U.S. Equity Markets closed mixed on Wednesday with the S&P 500 and the NASDAQ 100 little changed while the Dow was bid and Russell 2000 lower. Futures were hit in the pre-market however after some cautious earnings from Uber (UBER), soft Intel (INTC) guidance and weak China EV sales from Tesla (TSLA). Yields were also higher, weighing on the risk appetite and limiting any reversal in the S&P and Nasdaq. T-Notes had gradually moved lower throughout the APAC, EU and US sessions while an average 10 Year Auction had little impact. Markets are largely awaiting the next key catalyst in a data-light week with earnings quietening down and as eyes turn to next week’s US CPI data, as well as commentary from Fed Chair Powell on Tuesday. This week, meanwhile, Jobless Claims on Thursday and Friday’s initial May University of Michigan Survey take the limelight. In FX, Aussie and Yen underperformed with AUD still reacting to the less hawkish than feared RBA earlier in the week while Yen faced its usual selling pressures. The Yen weakness came despite commentary from BoJ Governor Ueda overnight, who suggested the BoJ may need to respond via monetary policy if such impact from Yen moves affects trend inflation. Ueda later added he does not see it as having a big impact so far, but there is a risk it could become more significant in the future. The Swedish Kroner was also weighed on after the Riksbank rate decision. Elsewhere, crude prices were bid after a larger-than-expected crude draw while we await Israel’s response on the hostage deal/ceasefire, with some reports suggesting progress has been made on the major gaps, although high-level Israeli officials still appear displeased with the proposal. Meanwhile, Fed Member Collins acknowledged there are risks to cutting too soon but she is optimistic the Fed can get to 2% inflation in a reasonable time frame. She does expect demand will have to slow however, but said the Fed was well positioned for the current outlook, and although current policy should slow the economy, it is too soon to tell just how restrictive policy is. On data, she noted firms are well positioned to absorb faster wage growth and that the recent inflation setbacks are not a surprise noting the economy is robust and job market is coming into better balance. She said the very strong jobs market has bolstered consumer spending, but she does expect some factors underpinning economic resilience to wane.
Bank of England Preview: Analysts are unanimous in their view that the MPC will keep the Bank Rate unchanged at 5.25%, with markets assigning a circa 93% chance of such an outcome. The vote split is once again expected to be 8-1 with Dhingra the lone dovish dissenter. Since the March announcement, Governor Bailey noted that the UK is “on track” to quell inflation. However, Chief Economist Pill, said that in his baseline scenario, “the time for cutting Bank Rate remains some way off.” Attention will also fall on the policy statement, and whether the MPC opts to provide a dovish tweak to, or scraps, its existing guidance that “policy will need to remain restrictive for sufficiently long.” Beyond the upcoming meeting, the first 25bps cut is not fully priced until August’s meeting, and a total of 53bps of loosening is being priced by year-end. For the accompanying MPR, focus will be on medium-term inflation expectations, which could be revised as low as 1.5%, according to NatWest Markets. Elsewhere, Oil rose 0.79% while Gold closed 0.2% lower after a quiet session.
To mark my 2975th 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 65 points yesterday and is still ahead by 987 points for May, having finished April with a gain of 4010 points 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 points, 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 0.01% lower at a price of 5187.
The Dow Jones Industrial Average closed 172 points higher for a 0.44% gain at a price of 39,056.
The NASDAQ 100 closed 0.04% lower at a price of 18,085.
The Stoxx Europe 600 Index closed 0.34% higher.
This Morning, the MSCI Asia Pacific closed 0.3% lower.
This Morning, the Nikkei closed 0.1% lower at a price of 38,166.
Currencies
The Bloomberg Dollar Spot Index closed 0.13% higher.
The Euro closed 0.1% lower at $1.0745.
The British Pound closed 0.1% lower at 1.2495.
The Japanese Yen fell 0.61% closing at $155.62.
Bonds
Germany’s 10-year yield closed 5 basis points higher at 2.47%.
Britain’s 10-year yield closed 1 basis points higher at 4.15%.
U.S.10 Year Treasury closed 5 basis points higher at 4.49%.
Commodities
West Texas Intermediate crude closed 0.89% higher at $79.08 a barrel.
Gold closed 0.2% lower at $2310.10 an ounce.
This morning on the Economic Front we have no Economic data of note. However, at 12.00 pm we have the latest Bank of England Rate Announcement, followed by a speech from BoE Governor Bailey at 12.30 pm. Next, we have U.S. Weekly Jobless Claims at 1.30 pm. Finally, we have a key 30-Year Treasury Auction at 6.00 pm and a speech from Fed Member Daly at 7.00 pm.
Cash S&P 500
Yesterday was the second slowest trading volume of the year. Total Big Board Volume was just 9.8 billion shares traded. I am still flat the S&P as the market for the most part traded in a 10 Handle range. Given how short-term overbought the S&P is at this time, I am not going to chase the market higher, preferring to leave my 5142/5157 buy level unchanged with the same 5127 ‘’Closing Stop’’. If stopped, I will be an aggressive buyer on any dip lower to last Thursday’s 5065 ‘’Open Gap’’ with no stop or T/P levels. The S&P has resistance from 5220/5238 where I will be a small seller with a 5255 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 5173. If I am taken short, I will have a T/P level at 5206. If these views change, I will be back with a new update for my Platinum Members.
EUR/USD
I am disappointed with the price action in the Euro. Given the rally in both European and U.S. Indexes, I would have expected the Euro to be trading higher. For this reason, I emailed my Platinum Members to exit any long position at 1.0755 and I am now flat. The key level to watch for the Euro is the April low of 1.0600. A break and close below here will be bearish. Today, I will be a small buyer from 1.0570/1.0650 with a tight 1.0525 ‘’Closing Stop’’. For now, I do not want to be short the Euro. If this view changes, I will be back with a new update for my Platinum Members.
Dollar Index
I am still flat the Dollar. This morning the Dollar is trading unchanged at 105.50. The Dollar has short-term resistance from 105.90/106.60 where I will continue to be a seller with a higher 107.15 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 105.45.
Cash DAX
Incredibly, the DAX made another new recovery high at 18545 yesterday morning and I am still flat. The DAX has resistance from 18640/18740 where I will be a small seller with an 18825 ‘’Closing Stop’’. Meanwhile, I will continue to be a buyer on any dip lower to 18150/18230 with the same 18065 tight ‘’Closing Stop’’.
Cash FTSE
The FTSE continues to make new all-time highs, with its latest high coming at a price of 8380 overnight. The 14 Day RSI for the FTSE hit a high yesterday at 78. I have no idea why but every time the RSI gets this ‘’hot’’ a larger pullback is coming. And just to highlight the historical absurdity here, the Weekly RSI is higher now than any time during the past 10 years. Adding to the mix is the fact that the FTSE is trading well outside the Weekly Bollinger Band. History tells us that these types of ramps eventually lead to major pullbacks. I certainly would not be long the FTSE against this backdrop. I am still short from early yesterday at a price of 8350. I will add to this position at 8410 while leaving my 8455 ‘’Closing Stop’’ unchanged. Meanwhile, I will leave my 8290 T/P level unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
Shortly before the New York close the Dow traded higher to my 39050-sell level. As I wanted to be flat overnight, I covered this position at my revised 39015 T/P level. The Dow is now overbought. We have further resistance from 39180/39430 where I will again be a seller with a higher 39605 tight ‘’Closing Stop’’. I still do not want to be a buyer of the Dow at this time. If this view changes, I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
Frustratingly, the NDX just missed yesterday’s sell range for the second consecutive trading session before falling over 100 points and I am still flat. I am not going to chase the NDX lower, leaving my 18170/18320 sell level unchanged with the same 18425 tight ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 18070. I still do not want to be long the NDX at this time.
March BUND
The Bund followed Treasury Markets lower yesterday and I am still flat. Ahead of the Bank of England Rate announcement at 12.30 pm and the key 30-Year Treasury Auction this evening, I will now lower my Bund buy level to 130.10/130.80. If triggered, I will have a T/P level at 131.40. Meanwhile, I will have a ‘’Closing Stop’’ at 129.45 on this position. I still do not want to be short the Bund at this time. If this view changes, I will be back with a new update for my Platinum Members
Gold Rolling Contract
Gold traded in a narrow range yesterday and I am still flat. Ahead of today’s economic data, I will again lower my Gold buy level to 2270/2285 with a lower 2257 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2299.
Silver Rolling Contract
I have had my 27.30 average long Silver position too long and decided to exit this position at my revised 27.45 T/P level as emailed to my Platinum Members and I am now flat. Having watched Silver trade below 26 last week, I am happy to get out of jail with this position. Silver, has short-term support below from 25.40/26.20 where I will be an aggressive buyer with a 24.65 ‘’Closing Stop’’. If triggered, I will have a T/P level at 26.80.
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