U.S. Equity Markets reversed Tuesday’s late sell-off to close in the green last night despite initial weakness at the open while the Russell 2000 led the gains and NASDAQ 100 again lagged. The majority of sectors were green with outperformance in Utilities, Financials and Real Estate, with Financials buoyed by strong MS earnings. Communication, Consumer staples and Technology lagged with the former two being the only sectors closing lower with communication hit by weakness in Meta (META). T-notes settled slightly in the green albeit primarily a function of softer New Zealand and UK inflation data as opposed to anything US-specific. US Import and Export prices both declined with export prices dropping more than expected, but little impact was seen. In FX, the Dollar outperformed with other currencies sold, namely Sterling, Australian Dollar and the New Zealand Dollar. Crude prices settled marginally lower with prices chopping to reports of an Iranian oil spill. Despite the odds of an October move being seen as significantly more unlikely than likely in the wake of the September announcement, soft PMI and CPI metrics have seen a dramatic ramp up in easing expectations by the ECB when it announces its latest findings at 1.15 pm. Focus for the release will be on how Lagarde guides the cadence of further easing given that the Bank has been disturbed from what appeared to be an approach of only easing at meetings containing macro projections. Elsewhere, oil closed lower by 0.27% while Gold rose 0.4% and is close to a new all-time high.
To mark my 3075th issue of TraderNoble Daily Commentary I am offering a special 2-Year rate of Euro 2750 for my Platinum Service which includes 1 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 was flat yesterday is still ahead by 785 points for October after ending September with a gain of 4402 points following a 301-point loss for August after closing July with a gain of 1918 points while June closed with a gain of 2074 points, having made 1843 points in May. The Platinum Service made 4010 points in April after ending March with a gain of 2113 points. 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 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 0.47% higher at a price of 5842.
The Dow Jones Industrial Average closed 337 points higher for a 0.79% gain at a price of 43,077.
The NASDAQ 100 closed 0.14% higher at a price of 20,174.
The Stoxx Europe 600 Index closed 0.19% lower.
Yesterday, the MSCI Asia Pacific closed 1.1% lower.
Yesterday, the Nikkei closed 1.83% lower at a price of 39,180.
Currencies
The Bloomberg Dollar Spot Index closed 0.31% higher.
The Euro closed 0.25% lower at $1.0855.
The British Pound closed 0.5% lower at 1.2982.
The Japanese Yen fell 0.2% closing at $149.76.
Bonds
Germany’s 10-year yield closed 4 basis points lower 2.19%.
Britain’s 10-year yield closed 10 basis points lower at 4.07%.
U.S.10 Year Treasury closed 2 basis points lower at 4.02%.
Commodities
West Texas Intermediate crude closed 0.27% lower at $70.39 a barrel.
Gold closed 0.4% higher at $2673 an ounce.
This morning on the Economic Front we have Euro-Zone CPI and Trade Balance at 10.00 am followed by the ECB Rate Announcement at 1.15 pm. Next, we have U.S. Weekly Jobless Claims, Retail Sales and the Philly Fed Manufacturing Survey at 1.30 pm. This is followed by ECB President Lagarde’s Press Conference at 1.45 pm. At 2.15 pm we have U.S. Industrial Production and Capacity Utilisation followed by Business Inventories and the NAHB Housing Market Index at 3.00 pm. Finally, we have a speech from Fed Member Goolsbee at 2.00 pm.
Cash S&P 500
As you know for the past few weeks, I am struggling here to find a justifiable risk/reward proposition to initiate new longs at this time. Yet the bullish sentiment and continued one-way bullish price action has been so persistent and relentless as it is advertised throughout the media, Wall Street and retail nonstop. For example, I know of not a single person that does not expect a year-end rally. I have highlighted over the past few weeks that in previous election year seasonalities that the S&P rallies into year-end. But they all came following an October correction of some sort. But now nothing as my ‘’Nothing Matters’’ theme shows no sign of ending anytime soon. Now everybody and their moms are trampling all over themselves to issue ever higher targets in the 6000+ range. It is now generally accepted as fact. And it has become a virtual circle jerk as media brings on nothing but bulls who then agree with each other with assured certainty that markets go higher, and nothing could derail this train. Highest valuations in history, most one way market in years and nobody is even expecting a correction any longer as none has been forthcoming other than that 5-day event in early August. The dip buying so aggressive nothing lasts more than a day or two. The most aggressive trader long positioning in history. Not by a little, but by an unprecedented margin. I mean if this does not cement the sentiment equation I highlighted above I don’t know what does. I look at this and I cannot help but wonder if such an extreme long positioning will not lead to a major tanking in the market. The scary thing is buybacks for tech stocks are coming back at the end of the month knocking another nail into my view of looking for a sizeable correction. Tuesday’s 0.75% fall was met by immediate buying after the close Tuesday night, carrying the S&P to a 5847 print intra-day Wednesday. As I said yesterday, I just cannot understand the complacency 18 days away from the most contentious Presidential Election ever. Markets are all priced in a large one-way bullish direction which is making this market so hard to interpret. The Dollar tagged on a further 0.3% yesterday and still the S&P chooses to ignore. As I am now short the Dow I will raise my S&P sell level to 5855/5875 with a higher and wider 5891 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 5839.
EUR/USD
The Euro hit new one-month low yesterday. The Euro has now closed lower for 13 of the past 14 trading sessions which is a losing streak of historic proportions. This move lower saw the Euro close below its 200-Day Moving Average which comes in at a price of 1.0875. Today’s ECB Meeting will determine whether this is a ‘’False Break’’ or the start of something more meaningful. As a result of Wednesday’s sell-off I am now long at 1.0865. I will add to this position at 1.0805 while leaving my 1.0745 ‘’Closing Stop’’ unchanged. I will now lower my T/P level to 1.0950. 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 flat the Dollar as the market traded in a narrow range. As I am now long the Euro, I will raise my Dollar sell level to 103.80/104.60 with a now higher 105.25 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 103.20.
Cash DAX
No Change: Like any short position at the moment you have to quick to take your gain or it will quickly evaporate. This is not a fundamental rally but one based on liquidity. After all Germany has negative growth yet the DAX is trading at all-time highs. This morning the DAX is trading at 19480. I cannot be a buyer of the DAX at these levels and shorting the market requires full concentration given the explosiveness of the upward price action. I am going to stay flat the DAX for now until I see how the market reacts to the ECB rate cut this afternoon.
Cash FTSE
The FTSE never came close to yesterday’s buy range by rallying to close back above the key 8300 pivot point. Lower Gilt Yields have helped the FTSE over the past few trading sessions. The FTSE has strong support below from 8180/8250. I will now raise my FTSE buy level to this area with a higher 8105 ‘’Closing Stop’’. If triggered, I will have a T/P level at 8305. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
The Dow reversed most of Tuesday’s losses. A late rally saw the Dow hit my 43100 sell level. I am still short with a now higher 42910 T/P level. I will add to this position at 43350 with a now higher 43605 ”Closing Stop”. If any of above levels are hit, I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
The NDX continues to trade heavy and I am still flat. I will not chase the NDX higher especially as we have so many earnings reports coming out over the next week. The NDX has support below from 19700/19860 where I will again be a buyer with the same 19595 ‘’Closing Stop’’. If executed, I will have a T/P level at 19990. I still do not want to be short the NDX at this time.
December BUND
No Change: The Bund never came close to yesterday’s buy range, and I am still flat. I am reluctant to chase the Bund higher given how low the Bund Yields are. It will be interesting to see the Bund’s reaction to tomorrow’s expected ECB rate cut. The Bund has support from 132.40/133.10. I will raise my buy level to this area with a higher 131.75 ‘’Closing Stop’’. I still no longer want to be short the Bund at this time.
Gold Rolling Contract
No Change: Gold traded in a narrow range yesterday and I am still flat. Today, I will continue to be a buyer from 2595/2611 with the same 2579 tight ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2625.
Silver Rolling Contract
Silver tried to break above $32 but this move was met by heavy selling which is surprising given the fact that Gold is pushing towards all-time highs again. Given the strength of the Dollar I am hoping we will see a small sell-off in Silver over the coming days as this will set up a strong long position for me. Silver has support from 29.80/30.80 where I will be an aggressive buyer with no stop for now if triggered. My T/P level will be at 31.70 on any executed long position.
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