U.S. Equity Markets were choppy on Wednesday and ultimately saw two-way action on the Federal Reserve meeting. In an immediate reaction to the Fed holding rates at 4.25-4.50%, as expected, there was a hawkish reaction to the accompanying statement whereby it removed reference that “inflation has made progress toward the Committee’s 2 percent objective”. However, in Chair Powell’s Q&A he said it was a language clean-up, as opposed to anything fundamental, which saw a dovish reversal to the initial moves. Elsewhere, Powell reiterated the Fed does not need to be in a hurry to adjust the policy stance, and stated assessment of policy stance has not changed but policy is meaningfully less restrictive than when they started cuts. The Dollar was ultimately flat, albeit choppy while both the Australian Dollar and Swiss Franc underperformed and the Japanese Yen outperformed. The Canadian Dollar saw fleeting strength in wake of the Bank of Canada removal of guidance, but swiftly pared with focus on trade and Trump tariffs. The Treasury curve flattened while T-Notes chopped to the aforementioned Fed statement and presser. The crude complex was lower and sold off after US Commerce Secretary nominee Lutnick said tariffs on Canada are to address fentanyl entering the US, and if Canada addresses the flow of fentanyl into the US there will be no tariffs. Sectors saw downside bias, with Real Estate and Technology the laggards with Nvidia closing down 4%, and continues to be weighed on by DeepSeek newsflow. The Federal Reserve held rates between 4.25-4.50%, as expected, in a unanimous decision while it made hawkish adjustments to its description of the economy after recent data. It maintained language that “inflation remains somewhat elevated”, but removed reference to “inflation has made progress toward the Committee’s 2 percent objective”. Regarding the labour market, the statement noted the “unemployment rate has stabilised at a low level in recent months, and labour market conditions remain solid”, against December’s “labour market conditions have generally eased, and the unemployment rate has moved up but remains low.” Elsewhere, the FOMC statement was largely unchanged, judging that risks to achieving its employment and inflation goals are “roughly in balance” and that “it is attentive to the risks to both sides of its dual mandate.” It also maintained its guidance in the statement, “In considering the extent and timing of additional adjustments… the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.” In reaction to the adjustments to the statement, a hawkish reaction was seen on the removal of the language that inflation has made progress towards target while noting the labour market has stabilised. In the post-meeting press conference, Chair Powell said that the Fed does not need to be in a hurry to adjust the policy stance and the central bank is not on a preset course, something he reiterated throughout the Q&A, even when asked about a March cut. When asked about removing reference to inflation progress in the statement, Powell said that it was a language clean-up and just used to shorten the sentence, which saw a notable dovish reversal in markets. Further, Powell said the Fed got two good readings in a row and wants to see further progress on inflation, but he thinks the Fed can see the pathway for that to happen, particularly as we see shelter inflation coming down pretty steadily. Powell did note, “We seem to be set up for further progress [on inflation]”, however, being set up for further progress is one thing and “Having it is another.” On forecasts, the Chair noted they are highly uncertain, and currently some elevated uncertainty because of significant policy shifts, but that should be passing. The Chair later added that assessment of policy stance has not changed but policy is meaningfully less restrictive than when they started cuts. Powell once again highlighted data dependence and said the Fed is looking at data to guide them. He added that right now, he sees things in a really good place for the policy and economy, and reiterated he does not need to be in a hurry to make any adjustments, something he said a couple of times throughout the address. Regarding the neutral rate, he noted the Fed is currently above everyone on the committee’s estimates on the long-run neutral rate (top-estimate 3.9% in Dec. SEPs), and would say the Fed is meaningfully above the neutral rate. When asked about ending QT, stated most recent data suggests reserves are still abundant, Fed intends to reduce balance sheet size, closely monitoring signals on reserves. On President Trump policies, Powell said the Fed is in the mode of waiting to see what policies are enacted and does not know what will happen with fiscal, regulatory, tariffs, and immigration policy. Elsewhere,Oil closed lower by 1.5% while Gold was flat%.
To mark my 3125th issue of TraderNoble Daily Commentary I am offering a special 2-Year rate of Euro 2750 for my Platinum Service which includes 1 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 105 points yesterday and is now ahead by 2054 points for January after closing December with a gain of 1997 points after closing November with a gain of 3049 points having finished October with a gain of 2179 points. September saw a gain of 4402 points following a 301-point loss for August after closing July with a gain of 1918 points while June closed with a gain of 2074 points, having made 1843 points in May. The Platinum Service made 4010 points in April after ending March with a gain of 2113 points. February closed with a gain of 1606 points, after closing January with a gain of 3675 points. December saw a gain of 1890 points after finishing November with a gain of 1734 points. October ended with a gain of 3184 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 0.47% lower at a price of 6039.
The Dow Jones Industrial Average closed 136 points lower for a 0.31% loss at a price of 44,713.
The NASDAQ 100 closed 51 points lower for 0.24% loss at a price of 21,411.
The Stoxx Europe 600 Index closed 0.36% higher.
Yesterday, the MSCI Asia Pacific closed 0.7% higher.
Yesterday, the Nikkei closed 1.02% higher at a price of 39,414.
Currencies
The Bloomberg Dollar Spot Index closed 0.6% higher.
The Euro closed 0.1% lower at $1.0416.
The British Pound closed 0.1% higher at 1.2441.
The Japanese Yen rose 0.25% closing at $155.14.
Bonds
Germany’s 10-year yield closed 2 basis points higher 2.56%.
Britain’s 10-year yield closed 5 basis points lower at 4.58%.
U.S.10 Year Treasury closed 3 basis points lower at 4.53%.
Commodities
West Texas Intermediate crude closed 1.56% lower at $72.62 a barrel.
Gold closed 0.2% lower at $2757 an ounce.
This morning on the Economic Front we have the UK Money Supply and Mortgage Approvals at 9.30 am. Next, we have Euro-Zone Consumer Confidence at 10.00 am. This is followed by the ECB Rate Announcement at 1.15 pm. At 1.30 pm we have U.S. Weekly Jobless Claims and GDP. Next, at 1.45 pm we have the Lagarde Press Conference. Finally, we have Pending Home Sales at 3.00 pm.
Cash S&P 500
With valuations so high across the board I find it very hard to chase the S&P higher. There is not a pause to ponder any sell-off just relentless buying which was fine back in late 2022 when valuations were reasonable but not today. Forward P/Es for $TSLA, $MSFT and $META are at 120, 30 and 26 respectively. How can you justify buying these stocks against this background. Price to Sales is at 11/13 for these three companies. Looking at their respective charts: $META is already at record highs and now extended above its Weekly Bollinger Band. Of course, it can go higher but not for me. $TSLA got a huge post election premium due to Elon’s close proximity to President Trump. How that proximity leads to sales growth in cars? I will leave that up your imagination. Meanwhile, Microsoft keeps hugging a key trendline, unable to break higher for now. With the S&P making a new all-time high in January, the NASDAQ 100 needs to follow suit or the negative divergence between both Indexes could see a nasty sell-off in tech stocks as we hit the seasonally weak February /March timeframe. The Monthly charts for both Indexes are showing massive negative divergences. In my opinion one of these aggressive sell-offs is not coming back and will trap a lot of traders who continue to aggressively buy all dips. I am still flat the S&P. I will now lower my sell level to 6078/6098 with a lower 6113 ‘’Closing Stop’’. The S&P has support from 5980/5996. I will continue to be a small buyer on any dip to this area with the same 5965 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 6061. If I am taken long, I will have a T/P level at 6013.
EUR/USD
For the second consecutive trading session the Euro traded in a narrow range. I am still long the Euro from late Monday at a price of 1.0430. I will continue to look to add to this position on any further move lower to 1.0370 while leaving my 1.0315 ‘’Closing Stop’’ unchanged. I will have a T/P level on this position at 1.0480. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
I am still flat the Dollar as the market never came close to either my buy/sell level on Wednesday, trading unchanged from I marked prices 24 hours ago at a price of 107.85 as I go to press. I will continue to be a buyer on any dip lower to 106.50/107.20 with the same 105.85 ‘’Closing Stop’’. The Dollar has resistance from 108.60/109.30 where I will be a seller with the same 110.05 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 107.80. If I am taken short, I will have a T/P level at 108.10.
Russell 2000
No Change: I am still flat the Russell 2000 as the market again traded in a narrow range. With Interest Rates refusing to trade lower I will not chase the Russell 2000 higher as higher rates are not helpful to an Index that contains so many stocks with huge debt. This morning the Russell is again trading below its 50-Day Moving Average, trading at a price of 2291 as I go to press. Ahead of tomorrow’s FOMC Meeting, I will continue to be a buyer on any dip lower to 2150/2230 while leaving my 2075 ‘’Closing Stop’’ unchanged. If I am taken long I will have a T/P level at 2280.
Cash FTSE
My FTSE plan worked well as the market traded higher to my 8580 sell level before selling off to my 8525 T/P level and I am now flat. Today, I will again be a seller on any further rally to 8580/8650 with the same 8715 ‘’Closing Stop’’. If triggered, I will have a T/P level at 8530.
Dow Rolling Contract
The Dow fell shy of Wednesday’s sell range and I am still flat. Today, I will continue to be a seller on any further rally to 45100/45350 with the same 45505 ‘’Closing Stop’’. I still do not want to be long the Dow at this time. If I am taken short, I will have a T/P level at 44910.
Cash NASDAQ 100
Unfortunately, the NDX missed yesterday’s 21600 sell level by 25 points before falling 150 points into the close and I am still flat. I will now lower my sell level to 21570/21730 with a lower 21905 ‘’Closing Stop’’. If triggered, I will have a T/P level at 21440. I still do not want to be long the NDX at this time.
March BUND
Following the FOMC Statement the Bund traded lower to my 131.10 buy level. I am still long with a now lower 131.70 T/P level. I will add to this position on any further move lower to 130.40 while leaving my 129.75 ‘’Closing Stop’’ unchanged.
Gold Rolling Contract
No Change: Gold continues to find resistance at its broken trendline which comes in at a price of 2787. As a result, I will now be a small seller on any further rally to 2789/2805 with a 2817 tight ‘’Closing Stop’’. Gold has support from 2655/2670. I will continue to be a buyer on any dip lower to this range with the same 2639 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2684. If I am taken short, I will have a T/P level at 2773.
Silver Rolling Contract
Silver traded higher to my 30.90 T/P level on my latest 30.40 long position and I am now flat. Silver has support below from 29.50/30.20 where I will again be a buyer with a lower 28.55 ‘’Closing Stop’’. If triggered, I will have a T/P level at 30.80.
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