.
Silver Rolling Contract
No Change. I still believe in the bull case for this precious metal. I will continue to hold my 24.40 average long position with no stop or T/P level for now. If this view changes, I will be back with a new update for my Platinum Members.
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