U.S. Indices ultimately settled lower to start the week in a day of quiet newsflow, with attention turning to US CPI on Tuesday. Highlights came from over the weekend, where US President Trump approved export licenses for Nvidia (NVDA) and AMD (AMD) to sell chips to China, albeit not tier 1 chips, but in return for 15% of revenue to be paid back to the US government, seeing the stocks open lower before paring the losses during trade. Sectors were mixed, Consumer Discretionary, Staples and Health Care outperformed, while Energy, Tech and Real Estate lagged. T-Notes flattened on the day with 10 Year Futures settling relatively flat as all eyes turn to US CPI on Tuesday (preview below). In FX, the Dollar outperformed while the Swiss Franc lagged as the currency continues to be hit by the trade fallout with the US. On trade, the White House confirmed CNBC reports that an Executive Order has been signed to extend the trade truce with China by 90 days, as was widely touted ahead of the August 12th deadline. Crude prices settled flat with eyes turning to the Trump/Putin meeting on Friday. Meanwhile, spot gold prices saw notable weakness before paring off lows after US President Trump announced that Gold would not be subject to tariffs. Lithium surged yesterday after CATL suspended production at a mine in China after a permit expired on Saturday, supporting lithium miners in the US. July CPI is expected to rise by +0.2% M/M at the headline level (prev. +0.3%), with the annual rate seen rising to 2.8% Y/Y from 2.7%. The core rate of inflation is expected to rise by +0.3% M/M (prev. +0.2%), with the annual rate of core inflation expected to rise to 3.0% Y/Y from 2.9%. Wells Fargo says that the data will bring further signs of higher tariffs pushing up prices. “It is still early in the price adjustment process to see how higher import taxes will ultimately be distributed between the end-customer, domestic sellers and foreign exporters,” the bank writes, “at the same time, growing consumer fatigue is making it more difficult to raise prices in general.” Looking ahead, Wells Fargo expects inflation to pick up, but not ratchet higher, in H2 of this year, and sees both the core CPI and core PCE deflators returning to around 3% in Q4. The June Fed median projections saw headline PCE at 3.0% by year-end with core PCE at 3.1%. Elsewhere, Oil closed higher by 0.25% while Gold was weak ending Monday’s session with a loss of 1.3%
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For anyone following my Platinum Service it made 59 points yesterday and is now ahead by 1137 points for August after closing July with a gain of 3753 points 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 0.25% lower at a price of 6373.
The Dow Jones Industrial Average closed 200 points lower for a 0.45% loss at a price of 43,975.
The NASDAQ 100 closed 0.36% lower at a price of 23,526.
The Stoxx Europe 600 Index closed 0.06% lower.
This Morning, the MSCI Asia Pacific closed 0.6% higher.
This morning, the Nikkei closed 2.30% higher at a price of 42,778.
Currencies
The Bloomberg Dollar Spot Index closed 0.37% higher.
The Euro closed 0.31% lower at $1.1605.
The British Pound closed 0.21% lower at $1.3421.
The Japanese Yen fell 0.17% closing at $148.02.
Bonds
U.K.’s 10-Year Gilt closed 4 basis points lower at 4.57%.
Germany’s 10-Year Bund Yield closed 1 basis points higher at 2.70%
U.S.10 Year Treasury closed 3 basis points lower at 4.26%.
Commodities
West Texas Intermediate crude closed 0.25% higher at $64.04 a barrel.
Gold closed 1.31% lower at $3353.10 an ounce.
This morning on the Economic Front we already had the release of the U.K. Employment Rate which came in as expected at 4.7%. Next, we have the Euro-Zone ZEW Survey at 10.00 am and the U.S. NFIB Small Business Optimism Index at 11.00 am. This is followed by CPI at 1.30 pm. Finally, we have speeches from Fed Members Barkin and Schmid at 3.00 pm and 3.30 pm respectively.
Cash S&P 500
Today is a pivotal day for the market, with the CPI report due and a large Treasury settlement—the first of three this week. The CPI swaps market may prove most important, as inflation expectations have risen sharply since the start of the year and are climbing again. An in-line CPI reading would likely keep those expectations trending higher, while a miss or beat could shift them. Currently, CPI swaps are pricing July at 2.8% y/y, rising to 3.0% in August, and 3.2% by October. Late yesterday, the 1-year CPI swap reached 3.32%, while the 2-year moved back to 2.9%. The 5-year CPI swap moved back above 2.6%. The technical patterns in CPI swap pricing appear bullish, suggesting expectations are likely to continue rising. Based on those patterns, this afternoon’s report would need to come in at or above expectations for that trend to continue. Yesterday, the S&P just missed my initial 6411 sell level before falling over 30 Handles into the close. As long as the February highs of 6145 hold on any dip it will be difficult for bears to get any joy with a short position. Following the S&P sell-off 10 days ago, the Daily Top and Bottom for the Bollinger Bands have begun shifting higher, though at a modest pace, to 6415 and 6230 respectively. If CPI is benign today, then there is every chance that the S&P can test the 6418/6438 resistance area. I will now raise my sell level to this range with a now higher 6455 ‘Closing Stop’. I will also raise my S&P buy level slightly to 6320/6340 with a higher 6299 ‘Closing Stop’. If I am taken short, I will have a T/P level at 6395. If I am taken long, I will have a T/P level at 6363.
EUR/USD
The Euro never came close to Monday’s sell range as it spent the rest of the session testing the 1.1600 short-term support level. I will now lower my sell level to 1.1680/1.1760 with a lower 1.1825 ‘Closing Stop’. If I am taken short, I will have a T/P level at 1.1610.
Dollar Index
Shortly after I posted yesterday morning the Dollar traded lower to my 98.30 buy level before rallying to my revised 98.58 T/P level and I am now flat. Hopefully, we will see some increased two-way volatility once we get this afternoon’s CPI print. The Dollar has support below from 97.30/98.10 where I will again be an aggressive buyer with the same 96.75 ‘Closing Stop’. If I am taken long, I will have a T/P level at 98.70.
Russell 2000
Monday’s move lower saw the Russell trade lower to my revised 2219 T/P level on my latest 2250 short position and I am now flat. Today, I will again be a seller from 2250/2310 with a 2365 ‘Closing Stop’. If I am taken short, I will have a T/P level at 2215. I still do not want to be long the Russell at this time.
FTSE 100
While most Indexes closed lower on Monday, the FTSE was firm, closing higher by 0.4%. I am still flat as I continue to be a seller on any further rally to 9170/9240 with the same 9305 ‘Closing Stop’. If I am taken short, I will have a T/P level at 9115.
Dow Rolling Contract
The Dow has now quietly dropped over 1000 points over the past two weeks while the NDX is close to all-time highs. The Dow has short-term support below from 43500/43750 where I will be a small buyer with a 43295 tight ‘Closing Stop’. Ahead of CPI I do not want to be short the Dow. If this view changes I will be back with a new update for my Platinum Members. If I am taken long, I will have a T/P level at 44010.
Cash NASDAQ 100
No Change: The NDX closed higher on Friday, propelled mainly by Apple, while the equal-weight index ended the day essentially unchanged, highlighting the lone standout in an otherwise uneventful session. The NDX continues to make new all-time highs led by vertical moves higher in NVIDIA and Microsoft. In 2000 we thought we had experienced the investment mani of a lifetime when the dot-com bubble burst amidst blissed-out market conditions. In 2005-2007, a hyper frenzy for financial engineering ultimately led to a housing crash and global credit implosion that bankrupt major pillars of the world financial system. In size and quality the attributes of the current mania easily eclipse those prior episodes. SPACs, Meme stocks, 0DTE Options, Leveraged ETFs, Cryptos with no intrinsic value as Bitcoin makes a new all-time high this morning above $122K, YOLO, the record use of NYSE Margin debt and the irrepressible desire to own the debt of companies with the weakest balance sheets all show a fervor for speculation that has no parallel. In 1635, the object of investor speculation was one thing – tulip bulbs. Now, the centre of speculation is nearly everything. A mania runs until it exhausts before asset prices plunge across the board. It is an inevitable progression. When the current bubble bursts, the biggest crash of our lifetime will result. Unfortunately, we do not know the ‘’When or Where’’ this will commence and until we do the buy the dip will continue to be rewarded as record amounts of liquidity continue to flood the system with financial conditions easier than the start of QE back in 2008. The NDX closed at a new all-time high on Friday despite many of the stock in its Index closing below their respective 50-Day Moving Averages. I am still short the NDX from last week at a price of 23520. I will add to this trade at 23720 with the same 23905 ‘Closing Stop’. We have a nice start to August which gives us more flexibility. I will have a T/P level on this position at 23410. 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 the Bund as the market traded in an extremely narrow range on Monday. This morning, the Bund is trading at a price of 129.55. We have short-term support below from 128.40/129.10 where I will again be a buyer with a 127.75 ‘Closing Stop’. If I am taken long, I will have a T/P level at 129.70. I still do not want to be short the Bund at this time.
Gold Rolling Contract
I am still flat as I continue to be a buyer on any further dip lower to 3305/3325 with the same 3289 ‘Closing Stop’. If I am taken long, I will have a T/P level at 3349. I no longer want to be short Gold at this time.
Silver Rolling Contract
Silver closed lower by 1.85% yesterday and I am still flat. Today, I will continue to be a buyer on any further dip lower 36.00/36.80 with the same 34.95 ‘Closing Stop’. If I am taken long, I will have a T/P level at 37.50.
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