U.S. Indices closed higher while Treasuries were hit on Wednesday, with focus on trade updates. The US announced a trade deal with Japan where Japan will pay a 15% tariff on imports to the US, down from the previous 25%, while focus has also been on a touted EU deal, which also suggests a 15% tariff rate, albeit this is yet to be officially confirmed. The EU reports sent European equity futures soaring while EZ debt saw chunky selling. The Euro was bid versus the softer Dollar, albeit the cyclical currencies outperformed on the risk environment, while havens underperformed, aside from the Japanese Yen, given the trade deal announcement. Gold prices were sold amid haven outflows amid reduced trade uncertainty, while the higher US yields also hit the precious metal. Crude prices settled flat with downside in the morning, largely pared by settlement, while the DoE data saw a larger crude stock draw than expected, with distillates posting a surprise build with gasoline seeing a larger draw than forecast. In Fixed Income, the US 20-Year bond auction was strong relative to recent auctions, sparking short-lived upside as attention shifted back to trade. Focus remains on confirmation of the EU tariff rate, but also on US/China talks next week. On earnings, healthcare names (ISRG, BSX, TMO) performed well, but tech names (TXN, SAP) disappointed. Existing home sales fell 2.7% in June to 3.93 million from 4.04 million, and beneath the expected 4.0 million. Inventory of homes for sale was 1.53 million units or 4.7 months’ worth (prev. 1.54 million units, 4.6months’ worth), with the national median home price rising to a record high USD 435,300, +2% Y/Y. Within the report, NAR Chief Economist Yun said, “Multiple years of undersupply are driving the record high home price, and home construction continues to lag population growth.” As such, Yun adds this is holding back first-time home buyers from entering the market, and more supply is required to raise the share of first-time homebuyers in the coming years even though some markets appear to have a temporary oversupply at the moment. Elsewhere, both Oil and Gold closed lower on Wednesday by 1.08% and 1.25% respectively.
To mark my 3225th 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 flat yesterday and is still ahead by 3235 points for July after closing June with a gain of 3530 points, having closed May with a gain of 3606 points, after closing April with a gain of 7685 points after closing March with a gain of 2254 points while closing February with a gain of 4180 points. January ended with a gain of 2768 points while 1997 points were gained in December. October ended with a gain of 2179 points, after closing September with a gain of 4402 points, following a loss of 301 points in August. July gained 1908 points while June saw a gain of 2074 points. The Platinum Service made a record 9619 points in October 2022. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 2300 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 0.78% higher at a price of 6358.
The Dow Jones Industrial Average closed 507 points higher for a 1.04% gain at a price of 45,010.
The NASDAQ 100 closed 0.43% higher at a price of 23,162.
The Stoxx Europe 600 Index closed 1.08% higher.
This Morning, the MSCI Asia Pacific closed 0.8% higher.
This Morning, the Nikkei closed 1.83% higher at a price of 41,926.
Currencies
The Bloomberg Dollar Spot Index closed 0.21% lower.
The Euro closed 0.15% higher at $1.1772.
The British Pound closed 0.37% higher at $1.3580.
The Japanese Yen rose 0.08% closing at $146.50.
Bonds
U.K.’s 10-Year Gilt closed 8 basis points higher at 4.65%.
Germany’s 10-Year Bund Yield closed 7 basis points higher at 2.66%
U.S.10 Year Treasury closed 6 basis points higher at 4.39%.
Commodities
West Texas Intermediate crude closed 1.08% lower at $65.47 a barrel.
Gold closed 1.23% lower at $3389.10 an ounce.
This morning on the Economic Front we already had the release of German GFK Consumer Confidence which printed -21.5 versus -19.2 expected. Next, we have German, Euro-Zone and UK Manufacturing PMI at 8.55 am, 9.00 am and 9.30 am respectively, followed by the ECB Rate Announcement at 1.15 pm. This is followed by U.S. Weekly Jobless Claims, Building Permits and the Chicago Fed National Activity Index at 1.30 pm. At 1.45 pm we have the Lagarde Press Conference. Next, we have the U.S. Manufacturing PMI at 2.45 pm and New Home Sales at 3.00 pm. Finally, we have the Kansas City Fed Manufacturing Index at 4.00 pm.
Cash S&P 500
The S&P 500 moved higher again on Wednesday and remains in an unusually peculiar position. The 10-day realised volatility increased to 5.4% after briefly dipping to 4.5% around midday, while the 1-month implied correlation index dropped below 11. Historically, when realised volatility and correlation have reached levels this low, it is typically been near market tops—at least dating back to 2023. Again, I have been saying for a few weeks that around the time of the earnings, these patterns shift, and we start to see volatility and correlations rise. Maybe this year will be different, but in the past few years, it has been the case. Better than expected earnings from Google after the close sees the S&P trading at a new all-time high at 6365 this morning. The 14-Day RSI is at 75 which is a level from which significant declines have occurred in the past. Meanwhile, the VIX got slammed yesterday closing lower by 7% at a price of 15.37. The recent rally is much more steep and aggressive than even the non-stop 2023 rally which came on the heels of weak seasonality going into strong seasonality. Now we are racing higher into weaker seasonality. Treasury Yields rose again yesterday but markets do not care at the moment. Earnings yields are on the floor at 1.23%. Such low yields has a limited history and invariably ends in trouble but like everything else over the past few months – it does not matter until it does. But it certainly poses a question re risk/reward and it is why I have been selling rallies on rips for the past six weeks. Markets are getting more stretched: we have had no Weekly 5 EMA reconnect on the continuous chart for four consecutive weeks, which is a run that I cannot remember happening before. The S&P is now back at its upper Bollinger Band which is another reason to be a seller. Wednesday’s move higher saw the S&P hit my second sell level at 6344 for a now 6334 average short position. I will leave my 6361 ‘Closing Stop’ unchanged. There is a fair chance that I will be stopped and if I do I will be back with a new update for my Platinum Members. We have had an excellent month’s so I can afford to be slightly more aggressive on the sell side.
EUR/USD
I am still short the Euro at an average rate of 1.1710. This morning the Euro is trading higher at 1.1770. I will now raise my T/P level to 1.1660 while leaving my 1.1805 ‘Closing Stop’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
The continued weakness in the Dollar saw the market hit my second buy level at 97.30 for a now 97.65 average long position. I will leave my 96.75 ‘Closing Stop’ unchanged while lowering my T/P level to 98.30. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Russell 2000
The Russell never came close to Wednesday’s buy range and I am still flat. I will not chase the Russell higher from here as I continue to be a buyer on any dip lower to 2120/2190 with the same 2075 ‘Closing Stop’. If I am taken long, I will have a T/P level at 2240.
FTSE 100
The FTSE remains an analytical challenge. The market keeps squeezing and squeezing and I cannot give reason as to ‘WHY’ as the U.K Budget, Gilt Yields – which rose 8 basis points yesterday- and the state of the economy are all a mess, yet the FTSE closed at a new all-time high on Wednesday. I am still short at an average rate of 9010 with the same 9125 ‘Closing Stop’. I will now raise my T/P level to 8980. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
Wednesday’s surge on the Dow saw the market hit my second sell level at 44900 for a now 44775 average short position. I will leave my 45105 ‘Closing Stop’ unchanged while raising my T/P level to 44700. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
The NDX surged into the Chicago close at again in after-hours following better than expected earnings from Google. This gap higher saw the NDX hit my sell range for a now 23240 short position. I will now add to this position at 23400 with a now higher 23505 ‘Closing Stop’. I will now raise my T/P level on this position to 23110. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
December BUND
I am still flat as the Bund as the market finally has a down-day following five consecutive trading sessions that closed higher. Today, I will continue to be a buyer on any further dip lower to 128.60/129.40 with the same 127.95 ‘Closing Stop’. If I am taken long, I will have a T/P level at 130.05.
Gold Rolling Contract
Gold never came close to Wednesday’s sell range before closing lower by 1.25%. Ahead of the weekend I no longer want to be short the market. Meanwhile, I will continue to be a buyer on any dip lower to 3295/3315 with the same 3279 ‘Closing Stop’. If I am taken long, I will have a T/P level at 3334.
Silver Rolling Contract
I am still flat. Today, I will continue to be a buyer on any dip lower to 37.40/38.20 with the same 35.95 ‘Closing Stop’. If I am taken long, I will have a T/P level at 39.00.
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