U.S Equity Markets and Treasuries traversed higher throughout Wednesday’s session aside from a knock in stocks around the cash equity open. The post-CPI extremes had pared somewhat although T-Notes remained well below pre-CPI levels and E-Mini S&P futures reclaimed 5000, albeit still off the pre-data highs. The Fed appear to be downplaying the impact of the hot January CPI report with Powell in a closed-door meeting telling Congress the inflation data was consistent with what they had been anticipating and they will be looking to the PCE report to give them more intel. Goolsbee also stated it is still clear that inflation is coming down. There was little reaction to the U.S. PPI revisions which saw the headline revised down but the core left unchanged. In FX, the Dollar was sold after the post-CPI rally but Sterling underperformed after cooler-than-expected inflation data while the Antipodes outperformed, tracking upside in stocks. USD/JPY remains above 150 despite officials jawboning overnight. Oil prices initially gained throughout the European morning on ongoing geopolitics, but the complex tumbled on a much larger build than expected in the weekly DoE inventory report. In Treasuries, the curve bull-steepened in a gradual post-CPI recovery with corporate supply weighing out the curve. Looking ahead, Thursday has a massive slew of US data: Retail Sales, Import/Export Prices, Philly and Empire Fed surveys, Industrial Production, and NAHB index. On Friday, we get the Michigan consumer survey and the Jan PPI figures. In a closed-door meeting, Fed Chair Powell told Congress after the CPI report that the inflation data was “consistent with what they had been anticipating” and the Fed would look to the upcoming PCE report to give them more intel, according to Politico citing Representative Stephen Lynch. Meanwhile, Fed’s Waller said that one lesson from 2020 is that forward guidance should be more flexible and forward guidance perhaps should also signal the possible path of the policy rate. Meanwhile, Fed Member Goolsbee (voter and dove) said even if inflation comes in a bit higher over the next few months, it is still consistent with the Fed’s path back to target. Goolsbee said he does not support waiting until inflation is already at 2% on a 12 month basis before cutting rates, and added cuts should be tied to confidence in being on a path towards the target rate. The Chicago Fed President added that if the Fed stays restrictive for too long, the Fed will have to worry about the employment side of its mandate, noting current policy stance is quite restrictive. Meanwhile, the supply side may continue to help the Fed this year but higher productivity growth, if it continues, would have a profound implication for Fed policy making. On inflation, Goolsbee said he expects improvements in housing services inflation to resume although acknowledged the January CPI data was puzzling and it is something he is watching. Elsewhere, Oil closed 1.70% lower while Gold closed flat, unable to gain any bounce back from yesterday’s hammering.
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For anyone following my Platinum Service it was flat yesterday and is still ahead by 581 points for February 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 0.96% higher at a price of 5000.
The Dow Jones Industrial Average closed 151 points higher for a 0.40% gain at a price of 38,424.
The NASDAQ 100 closed 1.18% higher at a price of 17,807.
The Stoxx Europe 600 Index closed 0.5% higher.
Yesterday, the MSCI Asia Pacific closed 0.6% higher.
Yesterday, the Nikkei closed 0.69% lower at a price of 37,703.
Currencies
The Bloomberg Dollar Spot Index closed 0.17% lower.
The Euro closed 0.2% higher at $1.0731.
The British Pound closed 0.2% lower at 1.2564.
The Japanese Yen rose 0.1% closing at $150.61.
Bonds
Germany’s 10-year yield closed 7 basis points lower at 2.33%.
Britain’s 10-year yield closed 10 basis points lower at 4.05%.
U.S.10 Year Treasury closed 7 basis points lower 4.26%.
Commodities
West Texas Intermediate crude closed 1.70% lower at $76.55 a barrel.
Gold closed 0.1% lower at $1992.10 an ounce.
The morning on the Economic Front we have U.K. GDP, Trade Balance and Industrial Production at 7.00 am. Next, we have a speech from ECB President Lagarde at 8.00 am, followed by Euro-Zone Trade Balance at 10.00 am. At 1.30 pm we have U.S. Weekly Jobless Claims, Import/Export Price Index, Retail Sales and the Philly Fed Manufacturing Survey. Next, we have Capacity Utilisation and Industrial Production at 2.15 pm. Finally, we have Wholesale Inventories and the NAHB Housing Market Index at 3.00 pm.
Cash S&P 500
From early January, I had a target level in the VIX above 17. Tuesday’s 130 Handle sell-off saw the VIX spike to an intra-day high at 18 before selling off 2.5 points into the close. That reversal continued yesterday with the VIX closing a further 10% lower at a price of 14.38. I should have paid more attention to Tuesday’s VIX reversal as shortly after I posted last night Treasury Secretary Yellen was on the wires stating that ‘’while losses in commercial real estate was a worry, U.S. regulators are working to ensure that liquidity levels in the financial system are adequate to cope with’’. The message here is no matter what is thrown at markets, Yellen will be there to ensure that liquidity will continue to be injected into the system. As I have stated consistently over the past few months, markets are not allowed to fall especially in a Presidential Election Year. Nothing was broken with Tuesday’s sell-off as this massive bull market just keeps cranking higher. Apart from the odd day, we are seeing zero price discovery. There is no doubt that this will end in tears but until some key Moving Averages are broken then bears have nothing to work with. Yellen cannot afford Bond Yields to move higher given the level of debt that the Treasury has to finance. With $NYSI and $NYSO stochastics on the floor, I just cannot make a bearish case. The only time I will try a short position is when the 14 Day RSI gets over 73. This has worked well so far in 2024 but you have to be quick to take any gain. I am still flat the S&P as thanks to Yellen the market never came close to yesterday’s buy range. I will now raise my buy level to 4962/4977 with a higher 4949 ‘’Closing Stop’’. Ahead of tomorrow’s key PPI data, I am reluctant to chase the S&P higher.
EUR/USD
No Change: I am still long the Euro from late Tuesday at a price of 1.0705. I will continue to look to add to this position on any further move lower to 1.0645 while leaving my 1.0595 ‘’Closing Stop’’ unchanged. I have a T/P level at 1.0765 on this position. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
Back to normal 25-point trading range for the Dollar as yet again currency volatility for the major currencies is non-existent. I am still short the Dollar at a price of 104.80 with the same 104.30 T/P level. I will add to this position at 105.40 while leaving my ‘’Closing Stop’’ unchanged at 106.05.
Cash DAX
European Indexes continue to trade in their own narrow ranges. Every dip in the DAX so far this year is bought as bulls remain in total control. No matter how bad the economic news, buyers turn up at every dip. This is the main reason why I have only attempted a short DAX position a couple of times this year. This morning, the DAX is trading at 16990. We have short-term support from 16700/16790 where I will again be a buyer with a higher 16595 ‘’Closing Stop’’. Given how overvalued the DAX is trading, I am reluctant to chase the market higher. I still do not want to be short the DAX at this time. If this view changes, I will be back with anew update for my Platinum Members.
Cash FTSE
Frustrating! I get stopped late Tuesday at 7515, only for the market to rally 80 points yesterday and I am still flat. Today, I will raise my buy level to 7450/7520 with a higher 7385 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 7575.
Dow Rolling Contract
Despite Tuesday been the largest one-day fall in the Dow since March 2023, we saw no follow through yesterday helped again by Yellen’s ‘’Concerned Comment’’. Poor bears cannot get any break to the downside as every dip gets bought. Tuesday was the fifth one-day sell-off since Mid-December that saw no follow through to the downside as this ‘’managed’’ market continues to ignore any bad news. I will now raise my Dow buy level to 38000/38250 with a tight 37855 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 38430. I still do not want to be short the Dow at this time. If this view changes, I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
I am still flat the NDX as the market led Wednesday’s gains helped by the fall in Treasury Yields. I will now raise my NDX buy level to 17550/17700 with a higher 17435 ‘’Closing Stop’’. I still do not want to be short the NDX at this time.
March BUND
Unfortunately, the Bund just missed yesterday’s buy range before having a late 100-point rally and I am still flat. Just like equity markets it is very difficult to be short the Bund as it is clear the ECB do not want higher long-term rates given the level of debt in the Euro-Zone. I will now raise my Bund buy level to 132.50/133.20 with a higher 131.85 ‘’Closing Stop’’.
Gold Rolling Contract
No Change: I am still long Gold from Tuesday at an average rate of 1998 with the same 2007 T/P level. Although Equity and Bond Markets recovered yesterday, Gold did not move, closing unchanged at 1992. I will leave my 1979 wider ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Silver Rolling Contract
No Change. The boring price action shows no sign of ending unfortunately. 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. This morning, Silver is trading higher at a price of 22.35. I will continue to look to add to my existing long position on any further move lower to 21.50. If this view changes, I will be back with a new update for my Platinum Members.
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