Disappointing ADP Employment data and Manufacturing ISM missing expectations saw both the Treasury Market and Equity Markets rally into the Fed announcement. Helping the 19-Basis point fall in 10-year Treasuries was the news from the Treasury Department announcing a smaller quarterly refunding programme. The Fed as expected left Interest Rates unchanged and only making minor tweaks in its Statement. Meanwhile, in his press conference Fed Chair Powell poured cold water on the September dot plot and acknowledge that the Fed is close to end of the rate hiking cycle. Instead saying they are proceeding carefully, and this helped stocks to rally into the close. Lower rates saw the NASDAQ 100 leading Wednesday’s gains, closing higher by 1.77%. The across-the-board rally saw the VIX close lower by a further 7%. Caterpillar (CAT) shares slid Tuesday as the company reported third-quarter earnings. For the first time since 2020, Caterpillar reported a decline in its order backlog, seeing it shrink $1.9 billion year over year. This drop will only serve to exacerbate worries of economic headwinds. However, Caterpillar exceeded its earnings expectations due to higher prices and strong sales. Additionally, the company reported adjusted earnings per share of $5.52, significantly higher than the estimated $4.77. The U.S. Department of Justice is attempting to block JetBlue Airways’ (JBLU) $3.8 billion acquisition of Spirit Airlines (SAVE) in a polarising antitrust case. The Justice Department argues that the deal would reduce competition, leading to fewer flights and seats, and ultimately price increases for consumers. JetBlue defended the deal by suggesting it is consumer friendly and agreed to sell off Spirit’s gates at several international airports in the U.S. If the deal between the U.S.’s sixth and seventh largest carriers is completed, it would mark the first major airline merger since 2016 and catapult JetBlue to the fifth largest carrier. U.S. employment costs climbed 1.1% in the third quarter, raising concerns that a strong labour market could keep inflation higher. The 1.1% quarterly gain in the Employment Cost Index (“ECI”), a gauge of wages and benefits, was primarily due to the largest increase in state and local government-employee salaries in a year. Wage growth in the private sector grew modestly. However, the Atlanta Fed’s wage-growth tracker showed an easing in median pay since July. While the Fed left its Federal-Funds Rate unchanged, a reacceleration of wage growth could lead to further tightening in the coming months. High prices and pessimistic views of business conditions led U.S. consumer confidence to hit a five-month low in October. The Conference Board’s Consumer Confidence Index dropped to 102.6, down from September’s 104.3 reading as consumers grapple with increased grocery and gasoline costs, among others. The demise in confidence has been exacerbated further by political instability and uncertainty surrounding interest rates. While economists have increasingly set aside their recession concerns, consumer focus remains on inflation. A report from the University of Michigan showed near-term inflation expectations rose to a five-month high. For the seventh consecutive month, home prices in the U.S. ticked higher in August. The streak of gains resulted in all-time-high home prices in major cities like New York, Boston, Miami, and Atlanta. The S&P CoreLogic Case-Shiller U.S. National Home Price Index rose 0.9% month-over-month in August. Tighter lending conditions have significantly limited available inventory, resulting in a year-to-date price increase in homes of 5.8%. That trumps the median annual increase over the past 30 years. Mortgage rates have climbed even higher, with some measures now hovering near 8% for a 30-year fixed loan, giving homebuyers even more to contend with. European Markets closed higher. The European Central Bank’s (“ECB”) monetary-tightening campaign shrank the Euro-Zone economy but resulted in a two-year low in inflation. Consumer prices increased 2.9% in October, lower than September’s 4.3% increase and analysts’ expectations of a 3.1% increase. This decline signals that the ECB’s efforts are working to lower inflation to its 2% target… at the expense of the economy. The Euro-Zone’s gross domestic product (“GDP”) fell 0.1% for the third quarter. ECB President Christine Lagarde expects the bloc’s economy to remain weak through the year but stressed that it’s too early to begin discussing rate cuts. Elsewhere, Oil continued its recent fall, closing lower by 0.6% while Gold ended Wednesday with a small 0.3% loss.
To mark my 2900th 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 160 points yesterday on the first trading session for November. October ended with a gain of 3184 points, after closing September with a small gain of 228 points, after finishing August with 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 1.05% higher at a price of 4237.
The Dow Jones Industrial Average closed 221 points higher for a 0.61% gain at a price of 33,274.
The NASDAQ 100 closed 1.77% higher at a price of 14,664.
The Stoxx Europe 600 Index closed 0.67% higher.
Yesterday, the MSCI Asia Pacific closed 0.8% higher.
Yesterday, the Nikkei closed 2.41% higher at a price of 31,601.
Currencies
The Bloomberg Dollar Spot Index closed 0.21% higher.
The Euro closed 0.1% lower at $1.0567.
The British Pound closed 0.1% higher at 121.52.
The Japanese Yen rose 0.6% closing at $150.82.
Bonds
Germany’s 10-year yield closed 7 basis points lower at 2.75%.
Britain’s 10-year yield closed 2 basis points lower at 4.50%.
U.S.10 Year Treasury closed 19 basis points lower at 4.74%.
Commodities
West Texas Intermediate crude closed 0.6% lower at $80.44 a barrel.
Gold closed 0.3% lower at $1977.10 an ounce.
This morning on the Economic Front we have German Unemployment and Manufacturing PMI at 8.55 am, followed by Euro-Zone Manufacturing PMI at 9.00 am. Next, we have the Bank of England Rate Announcement at 12.00 pm where no change is expected. This is followed by U.S. Weekly Jobless Claims and Non-Farm Productivity at 12.30 pm. Finally, we have Factory Orders at 2.00 pm.
Cash S&P 500
As I have said recently the last few months have been the most challenging that we as investors/traders have faced in many years. No matter what time of the day or night that you turn on the news it is one negative headline after another. It is no wonder that in the Barrons weekend poll to discover how many people were bullish the reading was just 12%. This has got to be one of the lowest readings in history. Yet the chart signals have indicated a ‘’screaming buy’’ over the past few weeks. Given the rally in the NDX since Thursday and the S&P since its 4103 late Friday night’s low, it looks more and more likely from where I sit that the GANN Cycles calling for a major low last week may prove to be correct. It is certainly a decent start given the 600-point rally in the NDX and 150 Handles in the S&P. Slowly but surely the technical signals are beginning to align. The strong Dollar is still a worry for my bullish case as a currency fight could result in a nasty sell-off in equity markets. The U.S. Presidential election next year has the likelihood of something insane happening given the level of division across the American electorate. Ahead of this we have the potential for another Government shutdown in two weeks’ time. Meanwhile, the West is hopelessly divided and drowning in debt. So, you can see why investors are nervous. We have Apple reporting after the close this evening ahead of tomorrow’s Payroll data. I am now flat the S&P after the market hit my 4196 T/P level on last week’s aggressively long 4180 long position. Given the extent of the rally I would look to exit any stale long positions ahead of the weekend, especially if we can continue to move higher. The S&P has support from 4190/4210 where I will be a buyer with a 4175 ‘’Closing Stop’’. Even though the S&P has strong resistance at the 200-Day MA which comes in at 4243 this morning, I have no interest in having a short position.
EUR/USD
No Change. I am still long from Tuesday at 1.0570 with the same 1.0630 T/P level. I will continue to look to add to this position at a higher price of 1.0510 while leaving my 1.0445 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
September Dollar Index
The Dollar traded higher to sideways for most of yesterday and is the one worry I have for higher stock prices as the Dollar has not rolled over as yet despite being severely overbought. Yesterday’s move higher saw my 106.95 second sell level triggered for a now 106.60 average short position. This morning the Dollar is trading at 106.85 as I go to press. I will now raise my T/P level on this position to 106.00 while leaving my 107.35 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash DAX
The DAX has now risen over 500 points off last Thursday’s low print as yet again anyone trying to short the German Equity Market is not getting much joy. The DAX is touching 15,000 again and is only 1100 points off its all-time high despite the doom and gloom about the economy in the press. Remember a market that cannot fall on bad news has to be respected. The DAX has support from 14820/14910 where I will be a buyer with a 14745 tight ‘’Closing Stop’’.
Cash FTSE
No Change. I am still flat the FTSE. I will now raise my buy level to 7250/7320 with a higher 7195 ‘’Closing Stop’’. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
Unfortunately, the Dow missed yesterday’s 32750 buy level by just 35 points before rallying 300 points into the close. I will now raise my Dow buy level slightly to 32560/32820 with a higher 32395 ‘’Closing Stop’’. If this view changes I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
The NDX missed my 14380 by 50 points before having a nice 200-point rally into the close. The next major resistance level is the 50-Day Moving Average at 14950. I will be a small seller from 14850/15000 with a tight 15055 ‘’Closing Stop’’. The NDX has support from 14400/14550 where I will be a small buyer with a 14295 ‘’Closing Stop’’.
December BUND
The Bund missed yesterday’s buy level by 30 points before rallying over 140 points into the New York close and I am still flat. I will now raise my Bund buy level to 128.40/129.20 with a higher 127.65 ‘’Closing Stop’’.
Gold Rolling Contract
Gold saw some further unwinding of geopolitical risk, closing lower by 0.3% at $1977 last night in New York. I am still flat. As I am still long Silver, I will now lower my Gold buy level to 1943/1958 with a wider 1929 ‘’Closing Stop’’.
Silver Rolling Contract
No Change. I am still long Silver from five weeks ago at 24.05. In a change of strategy, I will have no stop or no T/P level on this position. This morning Silver is trading higher at 23.02. If this view changes, I will be back with a new update for my Platinum Members.
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