U.S Equity Markets closed lower yesterday led by the NASDAQ 100 which fell 1.35%. Incredibly the VIX also closed lower, falling a huge 5%, to close at a price of 13.20. Fed Chair Powell in his testimony to Congress says he wants to be hawkish, insisting there is no pause. This was followed by a couple of Fed speakers saying they are ready to pause and have not made up their mind on July rate hike. Again, we have a message of utter confusion and lack of clarity. This highly unusual price action and fits with my idea that July will see the usual seasonal rally. During a panel discussion at the New York Fed, Federal Reserve Vice Chair for Supervision, Michael Barr, stated that the U.S. central bank is in the early stages of examining ways to expedite its response to issues identified by bank regulators outside of crisis situations. Barr acknowledged that the Fed is not known for swift action on supervisory matters and expressed the need to enhance its responsiveness in these areas. FedEx (FDX) reported its third consecutive decline in quarterly revenue as the company adjusts to lower demand following a surge in business during the pandemic. To reduce costs, the company has implemented measures such as reducing flight hours and parking aircraft. Furthermore, FedEx has aimed to counter the decline in package volume by increasing shipping rates. However, executives at FedEx do not anticipate a significant improvement in business conditions in the near future. Factors such as inflation, higher interest rates, and a slowdown in global trade are expected to dampen parcel volumes and revenue growth, according to Chief Executive Raj Subramaniam. European Markets closed lower. The inflation rate in the U.K. remained unchanged in May, defying expectations of a slowdown in price increases, as reported by the Office for National Statistics on Wednesday. Consumer prices rose by 8.7% compared to the previous year, the same as in April. This data is likely to amplify concerns over the country’s cost-of-living crisis, with fears that it may escalate in the coming months as mortgage holders face the burden of higher interest rates implemented to combat inflation. According to Bank of France Governor Francois Villeroy de Galhau, the European Central Bank (“ECB”) has largely completed its interest rate hikes, and any potential future increases would be less significant in combating inflation compared to the duration of a tight monetary policy. Villeroy stated that the ECB’s rates are approaching their limit, and any further rate hikes would depend on observed inflation data, emphasising the need for a patient and timely approach to decision-making. These comments from Villeroy inject a note of caution into the ongoing debate within the ECB regarding the future trajectory of interest rates, as some more hawkish policymakers argue that further rate hikes are necessary. In Asia, Growing calls for economic stimulus in China are emerging from various sources, including prominent state media and top government advisers. Several state-run securities newspapers published front-page articles suggesting that the central bank is likely to further ease monetary policy, backed by opinions from well-known economists. The recent surprise rate cut by the People’s Bank of China has raised expectations for additional stimulus measures. While discussions are ongoing within the State Council, China’s cabinet, about potential support measures, no definitive actions have been taken yet. China has criticised U.S. President Joe Biden for referring to Chinese President Xi Jinping as a dictator, describing it as a “public political provocation.” The comments from China’s Foreign Ministry came in response to Biden’s comparison of Xi Jinping to a strongman kept in the dark over a spy balloon incident in the U.S. The Chinese Foreign Ministry spokesperson called the remarks “absurd and extremely irresponsible.” The tensions between the two countries have resurfaced shortly after meetings aimed at stabilising relations between the world’s largest economies and Secretary of State Antony Blinken’s visit to Beijing. Elsewhere, Oil closed higher by 0.62% while Gold fell 0.30% despite the weaker Dollar.
To mark my 2800th 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 was made 296 points yesterday and is now ahead by 1801 points for June. 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 0.52% lower at a price of 4365.
The Dow Jones Industrial Average closed 102 points lower for a 0.30% loss at a price of 33,951.
The NASDAQ 100 closed 1.35% lower at a price of 14,867.
The Stoxx Europe 600 Index closed 0.47% lower.
Yesterday, the MSCI Asia Pacific closed 0.3% higher.
Yesterday, the Nikkei closed 0.56% higher at a price of 33,575.
Currencies
The Bloomberg Dollar Spot Index closed 0.45% lower.
The Euro closed 0.5% higher at $1.0986.
The British Pound closed 0.2% lower at 1.2730.
The Japanese Yen fell 0.4% closing at $142.04.
Bonds
Germany’s 10-year yield closed 2 basis points higher at 2.43%.
Britain’s 10-year yield closed 6 basis points higher at 4.40%.
U.S.10 Year Treasury closed 6 basis points higher at 3.78%.
Commodities
West Texas Intermediate crude closed 0.62% higher at $70.94 a barrel.
Gold closed 0.3% lower at $1931.10 an ounce.
This morning on the Economic Front we have a speech from Fed Member Waller at 9.00 am. This is followed by the Bank of England Rate Announcement at 12.00 pm. At 1.30 pm we have U.S. Weekly Jobless Claims and the Chicago Fed National Activity Index. Next, we have Existing Home Sales and Fed Chair second day of Testimony to Congress at 3.00 pm. Finally, we have the Kansas Fed Manufacturing Activity Index at 4.00 pm.
Cash S&P 500
We saw some follow through to the downside in the S&P and in particular for the NDX. Yesterday’s move lower saw the S&P close below both its 5 EMA and 8 EMA despite the VIX falling 5%. There is no doubt that the VIX is the elephant in the room, drifting lower no matter what the price action. The VIX has now closed at a new three-year low. The other complexity, because of the lack of volatility, there is never any real follow thorough to the downside. This resulted in a positive divergence on the close for the S&P. I am still flat the S&P. I will now raise my buy level to 4337/4352 with a higher 4325 ‘’Closing Stop’’. I no longer want to be short the S&P at this time as I am utterly confused by the price action in the VIX. If this changes I will be back with a new update for my Platinum Members.
EUR/USD
Unfortunately, the Euro again missed my buy level before trading higher into the New York close. I no longer want to be short the Euro. I will now raise my buy level to 1.0860/1.0920 with a higher 1.0795 ‘’Closing Stop’’.
June Dollar Index
The Dollar closed 0.45% lower and I am still flat. I will now lower my buy level to 101.00/101.70 with a lower 100.45 ‘’Closing Stop’’.
Cash DAX
I am still flat as the DAX never came close to yesterday’s sell range. The DAX is trading heavy but has short-term support from 15800/15900 where I will be a small buyer with a 15695 ‘’Closing Stop’’. I will not chase the market lower leaving my 16250/16350 unchanged with the same 16455 ‘’Closing Stop’’.
Cash FTSE
Despite a huge inflation print, the FTSE again traded in a narrow range. The core inflation hit a 31-year high yesterday. Reasons for the high inflation is the fact that the U.K. has specific issues with Brexit. Nevertheless, it all spells higher for longer and this remains the signal the Fed is sending. Higher Gilt Yields tell you that core inflation is not going to fall dramatically anytime soon. This afternoon, the Bank of England will announce at least a further 0.25% rate hike. The FTSE hit my 7530-buy level before rallying to my revised 7556 T/P level and I am now flat. Remember a market that cannot fall on bad news – rising Gilt Yields and higher inflation- has to be respected. The FTSE has support from 7450/7510 where I will be a strong buyer with the same 7395 ‘’Closing Stop’’.
Dow Rolling Contract
As expected, the $NYSI hit a maximum overbought reading making it difficult to have a long position. However, as we have seen with this reading it can stay overbought for a couple of weeks before the market rolls over. For a new bull market to start we need to see a marked improvement in high yield credit. It is just not evident so far. I would like to see the banks rally convincingly and this is not happening. When have we ever seen a proper bull market without the banks participating? Well, never actually. As long as this theme continues it is difficult to be long. But markets can still rally in advance of rolling over as we have seen numerous times over the past eight months. With July a seasonally strong month I would expect any sell-off to the 50 Day Moving Averages to be aggressively bought. After the Dow hit my 33890 buy level we had a nice 150 point rally. I emailed my Platinum Members to exit any long position at 33980 and I am now flat. Today, I will again be a buyer on any dip lower to 33550/33800 with a lower 33395 ‘’Closing Stop’’. I still do not want to be short the Dow at this time.
Cash NASDAQ 100
The NDX has now fallen over 600 points from last Friday’s high resulting in the 14-Day RSI falling to 65. I am still flat as the market missed yesterday’s sell range. The NDX has support from 14580/14730 where I will be an aggressive buyer with a 14495 tight ‘’Closing Stop’’. I will now lower my sell level to 15080/15230 with a lower 15355 ‘’Closing Stop’’.
September BUND
My Bund call worked well as the market traded lower to my 133.20 buy level before rallying to my 133.80 T/P level and I am now flat. My fear for the Bund is the complacency to how low the yield is at 2.40% in comparison to 10 Year Gilts at 4.40%. However, every dip in Bunds over the past few months has been bought making it difficult to be short. The Bund has strong support below from 131.80/132.60 where I will be a strong buyer with a lower 130.95 ‘’Closing Stop’’.
Gold Rolling Contract
My Gold plan again worked well as the market traded lower to my 1921 buy level before rallying to my 1933 T/P level and I am now flat. Today, I will again be a buyer from 1900/1915 with the same 1889 ‘’Closing Stop’’.
Silver Rolling Contract
No Change. I am still long at an average rate of 23.63 with the same 24.40 T/P level. I will continue to have no stop on this position. If this changes I will be back with anew update for my Platinum Members.
Finally, I am on my way home from Florida, thus the early publication. On Friday my DC will be published at the normal time of 8.30 am.
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