U.S. Indexes closed lower on Monday, albeit finishing well off earlier lows, with weakness primarily driven by chip and memory names after a group of prominent AI CEOs, including those from OpenAI, xAI and Anthropic, called for a slowdown in the pace of AI development amid safety concerns. The majority of sectors finished lower, although Communication Services, Health Care and Consumer Staples outperformed. The AI developments weighed heavily on semiconductor and memory names given their significant exposure to the AI buildout, while cybersecurity names such as CrowdStrike (CRWD) and Palo Alto Networks (PANW) rallied. Software names also outperformed as concerns over increasingly advanced AI replacing existing software services eased. Elsewhere, Financials came under pressure after Bank of America (BAC), speaking at the Barclays conference, warned that sales and trading revenue is expected to be roughly flat Y/Y. Citi (C), however, pared earlier losses after guiding to low-single-digit Y/Y growth in investment banking revenue and mid-single-digit growth in markets revenue. Crude prices settled higher but notably off earlier peaks. Oil initially rallied after the Iran-Gulf nations meeting was postponed and Saudi Arabia’s East-West pipeline was shut down, with the pipeline expected to remain mostly out of service for several weeks. However, benchmarks pared gains on more constructive geopolitical headlines after President Trump said Ukraine and Russia had agreed not to strike each other’s energy infrastructure and that Iran wants to make a deal, while ILNA, citing Pakistani sources, reported that the US is seeking a step-by-step agreement with Iran. As oil retreated from its highs, Treasuries moved off their lows, with the long end ultimately rallying and the curve flattening. The AI developments may also have provided some support further out the curve, with a slowdown in AI development potentially reducing CapEx requirements and, consequently, corporate debt issuance to fund the AI buildout. In FX, the Dollar rallied amid the risk-off environment, while the Antipodeans, Japanese Yen and Euro lagged. Gold tumbled but finished off its lows, remaining below USD 4,300/oz. Attention now turns firmly to Wednesday’s FOMC decision, where expectations for a rate hike have continued to build. A Reuters poll conducted after Friday’s CPI report found 85% of forecasters expect a 25bp hike, while money markets assign around a 90% probability to such a move. Elsewhere, Oil closed higher by 0.8% while Gold ended Monday’s session with a 1% loss.
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For anyone following my Platinum Service it made 1140 points on Friday and is now ahead by 2440 points for September after ending the month of August with a gain of 2645 points after closing July with a gain of 8031 points, after ending June with a new record of 10527 points after ending May with a loss of 1104 points, 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 previous 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 0.48% lower at a price of 7619.
The Dow Jones Industrial Average closed 152 points higher for a 0.29% loss at a price of 52,421.
The NASDAQ 100 closed 0.82% lower at a price of 29,127.
The Stoxx Europe 600 Index closed 0.49% lower.
This Morning, the MSCI Asia Pacific closed 0.9% lower.
This Morning, the Nikkei closed 0.81% lower at 63,484.
Currencies
The Bloomberg Dollar Spot Index closed 0.29% higher.
The Euro closed 0.36% lower at $1.1556.
The British Pound closed 0.14% lower at $1.3507.
The Japanese Yen fell 0.34% closing at $154.14.
Bonds
U.K.’s 10-Year Gilt closed 1 basis points higher at 5.32%.
Germany’s 10-Year Bund Yield closed 1 basis points higher at 3.51%
U.S.10 Year Treasury closed 1 basis points lower at 4.96%.
Commodities
West Texas Intermediate crude closed 0.80% higher at $100.80 a barrel.
Gold closed 1.01% lower at $4305.10 an ounce.
This morning on the Economic Front we already had the release of U.K. Employment which rose 67K versus 67K expected. Next, we have the Euro-Zone Economic Sentiment Indicator at 10.00 am, followed by U.S. New York Empire State Manufacturing Index at 1.30 pm. Finally, we have a 20 Year Treasury Auction at 6.00 pm.
Cash S&P 500
The S&P 500 closed 0.5% lower on Monday, finishing above its early morning lows but below its session highs. The area around 7600 is proving to be a key level, with a sizable amount of options gamma appearing to help support the Index. However, that gamma support appears weaker heading into Tuesday’s session, potentially leaving the level more vulnerable if it is not rebuilt through Monday’s trading activity. With options expiration this week, positioning could contribute to a pinning effect, potentially keeping the index near the put wall. The technical chart suggests that if support at 7600 breaks, there is little nearby technical support below it. The uptrend from the March lows has already broken, and a subsequent retest has failed. With a descending triangle also in place, a gap lower today could lead to a break below 7600. The 10-year Treasury yield briefly moved above 5% before pulling back to close at 4.99%, matching its October 2023 closing high. In my view, the Fed is less inclined to push yields lower this time. In November 2023, it changed its statement to refer to “tighter financial and credit conditions”, rather than just “tighter credit conditions”. My read today is that the Fed wants the market to play ball—and that is exactly what it is doing. What else is different? The anchor that low Japanese yields provided for global rates has lifted, with the 10-year Japanese government bond yield now at 3%, compared with roughly 0.95% back then. That makes today’s landscape very different from what it was three years ago. Looking at the weekly chart of the 10-year Treasury yield, it is hard for me not to see a bullish pattern for yields, suggesting they could move substantially higher. I know some readers have pushed back on this view for years, but I continue to believe rates have been too low for too long. The 5%–5.25% region is now crucial. A break above 5.25% could bring 6.8% into view as the next major technical level. My S&P plan worked well yesterday as after the market hit my 7601 buy level we rallied to my 7623 T/P level and I am now flat. Overnight the S&P was soft, trading just above yesterday’s lows at 7594 as I go to post. The S&P has short-term support from 7553/7578 where I will be a buyer with a lower 7529 wider ‘Closing Stop’. If I am taken long, I will have a T/P level at 7605. Ahead of the Fed Meeting tomorrow, I do not want to be short the S&P at this time.
EUR/USD
The Euro hit my 1.1540 buy level. I am still long and I will continue to look to add to this position at 1.1460 while leaving my 1.1385 ‘Closing Stop’ unchanged. I will now lower my T/P level to 1.1590. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
I am still flat. Today, I will continue to be a buyer on any dip lower to 98.30/99.10 with the same 97.55 ‘Closing Stop’. If I am taken long, I will have a T/P level at 99.60.
Russell 2000
I am still flat. Today, I will continue to be a buyer on any dip lower to 2800/2860 with the same 2745 ‘Closing Stop’. If I am taken long, I will have a T/P level at 2910.
FTSE 100
The FTSE rallied to my 10710 T/P level on my latest 10670 average long position and I am now flat. Today, I will again be a buyer from 10540/10620 with a lower 10475 ‘Closing Stop’. If I am taken long, I will have a T/P level at 10690.
Dow Rolling Contract
My Dow plan worked well as the market hit my 52290-buy level before rallying to my 52580 T/P level and I am now flat. Today, I will again be a buyer on any dip lower to 51900/52200 with a lower 51695 ‘Closing Stop’. If I am taken long, I will have a T/P level at 52480. I still do not want to be short the Dow at this time.
Cash NASDAQ 100
My NDX plan worked well. After the NDX hit my 28910-buy level the market rallied to my revised 29170 revised T/P level and I am now flat. I do not know how long the buy the dip will continue given the rise in Bond Yields. The NDX has strong support below from 28770/28970 where I will be a strong buyer with a lower 28595 ‘Closing Stop’. If I am taken long, I will have a T/P level at 29220. If this view changes, I will be back with a new update for my Platinum Members.
December BUND
I am still long the Bund at an average rate of 121.00. I will leave my 119.85 ‘Closing Stop’ unchanged while lowering my T/P level to 121.30. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
My Gold plan worked well. Gold traded lower to my 4280-buy level before rallying to my revised 4317 T/P level and I am now flat. Gold has support below from 4180/4260 where I will again be a buyer with a lower 4095 ‘Closing Stop’. If I am taken long, I will have a T/P level at 4338. If this view changes, I will be back with a new update for my Platinum Members.
Silver Rolling Contract
Silver hit my buy range for a now 62.80 long position. I will add to this position at 59.80 with a now lower 57.95 ‘Closing Stop’. I will now lower my T/P level to 63.90. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
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