U.S. Indexes reversed earlier losses to close higher Monday led by the 0.62% rise in the Dow. This week, investors will be closely watching the release of the Consumer Price Index (CPI) data, which is expected to show a slower increase in inflation for June. Wall Street anticipates a 3.1% annual increase in headline inflation for June, compared to the 4% rise seen in May – marking the slowest pace of growth since March 2021. Core CPI, which excludes volatile food and fuel prices, is expected to increase at an annual rate of 5%, down from 5.3% in May but still well above the Federal Reserve’s target of 2%. This data will play a significant role in shaping expectations regarding the Fed’s future plans. Investors could get a glimpse inside those plans with several Fed officials, including Neel Kashkari, Loretta Mester, Mary Daly, and Christopher Waller, speaking throughout the week. Lastly, the Fed’s Beige Book is also set to be published, providing an overview of economic conditions across different regions. The second-quarter earnings season kicks off later this week with major banks, including JPMorgan Chase (JPM), Citigroup (C), and Wells Fargo (WFC), set to report their results on Friday. Investors will closely monitor how banks are handling the aftermath of the recent bank failures and the resulting deposit drains across the financial system since March. Analysts expect their second-quarter earnings to be affected by sluggish dealmaking and trading revenue. More importantly, the comments of JPMorgan Chase CEO Jamie Dimon and other executives will be of particular interest, as they will provide insights into the state of the U.S. economy and the banking sector. This morning’s NFIB Small Business Optimism Index will offer valuable insights into the state of small businesses, considering the impact of pricing pressures and labour concerns. Finally, the University of Michigan’s Survey of Consumers will indicate consumer expectations for the second half of the year. European Markets closed higher. Bank of England Governor Bailey said inflation is ‘’unacceptably high’’ but expected to decrease significantly, sending the Pound higher. In Asia, China is in the spotlight this week as they are set to release inflation and trade data, which is likely to highlight the challenges faced by the country’s economy. The data is expected to reflect a faltering post-COVID recovery, with deflationary pressures, high youth unemployment, and weak foreign demand being major contributing factors. Inflation data for June indicated stagnant annual inflation that was unchanged from a year ago, while Thursday’s trade figures are anticipated to show a decline in exports. Meanwhile, China continues to face tough competition from the West as the U.S. and its allies have tightened restrictions on chip-related imports causing further headwinds for a struggling economic rebound. Elsewhere, Oil fell 1.18% while Gold again closed flat.
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For anyone following my Platinum Service it made 180 points yesterday and is now ahead by 335 points for 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 0.24% higher at a price of 4409.
The Dow Jones Industrial Average closed 209 points higher for a 0.62% gain at a price of 33,944.
The NASDAQ 100 closed 0.06% higher at a price of 15,045.
The Stoxx Europe 600 Index closed 0.18% higher.
This morning, the MSCI Asia Pacific closed 0.4% higher.
This morning, the Nikkei closed 0.13% higher at a price of 32,233.
Currencies
The Bloomberg Dollar Spot Index closed 0.50% lower.
The Euro closed 0.3% higher at $1.1001.
The British Pound closed 0.4% higher at 1.2885.
The Japanese Yen rose 1.1% closing at $140.90.
Bonds
Germany’s 10-year yield closed 1 basis points higher at 2.65%.
Britain’s 10-year yield closed 1 basis points lower at 4.64%.
U.S.10 Year Treasury closed 10 basis points lower at 3.99%.
Commodities
West Texas Intermediate crude closed 1.18% lower at $72.99 a barrel.
Gold closed 0.1% higher at $1926.10 an ounce.
This morning on the Economic Front we already had the release of German Final CPI which came in at +6.4% versus +6.4% expected. At the same time U.K. Employment and Average Earnings were released, coming in higher than expected at 4% and 6.9% respectively. Next, we have the German and Euro-Zone ZEW Survey at 10.00 am, followed by U.S. NFIB Business Optimism Index at 11.00 pm. Finally, at 2.00 pm we have a speech from Fed Member Bullard.
Cash S&P 500
Just when it looked like that Friday’s late aggressive sell programme may mean something the S&P attracted strong buying shortly after I posted on Monday. The S&P is now trading 40 Handles higher from where I marked prices 24 hours ago, helped by weaker Bond Yields and a lower Dollar. The S&P hit my 4390 T/P level on my 4380 long position before rallying to my 4412 sell level. The S&P subsequently fell 20 Handles enabling me to cover this position at my 4405 revised T/P level and I am now flat. The S&P rallied into the close and again overnight, trading at 4418 as I go to press. I have not changed my view that this market is severely overbought as I have outlined below in my NDX commentary. However, we are in July which is one of the strongest months of the year. The last eight Julys have been positive making it even more difficult to have a short position on board. The S&P has resistance from 4435/4450 where I will be a small seller with a 4461 ‘’Closing Stop’’. If we do break higher the next major resistance level is at 4510. The S&P has support from 4382/4398 where I will be a small buyer with a 4369 ‘’Fixed Stop’’.
EUR/USD
I have had the right view on the Euro but unfortunately, I am not long with the market trading at 1.1020 this morning. I still believe that the Euro will trade higher to 1.12 over the coming weeks before we see a more sustained sell-off. I will now raise my buy level to 1.0910/1.0980 with a higher 1.0845 ‘’Closing Stop’’.
June Dollar Index
Unfortunately, the Dollar missed my 102.60 T/P level with a 102.56 high print before selling off overnight to my second buy level at 101.69. I am now long at an average rate of 101.98. I will now lower my T/P level on this position to 102.25 while leaving my 100.95 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash DAX
The DAX is opening 120 points higher at 15770 this morning. We have resistance from 15900/16000 where I will be a small seller with a tight 16085 ‘’Closing Stop’’. Meanwhile my only interest in buying the DAX is still on an aggressive move lower to 15340/15440 with the same 15265 ‘’Closing Stop’’.
Cash FTSE
The FTSE missed my initial 7220 buy level by six points before having a small rally into the close. I am still flat. Today, I will raise my buy level to 7170/7240 with a 7095 ‘’Closing Stop’’. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
Unfortunately, scared by Friday’s late sell programme, I exited my latest 33770 long position at 33780 and I am now flat. The Dow made an afternoon high at 33960 before having a small sell-off into the close. So far, the 50-Day Moving Average is holding. However, the last month has seen six successful tests of this key support, meaning this key pivot support point is weakening. If we do break and close below 33600 I will be a seller. Much to my surprise the Dow is trading above 34,000 this morning. This is 400 points higher from where I marked prices 24 hours ago. The Fear & Greed Index closed at 78 last night and will be higher this afternoon when the Cash Equity Markets open. However, as the Dow has underperformed the other main Indexes this year, I cannot be a seller. We have short-term support from 33600/33800 where I will be a small buyer with a fixed 33495 tight ‘’Fixed Stop’’.
Cash NASDAQ 100
To give you an example of how overextended the NDX is: Meta is up nine months in a row, admittedly off a very low base following last year’s aggressive sell-off. Apple is a $ 3 trillion stock where its growth rate is in single digits. Apple has a PE of 33 and a forward PE at 30. Who would want to be a buyer of this stock at these multiples. As I mentioned last week, Berkshire Hathaway has 24% of its capital tied up in Apple. This is insane, where is the diversification. Tesla has also gone up in a straight line. In December, Tesla was trading below $125, now trading at $270 having hit a high at $280 last week. Depending on which way you value the stock, it has a forward multiple of 59-79. Who wants to be a buyer at these levels? Certainly not me. Tops are a process as we know making it very difficult to be short but the price action of these three stocks is scary. They can roll over at any time especially at current interest rates. I have no interest in being long this market. I am still flat the NDX. I will continue to be a seller on any further rally to 15110/15210 with the same 15305 ‘’Closing Stop’’.
September BUND
I am still flat. The Bund missed my initial 130.50 buy level with a 130.62 print before having a small rally into the European close. I am not going to chase the market higher, leaving my aggressive129.80/130.50 buy level unchanged with the same 129.25 ‘’Closing Stop’’. If triggered, I will have a T/P level at 131.15.
Gold Rolling Contract
No Change. Gold traded in a narrow $14 range yesterday and I am still flat. I will continue to be a buyer on any dip lower to 1890/1905 with the same 1879 ‘’Closing Stop’’.
Silver Rolling Contract
No Change. Silver again traded in a tiny range. I am still long at 23.63 with the same no stop policy. In my opinion, Silver is grossly undervalued. I will continue to have a TP level at 24.20. If this changes I will be back with a new update for my Platinum Members.
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