U.S Equity Markets ultimately closed mixed on Monday with the RUSSELL 2000 tumbling while the majority of sectors took a hit. Individual stock weakness was offset by tech outperformance in the S&P 500 and NASDAQ 100, to see a flat close for those two Indices. The US data highlight was the NY Fed Survey of Consumer Expectations, which saw the 1 and 5 Year inflation expectations unchanged at 3.0% and 2.8%, respectively, although the 3 Year expectations fell to a series low of 2.3% (prev. 2.9%). Meanwhile, Fed’s Bowman spoke over the weekend, noting her baseline outlook is that inflation will decline further but she still sees some upside risks for inflation, also adding the rise in the unemployment rate may be exaggerating the degree of cooling in the labour market. Elsewhere, T-notes were bid across the curve in a steeper fashion with all eyes turning to key US data this week (PPI, CPI, Retail Sales). The upside yesterday was also supported by heightened geopolitical tensions, which saw oil prices surge. An Iran/Hezbollah response appears imminent with Fox News reporting Iran could attack Israel in less than 24 hours. Haven FX also performed well on this, with both the Japanese Yen and Swiss Franc paring from worst levels, although on the day it was the Antipodes that outperformed with Kiwi traders eyeing the RBNZ later in the week. Gold prices surged on the geopolitical tensions. Consumer inflation expectations for the 1yr and 5yr ahead remained unchanged at 3.0% and 2.8%, respectively, but the 3yr dropped dramatically to 2.3% from 2.9%, which is the lowest since the June 2013 inception of the survey. Elsewhere within the release, delinquency expectations increased, with the average perceived probability of missing a minimum debt payment over the next three months increasing by 1ppt to 13.3%, its highest level since April 2020. In addition, labour market expectations came in mixed, with respondents’ median one-year-ahead expected earnings growth declining by 0.3ppt to 2.7%, although the mean expected likelihood that the US unemployment rate will be higher one year from now decreased by 1.0ppt to 36.6%. Fed Governor Bowman spoke over the weekend, noting her baseline outlook is that inflation will decline further with the current stance of monetary policy. She added if US inflation continues the move toward 2%, it will become appropriate to gradually lower the policy rate. However, she calls for patience, noting she still sees some upside risks to inflation. Bowman also added that the rise in the unemployment rate may be exaggerating the degree of cooling in labour markets and that the Fed still needs to pay close attention to inflation, while watching for risks of the labour market weakening. She acknowledged progress on inflation in May and June is welcome, but it is still uncomfortably above the Fed’s 2% goal, and Bowman also said she is not confident that inflation will decline as it did in H2 2023. Looking to September, Governor Bowman said the Fed will have additional economic data by then and a wider view of financial conditions’ impact on the outlook. Elsewhere, Oil surged Monday, closing higher by 3.63 % while a 1.66% rise in Gold saw the market close at a new all-time high at $2471.
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For anyone following my Platinum Service it was flat yesterday as none of Monday’s calls were hit. The Platinum Service is still down by 863 points for August after closing July with a gain of 1918 points while June closed with a gain of 2074 points, having made 1843 points in May. The Platinum Service made 4010 points in April 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 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 0.001% higher at a price of 5344.
The Dow Jones Industrial Average closed 140 points lower for a 0.36% loss at a price of 39,357.
The NASDAQ 100 closed 0.16% higher at a price of 18,542.
The Stoxx Europe 600 Index closed 0.05% higher.
This Morning, the MSCI Asia Pacific closed 0.8% higher.
This Morning, the Nikkei closed 3.45% higher at a price of 36,232.
Currencies
The Bloomberg Dollar Spot Index closed 0.1% lower.
The Euro closed 0.2% lower at $1.0935.
The British Pound closed 0.2% higher at 1.2772.
The Japanese Yen fell 0.3% closing at $147.21.
Bonds
Germany’s 10-year yield closed 1 basis points higher 2.24%.
Britain’s 10-year yield closed 2 basis points lower at 3.92%.
U.S.10 Year Treasury closed 1 basis points lower at 3.93%.
Commodities
West Texas Intermediate crude closed 3.63% higher at $79.63 a barrel.
Gold closed 1.66% higher at $2471 an ounce.
This morning on the Economic Front we already had the release of U.K Unemployment Rate which printed 4.2% versus 4.5% expected. Next, we have both Euro-Zone and German ZEW Surveys at 10.00 am. This is followed by U.S. PPI at 1.30 pm. Finally, we have a speech from Fed Member Bostic at 6.15 pm.
Cash S&P 500
The S&P continues to attract buyers on dips. Yesterday’s 5322 low print was met be strong buying helping the S&P to rally to a new recovery high at 5371 before falling 30 Handles into the close. It is worth remembering that in a Presidential Election year the month of Ausust has always ended positively. This stat makes it very difficult to have a short position for any length of time. However, as I mentioned in yesterday’s Daily Commentary bears are still in control unless the key 5400/5420 resistance area is broken and subsequently proves itself by acting as strong support on any re-test. There is no doubt that the Bank of Japan made a huge mistake by hiking rates 10 days ago and have since said there will be no more rates hikes this year. At the same time the Fed also made a grave error buy not cutting rates last month and are now praying that we get a favourable CPI and PPI reading this week so they can rectify their policy error. From a bull’s point of view the ideal scenario would be the S&P to make a new low below last Monday’s 5090 low print while the VIX also makes a new low below its 65 high print. In my opinion it is fair to say that the VIX high for the year is already in. Market events such as what happened last week do not happen very often. The question now of course is whether this is just a bounce that fails and then produces new lows or whether we run off to new highs again. The simple answer: We don’t know until after the fact and all possibilities are open. Despite the near 300 Handle rally off last Monday’s 5089 low print many of the Moving Averages have not been recaptured. Second bulls need to recapture all the broken MAs which are now likely key resistance on any further rallies. We have now entered the second half of the year and suddenly we see plenty of concerns raised about the state of the U.S. economy, slowing growth and fears that the Fed was again sleep at the wheel, cutting interest rates too late. Fear begets fear and that contributes to selling, especially into a seasonally weak period of the year, namely September and October which are just around the corner. This morning on the back of the 3% rally in the Nikkei overnight, the S&P is trading higher at 5362 as I go to press. Ahead of PPI this afternoon, I will continue to be a seller of the S&P on any further move higher to 5398/5420 with the same 5435 tight ‘’Closing Stop’’. I will now raise my buy level to 5286/5302 with a higher 5269 wider ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 5382. If I am taken long, I will have a T/P level at 5320.
EUR/USD
No Change. The Euro has traded in a narrow range over the past five trading sessions, and I am still flat. The Euro has strong resistance from 1.1020/1.1090 where I will be a small seller with a 1.1155 ‘’Closing Stop’’. The Euro has support below from 1.0800/1.0870 where I will still be a buyer with the same 1.0745 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 1.0970. If I am taken long, I will have a T/P level at 1.0920.
Dollar Index
I am still flat as the Dollar has hardly moved in the past week. I am still long at an average rate of 103.30 with the same 102.35 ‘’Closing Stop’’. Meanwhile, I will leave my 103.70 T/P level 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 traded above 17800 shortly after I posted yesterday morning before trading sideways to lower for the rest of the session. The DAX has strong resistance from 17870/17970 where I will be a seller with a wider 18105 ‘’Closing Stop’’. I still do not want to be long the DAX at this time. If this view changes, I will be back with a new update for my Platinum Members.
Cash FTSE
The FTSE continues to consolidate the gains from the end of last week and I am still flat. This morning the FTSE is trading unchanged at a price of 8205. I will now raise my buy level to 8060/8140 with a higher 7985 tight ‘Closing Stop’’. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
I am still flat the Dow as the market again underperformed both the NDX and S&P. The Dow remains short of its August 2 ‘’Open Gap’’ at 39,737. I know all gaps are eventually filled and this level may have to be triggered before the bears have a chance to re-group and try and drive the market lower. This morning, the Dow is trading at 39460 as I go to press. We have short-term resistance from 39770/40020 where I will continue to be a small seller with the same wider 40205 ‘’Closing Stop’’. Given how extended the Dow is trading I no longer want to be short the market at this time.
Cash NASDAQ 100
Yesterday’s higher close for the NDX was its fifth consecutive rise. However, Monday’s positive close occurred with just 29.7% of the stocks comprising the NASDAQ 100 closing higher on the day. If the rally from August 5 is a countertrend, the current juncture is a strong one to expect the Index to resume the decline that started at 20,690 which was the intra-day high on July 10. Of course, the question is the ‘’where and the when’’. The NDX has resistance from 18800/18950 where I will be a small seller with a wider 19105 ‘’Closing Stop’’. Despite the positive price action over the past five trading sessions, I no longer want to long the NDX at this time. If this view changes, I will be back with a new update for my Platinum Members.
September BUND
No Change: I am still flat the Bund. The Bund has support below from 133.00/133.70 where I will continue to be a buyer with the same 132.35 ‘’Closing Stop’’. The Bund has resistance from 135.50/136.20 where I will still be a seller with the same 136.85 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 134.30. If I am taken short, I will have a T/P level at 134.95.
Gold Rolling Contract
Gold made a new closing high yesterday, and I am still flat. As I have a large, long silver position I am reluctant to chase the price of Gold higher especially ahead of PPI at 1.30 pm and CPI tomorrow. Gold has short-term support from 2398/2416. I will now raise my buy level to this area with a higher 2383 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2428.
Silver Rolling Contract
I am still long Silver at an average rate of 28.10 with the same no stop policy for. With Silver trading at 27.80 this morning, I will now lower my Silver T/P level on this large position to 28.80. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
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