U.S. Indexes were firmer on Monday, albeit off highs, with gains led by further upside in semiconductor names; SOXX +2%. Energy outperformed alongside higher crude prices, while Materials benefited from strength in metal prices. Oil prices rose after US President Trump rejected Iran’s response to the latest US proposal to end the war, calling it “totally unacceptable”. Geopolitical tensions remain elevated, with reports stating Trump is set to meet with his national security team to discuss next steps regarding Iran, including the potential resumption of military operations. Meanwhile, Iran warned it is prepared to respond to any aggression and remains open to “all options”. The upside in crude and elevated geopolitical risk premium weighed on Treasuries, pushing yields higher across the curve in a bear flattening move as front-end yields led the rise on firmer inflation expectations. Gold and Silver both rallied despite the rise in US yields, with Silver notably outperforming. In FX, G10 trade was mixed. Traditional havens such as the Japanese Yen and Swiss Franc lagged amid the rise in Treasury yields, while the Australian Dollar outperformed on stronger equities and metal prices. The Canadian Dollar was also supported by firmer crude prices. Sterling was little changed, although over 80 MPs are reportedly calling for PM Starmer’s resignation following Labour’s poor local election performance last week. Attention now turns to whether Trump decides to resume military action against Iran following the latest deadlock in negotiations, although some reports suggest any decision may wait until after his return from China later this week. Elsewhere, focus this week also falls on US CPI, PPI and Retail Sales, alongside the 10- and 30-year Treasury auctions. Elsewhere, Oil closed higher by 3% and Gold by 0.6%.
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For anyone following my Platinum Service it was flat yesterday and is still down 313 points for May having ended April with a gain of 1730 points, after ending March with a massive gain of 9002 points, having closed February with a strong gain of 5482 points after ending January with a gain of 4757 points, having closed December with a gain of 2599 points, after ending the month of November with a gain of 4542 points, after ending October with a nice gain of 5110 points after closing September with a gain of 3774 points while ending August with a gain of 3362 points 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 0.19% higher at a price of 7412.
The Dow Jones Industrial Average closed 95 points higher for a 0.19% gain at a price of 49,704.
The NASDAQ 100 closed 0.29% higher at a price of 29,320.
The Stoxx Europe 600 Index closed 0.11% higher.
This Morning, the MSCI Asia Pacific closed 0.3% lower.
This Morning, the Nikkei closed 0.43% higher at a price of 62,684.
Currencies
The Bloomberg Dollar Spot Index closed 0.05% higher.
The Euro closed 0.08% lower at $1.1775.
The British Pound closed 0.04% lower at $1.3621.
The Japanese Yen fell 0.36% closing at $157.23.
Bonds
U.K.’s 10-Year Gilt closed 9 basis points higher at 5.00%.
Germany’s 10-Year Bund Yield closed 4 basis points higher at 3.04%
U.S.10 Year Treasury closed 3 basis points higher at 4.39%.
Commodities
West Texas Intermediate crude closed 2.60% higher at $96.90 a barrel.
Gold closed 0.54% higher at $4724.10 an ounce.
This morning on the Economic Front we already had the release of German CPI which rose 2.9% Y/Y versus +2.7% expected. Next, we have the Euro-Zone Economic Sentiment Indicator at 10.00 am and the U.S. ADP Weekly Employment Change at 1.15 pm. This is followed by CPI at 1.30 pm. Finally, we have a Ten-Year Treasury Auction at 6.00 pm and a speech from Fed Member Goolsbee at 6.05 pm.
Cash S&P 500
Stocks finished the day mostly flat, with the S&P 500 up less than 0.2% and the RSP down fractionally. However, this pushed dispersion in the index even higher. The Dispersion Index closed the day near 40.5, above its level prior to the mega-cap earnings reports, which is something I have not seen in recent memory. The move continues to be all about technology, with the XLK ETF outperforming the S&P 500 by 20.5 percentage points over the past 30 days. Meanwhile, every other major sector has underperformed the Index over the same period. On a five-year lookback, the gap between the S&P’s move and the average sector’s move is now in the 0th percentile. Just to make that clear: the zero percentile. The S&P 500 is up 16.4% over the past 30 days, but the average sector has only moved 9.5%. That gap has never been wider in five years. Tech is roughly 30% of the index and up nearly 37% — it alone is doing about two-thirds of the S&P’s move. Strip it out, and the rest of the market looks far weaker than the headline suggests. Meanwhile, despite all three America Indexes closing higher the VIX also closed higher by a whopping 7.4%. History tells us that a rising VIX into a rising market does not end well. On top of this despite all three Indexes at or close to all-time highs the VIX closed over 18 which is another warning sign for lower prices ahead. The 10-year managed to push just barely above the downtrend on Monday, although it was not the cleanest breakout one would want to see. Breaking out through a period of consolidation is not ideal and, in many cases, is not really a breakout at all. In theory, for the 10-year to begin moving meaningfully higher from here, it likely needs to break above 4.45% and do so fairly quickly. High-yield credit spreads have notably turned higher over the past couple of days, while the S&P 500 earnings yield has moved lower. That is a divergence worth watching because one of them is likely wrong. Given where dispersion is and how much technology has outperformed the broader S&P 500, my guess is that the S&P 500 is the one that is wrong especially as the RSI closed above 75 last night. Finally, the oil volatility index rose yesterday and broke above two downtrend lines. If the OVX truly breaks out and continues higher from here, the party may be over. The move in oil has continued overnight with WTI back trading above $100 a barrel. The S&P has an ‘Open Gap’ from last week from 7257/7294. I will use any tag of the gap to close my 7097 average short position and reassess if triggered. With the S&P again closing over the top of its Daily Bollinger Band we should have at least a small retracement over the coming days. If this view changes I will be back with a new update for my Platinum Members.
EUR/USD
No Change: I am still flat as the Euro again traded in a narrow range on Monday. I still believe that the Euro is overvalued. The Euro has short-term resistance from 1.1840/1.1920. I will now raise my sell level to this area with a higher 1.2005 ‘Closing Stop’. Meanwhile, I will continue to be a buyer on any further dip lower to 1.1580/1.1660 while leaving my 1.1495 ‘Closing Stop’ unchanged. If I am taken short, I will have a T/P level at 1.1770. If I am taken long, I will have a T/P level at 1.1730.
Dollar Index
No Change: The Dollar has barely moved during the past two weeks unlike the equity and bond markets which is incredible considering that Japan’s Ministry of Finance spent an estimated $34.5 billion buying yen on April 30 after the currency breached 160 against the Dollar. It was the first intervention since July 2024. This is the central tension of Prime Minister Takaichi’s economic agenda. She wants cheap government borrowing to fund a defense and industrial buildup, a stable yen to protect household purchasing power, and growth. She cannot have all three. The tension is institutional as well as economic: Takaichi needs the Bank of Japan to keep Interest Rates low enough to fund her ambitions but the BOJ has been inching towards normalisation and the Finance Ministry worries more about the Yen weakening than Takaichi’s agenda progressing. I am still long from 10 days ago at a price of 98.30. I will add to this position at 97.50 while leaving my 96.95 ‘Closing Stop’ unchanged. I will leave my T/P level unchanged at 98.75. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Russell 2000
I am still flat. Today, I will continue to be a seller from 2885/2955 with the same 3015 ‘Closing Stop’. If I am taken short, I will have a T/P level at 2840. Given how overbought the Russell is trading I still do not want to be long the market at this time.
FTSE 100
I am still long the FTSE from Friday at an average rate of 10260. I will leave my 10145 ‘Closing Stop’ unchanged while lowering my T/P level to 10315. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
I am still flat the Dow as the market never came close to yesterday’s buy range The Dow’s underperformance versus the other three American Indexes is a warning sign for lower prices. The big question is as usual the ‘’WHEN AND FROM WHERE. Internally the market is weak as shown by the McClellan Oscillator which closed last night with a -21 print. This is another warning sign for lower prices as this should not happen with markets making new highs daily. Today, I will again be a buyer of the Dow on any further dip lower to 49000/49300 while leaving my 48795 ‘Closing Stop’ unchanged. If I am taken long, I will have a T/P level at 49650.
Cash NASDAQ 100
The NDX rallied to my sell range for a now 29320 short position. I will only add to this position on any further move higher to 29520 while leaving my 29705 ‘Closing Stop’ unchanged. I will now have a T/P level on this position at 28970.
December BUND
I am still flat. The Bund has short-term support below from 124.20/125.10 where I will be a small buyer with a lower 123.55 ‘Closing Stop’. The Bund has short-term resistance from 126.50/127.30. I will leave my sell level unchanged with the same 128.15 ‘Closing Stop’. If I am taken long, I will have a T/P level at 125.80. If I am taken short, I will have a T/P level at 125.90.
Gold Rolling Contract
I am still flat. Today, I will not chase the price of Gold higher believing that we are not done with lower prices for now. Today, I will continue to be a buyer from 4450/4550 with the same 4325 ‘Closing Stop’. If I am taken long, I will have a T/P level at 4680. If this view changes, I will be back with a new update for my Platinum Members.
Silver Rolling Contract
Silver rallied a further 7% on Monday and I am still flat. Today, I will raise my buy level to 73.50/76.50 with a higher 70.15 ‘Closing Stop’. If I am taken long, I will have a T/P level at 79.75.
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