U.S. Indices closed higher on Wednesday, but small caps continued to surge while the NASDAQ closed marginally higher. The outperformance in the Russell was led by more dovish rate cut bets, which were bolstered by Treasury Secretary Bessent advocating for a 50bps move in September. Money markets now fully price in a 25bp rate cut in September. Meanwhile, the Treasury Secretary also announced that there are 11 candidates for Fed Chair, all of whom have now been named, but some suggest that they are interviewing a wide range of candidates is a tactic to put pressure on the Fed. Note, a lot of the candidates who have been interviewed are calling for lower rates and/or are critical of the Fed. T-notes rallied throughout the session but pared ahead of settlement, almost completely paring the post-CPI downside in the long-end. In FX, the Dollar was weighed by lower yields while G10 FX performed well, particularly GBP and NZD. Crude prices settled red but well off the earlier lows. Weakness was seen in the wake of the inventory data but pared into settlement with eyes on the Trump/Putin meeting. The White House has been tempering expectations ahead of the meeting, but Trump suggested there will be a second, more important meeting if the first goes well. Gold prices benefited from the weaker dollar and lower yields on prospects of a more dovish Fed. Fed Member Bostic sees one rate cut in 2025 as appropriate, but it is predicated on the labour market staying solid. Bostic feels like they have the luxury today to wait to make a policy adjustment because the labour market remains strong. On consumers, he said low-to-moderate income consumers are still facing some stress, which is starting to move up the income scale, but upper-income consumers are still ok. The Atlanta Fed President added that they know a lot more people are using credit cards to buy things that they weren’t before, which signals something about where the consumer is. Meanwhile, Goolsbee the Chicago Fed President said that Fed meetings coming up are live. He noted that tariffs are a stagflationary shock, and he is uneasy about the view of tariffs as a one-time shock that creates only transitory inflation. He added there would be more of a concern if they started getting more reports like the latest CPI report, where components not tied to tariffs are rising. He stressed he does not like pre-committing on rates, and the Fed will still get inflation readings before the next meeting. On the labour market, he said, sharply lower job gains may reflect the transition period on immigration and may just be a sign of a drop in population growth. He described the labour market as pretty solid. He also noted that if inflation goes the wrong way, the Fed will have to act, but at the same time, there are some warning signs in the labour market, and they will need to keep an eye on that as well.
To mark my 3225th 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 315 points yesterday and is now ahead by 1642 points for August after closing July with a gain of 3753 points after closing June with a gain of 3530 points, having closed May with a gain of 3606 points, 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 2300 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 0.32% higher at a price of 6466.
The Dow Jones Industrial Average closed 463 points higher for a 1.03% gain at a price of 44,922.
The NASDAQ 100 closed 0.04% higher at a price of 23,849.
The Stoxx Europe 600 Index closed 0.54% higher.
This Morning, the MSCI Asia Pacific closed 0.4% lower.
This morning, the Nikkei closed 1.45% lower at a price of 42,649.
Currencies
The Bloomberg Dollar Spot Index closed 0.27% lower.
The Euro closed 0.23% higher at $1.1701.
The British Pound closed 0.45% higher at $1.3570.
The Japanese Yen rose 0.32% closing at $147.32.
Bonds
U.K.’s 10-Year Gilt closed 3 basis points lower at 4.60%.
Germany’s 10-Year Bund Yield closed 5 basis points lower at 2.69%
U.S.10 Year Treasury closed 5 basis points lower at 4.24%.
Commodities
West Texas Intermediate crude closed 0.63% lower at $62.77 a barrel.
Gold closed 0.27% higher at $3357.10 an ounce.
This morning on the Economic Front we already had the release of U.K. June Monthly GDP which rose 0.4% versus +0.1% expected. Next, we have Euro-Zone GDP, Industrial Production and Employment Change at 10.00 am. This is followed by U.S. PPI and Weekly Jobless Claims at 1.30 pm. MBA Mortgage Applications at 12.00 pm. Finally, we have another speech from Fed Member Barkin at 7.00 pm.
Cash S&P 500
The S&P closed at yet another new all-time high as this relentless buying frenzy shows no sign of ending. It feels like one of those moments when the anticipation becomes almost overwhelming — you just want the event to happen. For me, that moment arrives in a few days, as Treasury settlements continue to drain liquidity from the market, the Reverse Repo facility falls from its current $50 billion level, and reserves begin to decline as the Treasury issues its full slate of T-bills. To be clear, this is not a call for a market crash. However, if liquidity has been the key driver of recent gains, the coming days should offer a clear read on where conditions truly stand. As of August 12, the TGA sits around $550 billion and still needs to rise to $850 billion. The VIX closed 2% lower at a price of 14.49 yesterday. The VIX is now severely oversold, and I am watching this key signal for a change in sentiment. With the 14 Day RSI closing at 68 last night, I will continue with my strategy of selling rallies. This worked well yesterday as after the S&P traded the whole of my sell range for a 6468 average short position the market sold off to an afternoon low at 6445. This move lower saw my revised 6451 T/P level triggered. Subsequently, I emailed my Platinum Members to sell the S&P again which we did just before the close at 6468 before covering this position at 6457 this morning and I am now flat. Today, I will again be a seller of the S&P from 6472/6492 with a higher 6511 ‘Closing Stop’. Given how overbought and overvalued the S&P is at this time I will not chase the S&P higher as I continue to look to buy the market on any dip lower to 6320/6340 with the same 6299 ‘Closing Stop’. If I am taken short, I will have a T/P level at 6446. If I am taken long, I will have a T/P level at 6363.
EUR/USD
I am still short the Euro at 1.1690. I will continue to look to add to this position on any further move higher to 1.1770 while leaving my 1.1825 ‘Closing Stop’ unchanged. I will now raise my T/P level to 1.1630. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
I am still long the Dollar at a rate of 98.00. I will add to this position at 97.30 while leaving my 96.75 ‘Closing Stop’ unchanged. I will now lower my T/P level to 98.50. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Russell 2000
The Russell tagged on a further 1.5% on Wednesday on the expected rate cut from the Fed following Treasury Bessent comments yesterday afternoon. This latest move higher saw my second sell level at 2310 triggered for a now 2280 average short position. With the Russell hitting key resistance at 2320 I am happy to have a short position on board especially given the number of negative divergences for both the S&P and NDX. I will leave my 2365 ‘Closing Stop’ unchanged while raising my T/P level to 2240. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
FTSE 100
I am still short the FTSE from Wednesday morning at 9175 with the same 9305 ‘Closing Stop’. I will continue to add to this position at 9245 while leaving my 9130 T/P level unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
The Dow is now approaching a potential breakout. Resistance at 45,000 has been a major hurdle since January, and this marks the fifth attempt to clear it. Whether it succeeds this time remains uncertain. More importantly, the setup highlights the divergence between the S&P 500’s heavy dependence on Nvidia and an average like the Dow, which is not reliant on Nvidia’s performance. Thankfully we have had no sell levels in the Dow over the past few days and are still flat. Given the number of open positions that I currently have I am going to stay flat the Dow today and reassess on Monday. If this view changes I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
I am still short the NDX at an average rate of 23620 with the same 23905 ‘Closing Stop’. As I wrote yesterday: In my opinion this is the most overvalued market in history but the problem is it can become even more overvalued as no one knows ’Where and When’’ it will top. I will now raise my T/P level to 23590 and reassess if triggered. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
December BUND
Shortly after I posted yesterday morning the Bund rallied to my 129.35 T/P level on my latest 129.00 long position and I am now flat. Ahead of tomorrow’s key Trump/Putin Summit I will not chase the market higher. Therefore, I will again be a buyer on any dip lower to 128.40/129.10 with the same 127.75 ‘Closing Stop’. If I am taken long, I will have a T/P level at 129.70.
Gold Rolling Contract
I am still flat as I continue to be a buyer on any further dip lower to 3305/3325 with the same 3289 ‘Closing Stop’. If I am taken long, I will have a T/P level at 3349. I no longer want to be short Gold at this time.
Silver Rolling Contract
I am still flat. Today, I will leave my Silver buy level unchanged at 36.50/37.30 with the same 35.25 ‘Closing Stop’. If I am taken long, I will have a T/P level 38.00.
Please Note: There will be no Daily Commentary tomorrow. Any of my calls that are not triggered today and are subsequently executed on Friday will see me return with updated emails for my Platinum Members.
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