U.S Equity Markets extended their sell-off on Wednesday where an ugly last hour saw all three Indexes close near the lows the day. The NDX again led yesterday’s decline, closing lower by over 1%. Rising Bond Yields did not help with the 10-Year now trading above 4.25%. The FOMC Minutes were bearish with no-talk of Rate Cuts as economic data for the most part firm. Target (TGT) reported strong earnings in the second quarter as excess inventory that had accumulated since last year began to fall back to normal levels. Despite this marginal progress, the retailers saw sales decline for the first time in four years. On top of that, Target cut its profit outlook for the year and anticipates consumers to continue to pull back on larger discretionary purchases such as home goods, toys and electronics, and apparel. The latest data out of the U.S. Commerce Department shows retail sales rose 0.7% in July after upward revisions in the previous two months. Sales increased in nine of the 13 retail categories, including sporting-goods stores, clothing outlets, and restaurants and bars. The data reveals that American households, supported by a strong labour market and rising wages, are finding ways to weather current economic conditions. However, while consumers are starting to regain their purchasing power, the resumption of student loan payments and Americans’ little savings still paint a cloudy picture. The National Association of Home Builders (“NAHB”) reported that U.S. homebuilder sentiment declined for the first time this year in August. The NAHB’s gauge decreased six points to a reading of 50, coming in lower than all Bloomberg estimates. According to the report, sentiment is down across all major U.S. regions – reaching levels not seen since May. Higher borrowing costs have led to low resale inventory, which has fared well for builders up until August. This month, high construction costs and mortgage rates have finally caught up to the industry, creating a slowdown in new construction. Minneapolis Federal Reserve Bank President Neel Kashkari would not commit to saying that the Fed is done raising interest rates, during an interview late Tuesday. Kashkari admitted that there were positive signs emerging that suggest the central bank could end rate hikes. However, he remained steadfast in his belief that inflation still remains too high. European Markets closed flat following a quiet trading session. In Asia, Investors across the globe are questioning the strength of the Chinese economy. The People’s Bank of China unexpectedly lowered interest rates to 2.5% this week, down from the previous 2.65% level. This decision came after July data, released on Monday, showed the country’s declining retail sales growth, dwindling investments, and soaring unemployment. China’s bank loans also fell to the lowest level in 14 years last month. Plus, the Chinese government announced that it has suspended publishing youth unemployment data to review complexities in the numbers. All eyes are on President Xi Jinping to see how he tackles the spiralling economy. Japan’s economy expanded in the second quarter at the fastest pace since 2015 (excluding 2020). The nation’s real Gross Domestic Product rose 1.5% quarter-over-quarter, largely fuelled by a surge in exports. Japan’s Economy Minister, Shigeyuki Goto, believes that a moderate recovery will continue as long as the government support remains intact. Elsewhere, Oil closed 2% lower while a stronger Dollar saw Gold break $1900, closing lower by 0.3%
To mark my 2850th 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 lost 85 points yesterday and is now ahead by 1450 points for August 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 3164 points in February, 4687 points in January 2054 points in December, 4789 points in November and 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 0.76% lower at a price of 4404.
The Dow Jones Industrial Average closed 180 points lower for a 0.52% loss at a price of 34,765.
The NASDAQ 100 closed 1.07% lower at a price of 14.786.
The Stoxx Europe 600 Index closed 0.08% lower.
Yesterday, the MSCI Asia Pacific closed 1.1% lower.
Yesterday, the Nikkei closed 1.46% lower at a price of 31,766.
Currencies
The Bloomberg Dollar Spot Index closed 0.4% higher.
The Euro closed 0.1% lower at $1.0880.
The British Pound closed 0.2% higher at 127.30.
The Japanese Yen fell 0.4% closing at $146.29.
Bonds
Germany’s 10-year yield closed 2 basis points lower at 2.69%.
Britain’s 10-year yield closed 6 basis points higher at 4.65%.
U.S.10 Year Treasury closed 3 basis points higher at 4.25%
Commodities
West Texas Intermediate crude closed 1.99% lower at $79.38 a barrel.
Gold closed 0.3% lower at $1893.10 an ounce.
This morning on the Economic Front we have the release of Euro-Zone Trade Balance at 10.00 am. This is followed by U.S. Weekly Jobless Claims and the Philly Fed Manufacturing Survey at 1.30 pm. Finally, we have a 4-week Treasury Bill Auction at 4.30 pm.
Cash S&P 500
Frustratingly, the S&P missed my 4455-sell level with a 4451 high print before selling off nearly 50 handles yesterday. The 50 Day Moving Average at 4449 will now act as resistance on any bounce over the coming days. One stat that amazes me is the S&P is only down by 5% from recent highs yet the $NYMO closed with a reading of -88 last night. This is the worst reading since the March lows, and close to par with what we saw last September and October. Can it drop further? Of course, but in my opinion it is not the time to be initiating new shorts especially when the S&P also closed blow its Daily Bollinger Band. Seasonality starts to improve next week which is another reason why not to be short and is why I am long the market aggressively at the minute. Just to add to my bullish case is the McClellan Oscillator which closed last night at a severely oversold -258 print. Yesterday’s late sell-off as me long at 4408. I will add to this position at 4390 while leaving my 4379 ‘’Closing Stop’’ unchanged. I will now lower my sell level to 4445/4462 with a 4475 tight ‘’Closing Stop’’. I will have a T/P level at 4422 on my long position. If I am taken short, I will have a T/P level at 4432.
EUR/USD
No Change. Despite the aggressive sell-off in U.S. Equity Markets yesterday, the Euro traded in a narrow range over the past 24 hours. I am still long at 1.0970 with the same 1.0875 ‘’Closing Stop’’. I will now lower my T/P level to 1.1000. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
June Dollar Index
No Change. I am still flat as the Dollar fell shy of yesterday’s sell range. I will again raise my sell level to 103.70/104.30 with a higher 104.81 ‘’Closing Stop’’.
Cash DAX
Despite the American Indexes selling yesterday, the DAX closed flat. I will not chase the DAX higher leaving my 15450/15550 buy level unchanged with the same 15355 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 15680.
Cash FTSE
Wrong! The FTSE was weak all-day yesterday, stopping me out of my 7440 long position at 7355 and I am still flat. I am going to stay flat the FTSE as I have enough long exposure in the American Indexes. If this changes I will be back with a new update for my Platinum Members.
Dow Rolling Contract
Weak earnings from Target saw the Dow hit my second buy level at 34800 for a now 34925 average long position. I will now lower my T/P level to 35060 while leaving my tight 34695 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
With the $BPNDX RSI closing at 20 last night for the worst reading since October there is no way that I cannot be long the NDX. Even the December reading was above 20, leading to a 15% rally in the NDX over the ensuing 8 months. I am seeing positive divergences everywhere in technology. Yesterday’s 1% fall saw my second buy level at 14950 executed for a now 15085 average long position. I will continue with no stop on this trade while lowering my T/P level to 15200. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
September BUND
No Change. I am still long from Tuesday at an average rate of 131.10 with the same 131.50 T/P level. I will leave my 130.15 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
I am still flat Gold. The market is severely oversold as I continue to be a buyer on any dip lower to 1875/1890 with the same 1863 tight ‘’Closing Stop’’.
Silver Rolling Contract
No Change. Silver continues to trade in narrow ranges which is surprising given the recent weakness in Gold. I am still long at an average rate of 24.20 with the same 24.70 T/P level. Even though Silver is trading lower at 22.41 this morning I will continue to have no stop on this position. If this view changes I will email my Platinum Members.
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