U.S. Equity Markets closed lower on Wednesday amid the hawkish repricing of central bank rate paths amid a slew of hawkish economic data and central bank speak. However, a late rally into the close saw earlier losses erased by 30%. Hot U.K. CPI figures and more hawkish ECB pushback were followed by big beats in the US Retail Sales figures; the US Industrial Production data and NAHB Housing Market index both came in above expectations too. As a result, the small-cap Russell 2000 Index saw the largest losses vs US Index peers given the index’s high sensitivity to rates right now. Treasuries bear-flattened, particularly after the retail sales figures, with 2s10s (-8bps) and 2s30s (-11bps) spreads seeing their largest one-day flattening since early November; note the 20-year auction was poor, capping the long end’s recovery attempt in the New York afternoon. Fed Pricing is now down to 140bps of cuts for the year ahead vs the 170bps figure on Friday after the soft PPI data. Oil prices were little changed with losses seen in Europe on the heels of mixed Chinese activity data fading through the New York session. The Dollar Index was little changed with strength against most pairs except Sterling, which outperformed after the CPI data saw a big unwind of Bank of England Rate cut pricing. Indeed, the long Gilt rose a huge 20 basis points higher , closing just below 4%. Note the weak Chinese Retail Sales figures hit China-related stocks, although the Yuan was little changed, with Industrial Production strong in December. Elsewhere in stocks, defensive sectors such as healthcare, staples, and utilities outperformed with tech failing to hold up as a hedge for higher rates today. The Fed’s January Beige Book saw the majority of contacts report little change in economic activity since the November report, although looking ahead, contacts cited lower rates as a source of optimism. The report noted that consumer spending was on the hot side during the holiday season, although manufacturing remained suppressed. Overall employment levels were described as little changed, and the labour market continued to be described as tight. However, nearly all Districts cited one or more signs of a cooling labour market, such as larger applicant pools, lower turnover rates, more selective hiring by firms, and easing wage pressures. Firms from many Districts expected wage pressures to ease and wage growth to fall further over the next year. On prices, a small majority of districts reported inflation as having subsided to some degree. Districts also noted that increased consumer price sensitivity had forced retailers to narrow their profit margins and to push back in turn on their suppliers’ efforts to raise prices. Three Districts noted that their firms were expecting price increases to ease further over the next year, while four Districts’ firms anticipated little change. Elsewhere, Oil closed 0.41% higher while Gold fell 1.1% for the second consecutive trading session.
To mark my 2925th 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 214 points yesterday and is now ahead by 2410 points for January. 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 0.56% lower at a price of 4739.
The Dow Jones Industrial Average closed 94 points lower for a 0.25% loss at a price of 37,266.
The NASDAQ 100 closed 0.56% lower at a price of 16,736.
The Stoxx Europe 600 Index closed 1.21% lower.
Yesterday, the MSCI Asia Pacific closed 0.7% lower.
Yesterday, the Nikkei closed 0.40% lower at a price of 35,477.
Currencies
The Bloomberg Dollar Spot Index closed 0.11% higher.
The Euro closed 0.1% lower at $1.0868.
The British Pound closed 0.3% higher at 1.2680.
The Japanese Yen fell 0.7% closing at $148.22.
Bonds
Germany’s 10-year yield closed 5 basis points higher at 2.31%.
Britain’s 10-year yield closed 19 basis points higher at 3.98%.
U.S.10 Year Treasury closed 5 basis points higher 4.11%.
Commodities
West Texas Intermediate crude closed 0.41% higher at $72.70 a barrel.
Gold closed 1.1% lower at $2004.10 an ounce.
This morning on the Economic Front we have Euro-Zone Current Account and Construction Output at 9.00 am and 10.00 am respectively. This is followed by a speech from Fed Member Bostic at 12.30 pm. Next, we have U.S. Weekly Jobless Claims, Philly Fed Manufacturing Index, Housing Starts and Building Permits at 1.30 pm. Finally, we have a speech from ECB President Lagarde at 3.15 pm.
Cash S&P 500
My S&P plan again worked well with the market trading lower to my 4717 buy level before bouncing over 20 Handles into the close. This move lower saw my revised 4728 T/P level triggered and I am now flat. No matter how bad the news is buyers keep showing up and is one of the main reasons why I have no interest in being short the S&P. My strategy of buying dips for the month of January has worked really well and eliminates any stress in trying to short the market. This will be my strategy going forward unless we break the 30-Day Moving Average which comes in at a price of 4682. If this level is tested the S&P will also be outside the bottom of its Daily Bollinger. History tells us that this scenario is almost always a buy signal. The VIX surged over 10% at one stage yesterday for the second consecutive trading yet all three American Indexes only saw a small sell-off. This is highly unusual and another reason not to press the downside. The VIX eventually closed 7% higher at a price of 14.79. The S&P has strong support from 4693/4708 where I will be an aggressive buyer with a 4679 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 4723.
EUR/USD
I am still long the Euro from yesterday morning at a price of 1.0910. I will continue to look to add to this position at 1.0840 while leaving my 1.0795 ‘’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 form my Platinum Members.
Dollar Index
The Dollar traded in a narrow range yesterday which in effect is called an inside day following Tuesday’s 1% rally. I am still flat. My only interest in selling the Dollar is still on a rally to 104.10/104.80 with the same 105.35 ‘’Closing Stop’’. I no longer 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
Despite the recovery in U.S. Indexes, the DAX continues to trade heavy. As I have a number of open positions at this time, to reduce risk, I emailed my Platinum Members to exit any long DAX at my revised 16424 T/P level and I am still flat. There is no doubt that European Markets have got ahead of themselves in the number of rate cuts priced in for 2024. Yesterday’s 4% U.K. CPI was a warning shot in this regard and markets have reacted accordingly. The DAX has major support from 16080/16180. My only interest in buying the market is on a dip lower to this area with a 15995 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 16270. If this view changes, I will be back with a new update for my Platinum Members.
Cash FTSE
Yesterday’s much higher than expected 4% U.K. CPI Report saw the FTSE fall further to my 7410 buy level for a now 7445 average long position. The sell-off in the FTSE has gathered pace all-month. As a result, the FTSE is the furthest outside the bottom of its Daily Bollinger Band in many years. This means that a vertical bounce can happen at any stage. As I have so many open positions, I will now lower my T/P level on this position to 7480 while leaving my 7365 tight ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
I am still flat the Dow as the market fell well short of yesterday’s buy range with a 37130 low print before having a nice 140-point rally into the close. I am not going to chase the Dow higher, leaving my 36730/36980 buy level unchanged with the same 36595 ‘’Closing Stop’’. I no longer 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
My NDX call worked well as post the higher-than-expected Retail Sales print, the NDX hit my 16600 buy level before rallying to my revised 16670 T/P level and I am now flat. Even the VIX rising 10% yesterday afternoon could not produce a meaningful correction in tech stocks. Bulls remain in total control for now as this month continues to be a buy on dips trade. The NDX has support from 16480/16630 where I will again be a buyer with the same 16385 ‘’Closing Stop’’. I still do not want to be short the NDX at this time. If this view changes, I will be back with a new update for my Platinum Members.
March BUND
No Change: I am still long the Bund from early yesterday morning at 134.45. I will continue to look to add to this position on any further move lower to 133.75. The Bund is now short-term oversold. I will now lower my T/P level on this position to 134.95. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
Gold has continued its January sell-off hitting a new low for the year at a price of $2001. This move lower saw my 2003 buy level triggered. I will continue to look to add to this position on any further move lower to 1988 while leaving my tight 1979 ‘’Closing Stop’’ unchanged. I will now lower my T/P level to 2012. 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. 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. If this view changes, I will be back with a new update for my Platinum Members.
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