U.S. Equity markets reversed earlier optimism on a better-than-expected CPI print. All three main American Indexes closed lower led by the NASDAQ 100 which ended yesterday’s session with a loss of 0.89%. The U.S. economy has been developing cracks in its foundation for months now. But recently, they have crept up to the surface. We can see this by simply taking a walk down Main Street in any small town in America. You see, the American economy is built on the success of small businesses. According to the U.S. Small Business Administration, small businesses generate about 44% of national economic activity. They create two-thirds of net new jobs. So, they are often an excellent barometer of how the country is faring. But today, small businesses are reeling. The National Federation of Independent Business’ (“NFIB”) latest release of its Small Business Optimism Index paints a shocking picture of just how tough conditions are becoming on Main Street. The survey goes out to 800+ different small businesses throughout the month. It asks respondents questions on hiring plans, sales expectations, and their overall outlook for business. In March, the index fell 0.8 points to a reading of 90.1. That marked 15 consecutive months in which the index was below its 49-year average of 98. The net percentage of small businesses who think it’s a good time for expansion has fallen to the lowest level since March 2009. That same month, in the midst of the Great Recession, the S&P 500 Index reached its bottom- closing at 676.53 on March 9, 2009. If you look closely at 2003, 2009, and 2020, the NFIB’s index hits its cycle-low around the same time the S&P 500 hits its bear market low. In 2003, the NFIB’s index reached a low of 94.70 in March. The S&P 500 bottomed six months earlier, in September 2002. In 2009, the NFIB’s index and the S&P 500 both bottomed in March. In 2020, the NFIB low was in April. The S&P 500 bottomed a month earlier, in March. The most recent bear market low for the S&P 500 was in October 2022, when the index closed at 3,577. THE NFIB’s current cycle low occurred in June 2022, four months before the S&P 500 bottomed out. The point is, the NFIB Small Business Optimism Index can be a good indicator as to the direction of the market. If the NFIB’s index continues to slowly improve, there is a good chance the market has already seen its low. But if the NFIB’s index falls even further in the months ahead, it is likely that the S&P 500 could see a new bear market low. Remember, the economy and the stock market are inextricably linked. And the NFIB Index could prove to be an important factor to watch as we get closer to the Federal Reserve’s next policy meeting in May. Ultimately, the faster the economy slows down and the more recessionary signals that appear, the more likely the Fed will be to pull back on rate hikes and ultimately bring them to a peak terminal target rate faster. As soon as the Fed hints at an end to its rate-tightening cycle, we will see a bond market rally as money managers and investors look to lock in higher yields. Within the S&P 500 Index, seven of 11 sectors finished lower. European Markets closed mixed. ECB Member de Galhau said that the Euro Area faces the possibility of entrenched inflation as food costs continue to rise, which could mean higher rates for longer. British Home Sales have nearly recovered in full to pre-pandemic levels, according to the latest survey from property website, Rightmove. In Asia, Japan’s domestic CPI slowed for the third straight month as easing commodity and fuel costs have lessened the cost burden on firms hit by higher raw material costs. China’s Government Bonds are seeing massive inflows as investors believe that the People’s Bank of China is likely to introduce further monetary easing. Elsewhere, Oil rose 2.12% while a weaker Dollar saw Gold rally 0.50%.
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For anyone following my Platinum Service it made 250 points yesterday and is now ahead by 920 points for April after closing March with a gain of 6168 points, while finishing February with a gain of 3164 points, after closing January with a gain of 4687 points, while finishing December with a gain of 2054 points. November ended with a gain of 4789 points, while finishing October with a record gain of 9619 points, making 6660 points in 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 HEREHERE Please subscribe to this for new interview notification
Equities
The S&P 500 closed 0.41% lower at a price of 4091.
The Dow Jones Industrial Average closed 38 points lower for a 0.11% loss at a price of 33,646.
The NASDAQ 100 closed 0.89% lower at a price of 12,848.
The Stoxx Europe 600 Index closed 0.13% higher.
Yesterday, the MSCI Asia Pacific closed 0.41% higher.
Yesterday, the Nikkei closed 0.57% higher at a price of 28,082.
Currencies
The Bloomberg Dollar Spot Index closed 0.6% lower.
The Euro closed 0.6% higher at $1.0989.
The British Pound closed 0.4% higher at 1.2481.
The Japanese Yen rose 0.4% closing at $133.20.
Bonds
Germany’s 10-year yield closed 6 basis points higher at 2.30%.
Britain’s 10-year yield closed 2 basis points higher at 3.54%.
U.S.10 Year Treasury closed 3 basis points lower at 3.40%.
Commodities
West Texas Intermediate crude closed 2.12% higher at $83.26 a barrel.
Gold closed 0.50% higher at $2014.10 an ounce.
This morning on the Economic Front we have German CPI at 7.00 am. At the same time, we have U.K. Industrial Production, GDP and the Trade Balance. This is followed by Euro-Zone Industrial Production at 10.00 am. Next, we have U.S. PPI and Weekly Jobless Claims at 1.30 pm. Finally, at 7.00 pm we have a speech from Bundesbank President Nagel.
Cash S&P 500
A 5% CPI print saw the S&P spike to a 4151 high print before aggressive selling saw the S&P fall 60 Handles. A market that cannot rally on good news is a warning sign for a more prolonged sell-off following a nice rally over the previous three weeks. This initial move higher saw the whole of yesterday’s sell range filled for a 4143 average short position. I had a too tight T/P level at 4121 which was quickly executed, and I am still flat. Yesterday’s move lower has produced a Downside Key Day Reversal which is short-term bearish. I no longer want to be long the S&P at this time. Today, I will again be a seller from 4115/4132 with a 4147 tight ‘’Closing Stop’’
EUR/USD
The Euro finally hit my 1.1000 target level as outlined two weeks ago. I am still flat as the market never came close to yesterday’s buy range. The Euro has resistance from 1.1050/1.1110 which is the February high. I will be a strong seller in this range with a 1.1175 ‘’Closing Stop’’. Meanwhile, I will continue to be a buyer on any dip lower to 1.0790/1.0860 with the same 1.0715 ‘’Closing Stop’’.
June Dollar Index
The sell-off in the Dollar saw my initial 101.50 buy level triggered. I am still long, and I will add to this position at 100.80 with the same 100.15 ‘’Closing Stop’’. I will now lower my T/P level to 101.90. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash DAX
Frustratingly the DAX missed my initial 15840 sell level by 10 points before falling to sit at 13670 as I go to press. It is incredible that yesterday’s 15830 high print is basically near all-time highs which is insane when you look at the macro-economic situation. The DAX has seen every dip being bought since the October lows as the market defies all inflation or economic slowdown concerns and ignoring monetary tightening. The technical picture appears to be shifting as yesterday’s highs as come on a weekly negative divergence. It is a similar scenario with Apple Shares as it has led the S&P higher all-year. Apple has got so big that it has accounted for nearly 25% of the S&P gain for the year. These moves are not sustainable and are a red flag for me as we approach the key May period. I will now lower my DAX sell level to 15750/15850 with a lower 15945 ‘’Closing Stop’’.
Cash FTSE
My FTSE plan worked well as the market traded higher to my 7850-sell level before falling 60 points. This move lower enabled me to cover this position at my revised 7820 T/P level and I am still flat. Today, I will again be a seller on any further rally to 7830/7890 with a lower 7945 ‘’Closing Stop’’.
Dow Rolling Contract
I am still flat the Dow as the market did not come close to yesterday’s buy range despite having a similar Downside Key Reversal as the S&P above. With the 50-Day Moving Average at 33110 offering strong support, I will now lower my buy level to 33050/33300 with a lower 32895 ‘’Closing Stop’’. Ahead of tomorrow’s bank earnings I do not want to be short the Dow.
Cash NASDAQ 100
Just before the closes the NDX accelerated lower to my 12870-buy level. I am still long. I will now add to this position at 12720 while leaving my 12595 ‘’Closing Stop’’ unchanged. I will now lower my T/P level to 12960. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
June BUND
The Bund sold off to my second buy level at 135.30 for a now 135.60 average long position. I will leave my 134.95 ‘’Closing Stop’’ unchanged while lowering my T/P level to 136.15.
Gold Rolling Contract
I am still flat as Gold never came close to yesterday’s buy range. I do not trust this latest recovery in Gold as the Dollar is getting overbought. Ahead of PPI my only interest in buying Gold is still on a dip lower to 1975/1990 with the same 1959 ‘’Closing Stop’’.
Silver Rolling Contract
No Change. I am still flat Silver as the market traded in a narrow range since yesterday’s Daily Commentary. Today, I will leave my 23.70/24.50 buy level unchanged with the same 22.95 ‘’Closing Stop’’. Update: The Cash Silver hit my 25.50 T/P level on 50% of my 20.00 long position for my pension fund. I will hold the remaining 50% for now. If Silver dips over the coming weeks, I will look to buy back the portion I exited yesterday afternoon.
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