Equity Markets were subdued on Wednesday in a quiet US session in the aftermath of Tuesday’s hot CPI figures. There was no US data to shape the narrative ahead of this afternoon’s Retail Sales and PPI figures, while the Fed remains in its FOMC blackout period. The mega-cap names were mixed, although Tesla (TSLA) was a notable underperformer amid a bearish Wells Fargo note. Commodities and related stocks generally did well for various reasons, with energy surging amid refinery outages in Russia after a fresh set of drone attacks from Ukraine and bullish US inventory data. Copper prices surged amid Reuters reports on production cuts from China’s top copper smelters as they seek to cope with a shortage of raw materials. Elsewhere, the Treasury sell-off extended post-CPI, with the solid 30-year auction results failing to ignite a meaningful reversal. The Dollar saw some marginal weakness, with activity currencies seeing marginal outperformance, whilst the Japanese Yen saw some weakness despite more momentum around a Bank of Japan hike next Tuesday with the upcoming wage negotiation results to be the deciding factor. Meanwhile, Analysts expect headline PPI to rise +0.3% M/M in February, matching the increase seen in January, while the annual rate of headline PPI is expected to rise to 1.1% Y/Y from 0.9% previously. Core PPI is expected to rise +0.2% M/M in February, cooling from the +0.5% rise in January, while the annual rate of core PPI is seen easing to 1.9% from a prior 2%. Now that we have the CPI data for February (core CPI +0.4% M/M vs an expected +0.3%; headline CPI +0.4% vs an expected +0.4%), analysts will use the PPI reading to model what the PCE and core PCE measures of inflation will look like in February (the Fed’s preferred gauge of inflation). “We can’t finalise our February core PCE forecast until after the release of Thursday’s PPI report, because many core PCE components are driven by the PPI rather than the CPI, including healthcare services and airline fares,” Pantheon Macroeconomics says, “the PPI and CPI measures can diverge substantially month-to-month, but we can be reasonably confident that a repeat of January’s 0.42% jump in the core PCE is unlikely.” On inflation, Fed Chair Powell last week told lawmakers that while it remains above 2%, it has eased substantially of late. Still, Powell stated that it would not be appropriate to reduce the policy rate until policymakers had greater confidence that inflation was moving sustainably towards 2%, adding that they were not looking for inflation to move all the way down to 2%, instead, the sustainability of the move was more important in assessing the outlook. He also said that the Fed was not looking for ‘better’ inflation readings than we have had recently but was looking for more of what we have seen. Currently, Money Markets are pricing three full 25bps rate cuts by the Fed this year, with some probability of a fourth. Rate cuts are expected to start in June. Elsewhere, Oil surged 3% while Gold ended Wednesday with a gain of 0.8%.
To mark my 2950th 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 182 points yesterday and is now ahead by 1612 points for March. 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 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 0.19% lower at a price of 5165.
The Dow Jones Industrial Average closed 235 points higher for a 0.61% gain at a price of 39,005.
The NASDAQ 100 closed 0.83% lower at a price of 18,068.
The Stoxx Europe 600 Index closed 0.16% higher.
Yesterday, the MSCI Asia Pacific closed 0.4% higher.
Yesterday, the Nikkei closed 0.26% lower at a price of 38,695.
Currencies
The Bloomberg Dollar Spot Index closed 0.13% lower.
The Euro closed 0.1% higher at $1.0947.
The British Pound closed 0.1% lower at 1.2788.
The Japanese Yen fell 0.1% closing at $147.82.
Bonds
Germany’s 10-year yield closed 4 basis points higher at 2.37%.
Britain’s 10-year yield closed 7 basis points higher at 4.12%.
U.S.10 Year Treasury closed 5 basis points higher at 4.20%.
Commodities
West Texas Intermediate crude closed 2.97% higher at $79.86 a barrel.
Gold closed 0.8% higher at $2174.10 an ounce.
This morning on the Economic Front we have speeches from ECB Members Elderson and Schnabel at 9.30 am and 11.00 am respectively. This is followed by U.S. PPI, Retail Sales and Weekly Jobless Claims at 12.30 pm. Finally, we have Business Inventories at 2.00 pm.
Cash S&P 500
This week’s Investors Intelligence Advisors’ Survey shows a near capitulation to the Bull Market. The percentage of bulls jumped to 60.9, which is the highest reading since the Summer of 2021. This extreme occurred during the tops in MEME stocks, SPACs, IPOs, EVs and many NFTs. The last time there fewer ‘’Bears’’ was in January-February 2018, which was the most extreme reading of the past 32 years. January 2018 marked the top of the S&P at the time before a nasty 20% correction ensued. Adding to my worries for this market is the amount of short volatility bets. The money flow into these ‘’Short Bets’’ has quadrupled in two years to a record $64 billion, according to Bloomberg. The co-chief investment officer of a volatility hedge fund summed it well in a recent article ‘’You are assuming a risk – the fact that the risk has not materialised does not mean that it does not exist. The longer the volatility has been suppressed, the more violent the reaction’’. I am still flat the S&P. Given the fact that the S&P is now trading outside the top of the Monthly Bollinger Band is another reason not to be long this market. It does not mean we do not trade higher but for me the risk/reward is not worth it. We have had an excellent start to the year, and I do not want to take silly risks. Today, I will continue to be a seller of the S&P from 5194/5210 with the same 5221 ‘’Closing Stop’’. My only interest in buying the S&P is on a large sell-off to 5040/5056 with a 5025 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 5180. If I am taken long, I will have a T/P level at 5080.
EUR/USD
No Change: I am still flat the Euro as the market again missed yesterday’s initial 1.0880 buy level with a 1.0910 low print. Today, I will continue to be a buyer on any dip lower to 1.0810/1.0880 with the same 1.0745 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 1.0940. I still do not want to be short the Euro at this time.
Dollar Index
I am still flat. Today I will leave my Dollar sell level unchanged at 103.30/103.80 with the same 104.45 ‘’Closing Stop’’. I still do not want to be long the Dollar at this time. If this view changes, I will be back with a new update for my Platinum Members.
Cash DAX
This is one of the great mysteries to me why the DAX continues to make new all-time highs almost every day. The German economy is in trouble, with a complete absence of any growth as shown by the awful economic data released over the past few months. We are staring at a Weekly RSI with a 78 print. The last time we saw a relentless move to the upside in the DAX was back in 2015. This move ended in tears with a 30% correction. I have no doubt the same will happen now, the only issue is when. Today, I will continue to be a seller of the DAX on any further rally to 18140/18230 with the same tight 18305 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 18020.
Cash FTSE
Tuesday’s aggressive move higher in the FTSE has left a large ‘’Open Gap’’ below. I will not chase the market higher leaving my 7650/7720 buy level unchanged with the same 7585 ‘’Closing Stop’’. I still do not want to be short the FTSE at this time. If this view changes, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
Frustratingly, the Dow missed yesterday’s 39240 initial sell level by 35 points before selling off 300 points from this high. I am still flat. Ahead of the key economic data this afternoon, I will not chase the market lower, leaving 39240/39490 sell level unchanged with the same 39735 ‘’Closing Stop’’. I still do not want to be long the Dow at this time. If this view changes, I will be back with a new update for my Platinum Members. If I am taken short, I will have a T/P level at 39050.
Cash NASDAQ 100
My NDX plan worked well as the market sold off to my 18040-buy level before rallying to my conservative 18150 T/P level and I am now flat. The NDX has strong resistance at last Friday’s 18418 all-time high. Today, I will be a small seller from 18360/18510 with a tight 18605 ‘’Closing Stop’’. The NDX has support from 17800/117950. I will now raise my buy level to this area with a lower 17695 ‘’Closing Stop’’.
March BUND
The Bund continues to follow 10-Year Treasuries lower. I am still flat as the Bund just fell shy of my buy level into the close. Today, I will again lower my buy level to 131.20/132.00 with a lower 130.55 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 132.60.
Gold Rolling Contract
I am still flat as Gold just missed yesterday’s buy range before following Silver higher into the New York close. Ahead of today’s key PPI data, I will leave my 2125/2142 buy level unchanged with the same 2109 wider ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2153.
Silver Rolling Contract
Finally: We were able to book a profit in Silver, helped by yesterday’s 3.5% rally. I covered my one-month long 24.24 Silver position at my revised 24.96 T/P level and I am now flat. Today, I will again be a buyer on any dip lower to 23.80/24.60 with no ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 25.70.
Please Note: There will no Daily Commentary tomorrow Friday or on Monday as it is a Bank Holiday in Ireland. (St Patricks Day). Any calls that are not hit today and are subsequently executed between Friday and Monday will see me return with updated emails for my Platinum Members.
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