The NASDAQ 100 broke a seven-day losing streak to lead Equity Markets higher, closing with a 2.07% gain on Wednesday. Markets closed higher as investors await next Tuesday’s August Consumer Price Index (“CPI”) numbers to get a better idea of whether the Federal Reserve will raise rates by 50 or 75 basis points (“bps”) at the policy meeting on September 20 and 21. However, 75 bps is the more likely case, given the continued tightness in the labour market. Apple (AAPL) released its new product lineup which boosted markets late in the trading session, while Bond yields softened as the U.S. Dollar continued to strengthen against the Japanese Yen. Within the S&P 500, ten of the 11 sectors finished higher. European Markets closed higher. Equities recovered some ground after morning lows as negative momentum continues to carry into the European Central Bank’s (“ECB”) interest-rate decision this afternoon. Regional growth prospects continue to slump with the ECB’s more aggressive tone, due to worries of rates increasing simultaneously with prolonged economic stagflation. In Asia, Equity momentum remains negative as the Fed’s aggressive policy stance exacerbated ongoing pressure on regional capital outflow. Elevated U.S. Treasury yields created headwinds for several Asian currencies – as seen at yesterday morning’s multiyear or record lows made against the Dollar. Meanwhile, Chinese exports slowed sharply as their trade surplus with the U.S. narrowed. Elsewhere, Oil got slammed, closing 5.81% lower while Gold rose 0.89% after the Dollar weakened against the Euro in afternoon trading.
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For anyone following my Platinum Service it made 390 points yesterday and is now ahead by 1385 points for September, after closing August with a gain of 2228 points, having made 2660 points in July, following a gain of 3371 points in June. The Service made 3651 points in May, after making 762 points in April, following a gain of 5883 points in March. The Platinum Service made an impressive 5324 points in February, after ending January with a gain of 3878 points, more than making up for December’s 932 points loss. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 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 1.83% higher at a price of 3979.
The Dow Jones Industrial Average closed 435 points higher for a 1.40% gain at a price of 31,581.
The NASDAQ 100 closed 2.07% higher at a price of 12,259.
The Stoxx Europe 600 Index closed 1.1% higher.
This morning, the MSCI Asia Pacific Index rose 1.1%.
This morning, the Nikkei closed 2.31% higher at a price of 28,062.
Currencies
The Bloomberg Dollar Spot Index closed 0.8% lower.
The Euro closed 0.9% higher at $1.0005.
The British Pound closed 0.2% higher at 1.1515.
The Japanese Yen fell 0.2% closing at $143.60.
Bonds
Germany’s 10-year yield closed 5 basis points lower at 1.57%.
Britain’s 10-year yield closed 2 basis points lower at 3.03%.
US 10 Year Treasury closed 12 basis points lower at 3.23%.
Commodities
West Texas Intermediate crude closed 5.81% lower at $80.85 a barrel.
Gold closed 0.89% higher at $1712.90 an ounce.
This afternoon on the Economic Front we have the ECB Rate Decision, followed by the Lagarde press conference at 1.45 pm. Ahead of this key event we have U.S. Weekly Jobless Claims at 1.30 pm. This is followed by a speech from Fed Chair Powell at 2.10 pm. Finally, we have Net Consumer Credit at 8.00 pm.
Cash S&P 500
I have mentioned all-week the importance of an oversold $NYMO and McClellan Oscillator and finally we saw the fruits of these key signals as Equity Markets rallied the best part of 2% yesterday. Helping to rally was the big reversal in the U.S. Dollar while tech stocks soared after the 14 basis point fall in Treasury Yields. Today, is another key day for the markets as we have the ECB Rate decision at 1.15 pm followed by Fed Chair Powell speaking an hour later. For the bulls to regain control we need to see the 50-Day Moving Average broken. This key resistance level comes in at 4021.The fact that Asset Managers and Hedge Funds are record short Equity Futures could well propel the S&P a lot higher. As I said yesterday everyone is expecting September to be a down month but the signal charts that I follow were already on the floor making it difficult to be short. Thus, the opportunity is there for a much larger rally. Yesterday, the S&P hit my 3926 too tight T/P level on my 3919 average long position and I am still flat. The S&P has support from 3942/3962 where I will again be an aggressive buyer with a 3929 tight ‘’Closing Stop’’. Even though we should see strong resistance at the 50-Day MA, I do not want to be short given the oversold backdrop.
EUR/USD
No Change. I am still long from last week at .9990 with the same 1.0030 T/P level. I continue to hold this position with No Stop.
March Dollar Index
Finally, we saw a reversal in the Dollar yesterday with the market trading 100 points lower at 109.50 this morning. Central Banks need a weaker Dollar especially against the Euro and Asian currencies given the affect the strong Dollar is having on inflation. The Monthly RSI for the Dollar Index is at an unstainable 78.9. This shows how overvalued the Dollar is currently trading as it continues to press a major trendline with no sustained break as yet. The Dollar made new highs yesterday on further negative divergence on the Weekly Charts. The last time the Dollar was this overvalued, at the end of 2016, we quickly saw a 10% decline in the Dollar over the following 12 Months. I am expecting a similar outcome, I just do not know what the catalyst will be. Based on a longer-term outlook, the risk/reward is skewed to the downside. In my view, a key source of prior support has disappeared (strong economic growth) and another is fully discounted and may be on the verge of reversing which of course is a divergence in Central Bank rate hike expectations. I am still short the Dollar at an average rate of 107.50. Given how overbought the Dollar is trading I will have no stop on this position, fully believing that we are close to a reversal in the Greenback. I will now raise my T/P level on my short position to 107.10. I am convinced we will see a reversal in the Dollar and I will add to my existing short position on any further move higher to 110.50. If this price is triggered, I will come back with a new update for my Platinum Members.
Cash DAX
I had the correct view on the DAX as outlined in detail in yesterday’s commentary. Frustratingly, the DAX missed my 12710 buy level by five points before rallying 300 points to sit above 13000 this morning. The DAX has support from 12800/12880. I will raise my buy level to this area with a wider 12695 ‘’Closing Stop’’. If I am taken long I will have a T/P level at 13010.
Cash FTSE
No Change. I am still long the FTSE from yesterday at 7230. I will now lower my T/P level on this position to 7280 while raising my stop on this position to 7215. If any of the above levels are hit I will be back with a new update for my Platinum Members.
Dow Rolling Contract
As I had so many open positions over the past few days I unfortunately covered my 31200 average long Dow position too early yesterday at 31270 and I am now flat. This morning the Dow is trading higher as expected at 31600. We have support from 31200/31400 where I will again be a buyer with a 31995 wider stop. The 50-Day MA comes in at 32167. As a result, I will be a small seller from 32100/32300 with a tight 32425 stop.
Cash NASDAQ 100
While I was unlucky with the DAX fill above, the NDX did trade lower to my 11950 buy level shortly after I posted yesterday morning before rallying to my 12080 T/P level and I am now flat. Falling Bond Yields helped the NDX to a 2% gain yesterday. The NDX has short-term support from 11950/12150 where I will be a buyer with a wider 11795 ‘’Closing Stop’’.
December BUND
The Bund never came close to yesterday’s buy level before following the Treasury Market higher. I will now raise my buy level to 143.80/144.50 with a tight 142.95 ‘’Closing Stop’’. Volatility will pick up following the ECB rate decision and Lagarde press conference.
Gold Rolling Contract
My latest 1693 Gold position worked well with the market hitting my 1705 T/P level and I am now flat. This morning, Gold is trading higher at 1718. We have support from 1682/1697 where I will again be a buyer with the same 1669 ‘’Closing Stop’’.
Silver Rolling Contract
Thankfully, Silber had a nice 2.50% rallying yesterday, trading at 18.55 this morning. I am still long from last week at 18.80 with the same 19.25 T/P level. Given how oversold Silver is trading I will continue to hold this position with no stop.
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