Lower Treasury Yields and a weaker Dollar helped U.S. Equity Markets rally ahead of key earnings from Nvidia. Post close, NASDAQ Futures surged after Nvidia reported solid earnings that saw the stock price rise a further 6% on top of Wednesday’s 3% gain. Nvidia reported solid Q2 profits while announcing a further $25bn in additional buybacks. Luxury home builder, Toll Brothers (TOL), posted stronger-than-expected revenue and earnings for the second quarter, boosted by an increase in home deliveries and surging demand. The historically low supply of existing homes on the market has fuelled demand for new home construction, pushing Toll Brother’s contracts for the quarter up 77% compared to a year prior. CEO Douglas Yearley said that favourable long-term trends and the current housing supply shines favourably on the company’s outlook into 2024. Foot Locker (FL) reported declining sales for the second time this year and further cut its forward-looking guidance, blaming a growing ‘softness’ among consumers who can no longer withstand the pressures of high inflation. The retailer reported a loss of $5 billion, compared to a profit of $94 billion, a year earlier. Foot Locker CEO Mary Dillon said that the company will readjust accordingly to best compete for price-sensitive customers moving forward. Richmond Federal Reserve President Thomas Barkin emphasised the Federal Reserve could risk losing credibility if it were to consider changing its 2% inflation target before achieving its goal. He emphasised that the current target is not an unattainable figure and that the central bank should not deviate from its target prematurely. Barkin’s remarks come at a time when the Fed’s preferred inflation gauge rose by 3% from a year earlier in June – the smallest increase in over two years. The Richmond Fed president also believes the U.S. economy could experience a “soft landing” and a mild recession as long as key data remains strong. Several U.S. banks saw share prices decline as S&P Global downgraded credit ratings for five regional banks. Associated Banc-Corp (ASB), Valley National Bancorp (VLY), UMB Financial Corp (UMBF), Comerica Bank (CMA), and KeyCorp (KEY) all had their ratings cut due to a number of risks identified by S&P. While not explicitly mentioned, several large banks like JPMorgan Chase (JPM) and Bank of America (BAC) also suffered due to association. The downgrades do not pose an immediate systemic risk, but they highlight problems plaguing the sector – namely regional lenders weakened by higher interest rates and those with heavy exposure to commercial real estate. European Markets closed higher. Private sector firms in the U.K. recorded a surprise contraction in August, the first in seven months. S&P Global’s Purchasing Managers’ Index (“PMI”) slid to a score of 47.9 (below 50 indicates contraction), the lowest in 31 months. Economists and businesses however were less surprised as high interest rates and pricing pressures has had a stranglehold on manufacturing production this year. Martin Beck, chief economic adviser to the EY Item Club was one of many analysts to assert that the recent economic data should be reason for the Bank of England to pause interest rate hikes in September. Elsewhere, Oil closed 0.94% lower, while Gold surged, closing higher by 1.2%.
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 made 135 points yesterday and is now ahead by 1598 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 1.1% higher at a price of 4436.
The Dow Jones Industrial Average closed 184 points higher for a 0.54% gain at a price of 34,472.
The NASDAQ 100 closed 1.60% higher at a price of 15,148.
The Stoxx Europe 600 Index closed 0.44% higher.
This morning, the MSCI Asia Pacific closed 0.3% higher.
This morning, the Nikkei closed 0.87% higher at a price of 32,287.
Currencies
The Bloomberg Dollar Spot Index closed 0.2% higher.
The Euro closed 0.1% lower at $1.0857.
The British Pound closed 0.1% lower at 127.15.
The Japanese Yen rose 0.7% closing at $144.84.
Bonds
Germany’s 10-year yield closed 13 basis points lower at 2.52%.
Britain’s 10-year yield closed 14 basis points lower at 4.51%.
U.S.10 Year Treasury closed 10 basis points lower at 4.22%
Commodities
West Texas Intermediate crude closed 0.94% lower at $78.89 a barrel.
Gold closed 1.2% higher at $1918.10 an ounce.
This morning on the Economic Front we have no data of note from either the U.K. or the Euro-Zone. At 1.30 pm we have U.S. Weekly Jobless Claims, Durable Goods Orders and the Chicago Fed National Activity Index. Finally, we have the Kansas Fed Manufacturing Activity Index at 4.00 pm.
Cash S&P 500
In my opinion the best trading signal we have is the McClellan Oscillator which measures the internal reading of the market. For some reason very few traders watch this key signal. Last Thursday/Friday the MO had a reading between -250 and -287. Every time the MO has reading at -250 or lower the S&P is close to a major buy. Following better than expected earnings from Nvidia post close the S&P is now trading 145 Handles higher than last Friday’s 4342 low print while the MO has improved to close at -100 last night. The 50 Day Moving Average comes in at 4458 this morning so it will be interesting to see if the S&P can sustain its overnight break above this key resistance level. We are now overbought on the 15-minute chart while a word of caution as banks remain weak, holding an important trendline for now. What greatly aided yesterday’s ‘’Gap, Ramp and Camp’’ was the expected reversal in the Dollar and Treasury Yields closing lower by 10 basis points. A weak PMI reading was given as the blame for the reversal but oddly enough the chart already hinted at that direction as 10-year Treasuries hit support at 4.35%, closing an ‘’Open Gap’’ from March 2022. The seasonal chart suggest that last Friday’s low is it for a rally into mid-September. All the bulls have to worry about is Powell’s key Speech at Jackson Hole tomorrow. I am still flat the S&P. We have short-term support at last night’s 4436 close. I will be a small buyer form 4422/4437 with a tight 4409 ‘’Closing Stop’’. Despite the S&P being overbought short-term I do not want to be short the market at this time.
EUR/USD
My Euro plan worked well as the market traded lower to my 1.0810 buy level before rallying to my revised 1.0854 T/P level and I am now flat. Today, I will again be a buyer on any dip lower to 1.0750/1.0820 with the same 1.0685 ‘’Closing Stop’’. If I am taken long I will have a T/P level at 1.0890.
June Dollar Index
My Dollar plan worked well as the Dollar rallied to my 103.90 sell level before selling off to my revised 103.50 T/P level as emailed to my Platinum Members and I am now flat. Today I will again be a seller from 103.80/104.40 with the same 104.81 ‘’Closing Stop’’.
Cash DAX
The DAX has now risen over 350 points off Monday’s low print. I am still flat as the market never came close to yesterday’s buy range. I will now raise my buy level to 15550/15650 with a higher 15475 tight ‘’Closing Stop’’.
Cash FTSE
Gilt Yields falling 14 basis points yesterday helped the FTSE to close over 7320. I am still flat. I will now raise my buy level to 7210/7290 with a higher 7145 ‘’Closing Stop’’. Despite yesterday’s strong rally the FTSE is still oversold meaning I have no interest in pressing the downside.
Dow Rolling Contract
Weak bank stocks continue to hinder the Dow from so far breaking its 50-Day Moving Average (34,658) as the market continues to underperform the rampant NDX and to a lesser extent the S&P despite the latter’s impressive rally over the past week. I am still flat the Dow. The Dow has short-term support from 34100/34350 where I will be a buyer with a now higher 33895 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 34520.
Cash NASDAQ 100
Incredible price action as NDX has now rallied over 6% off last Friday’s low. Thankfully I held on to my aggressively long 15085 long position before again exiting too early at my revised 15136 T/P level and I am now flat. This morning the NDX is trading at 15330 following Nvidia’s 10% rally since I marked prices 24 hours ago. The price action in Nvidia is incredible with the stock now trading a whopping 48% above its 200 day Moving Average. This is not sustainable but as we have seen trying to short the likes of Apple in May and June was fool’s game. The recent sell-off in the NASDAQ saw the $BPNDX hitting lows not seen since 2021. This is incredible when you consider that last year’s 35% drop in the NDX could not produce a $BPNDX reading that we have now. The NDX has support from 15020/15170 where I will be an aggressive buyer with a 14895 ‘’Closing Stop’’.
September BUND
The Bund surged yesterday with Yields 13 basis points lower from where I marked prices 24 hours ago. Thankfully we have had the correct view in buying dips and have had no sell level in this market over the past few months. I will now raise my buy level to 131.00/131.80 with a higher 130.25 ‘’Closing Stop’’.
Gold Rolling Contract
Despite a stronger Dollar Gold closed over 1.2% higher yesterday which was expected given how oversold the Gold was. However, for bulls to regain control Gold needs to break and close over $2000 for a few days. I will now raise my Gold buy level to 1895/1910 with a higher 1879 wider ‘’Closing Stop’’.
Silver Rolling Contract
My patience has finally paid off with my long 24.20 long position now in profit. I will now raise my T/P level on this 24.20 long position to 25.10. I will now have a ‘’Closing Stop’’ at 22.95. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
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