U.S. Indexes closed higher in what was a risk-on session with equities bid across the board, with notable outperformance in the NASDAQ. The majority of sectors were green, although Energy, Health Care and Utilities were hit with energy stocks tracking crude prices lower. Crude initially gapped higher at the open as the Israel/Iran conflict escalated, although crude then tumbled from the peaks while equities moved higher, paring some of the moves seen late last week. Nonetheless, crude prices still remain elevated compared to recent weeks and kept Treasuries pressured on inflationary fears. In FX, the Dollar was sold but off lows heading into APAC while Antipodes outperformed, tracking risk sentiment. The risk on trade was seen despite continued conflict in the Middle East, but reports in the Wall Street Journal suggested Iran wants to de-escalate, which took crude prices to session lows and stocks to highs but ultimately finished off best levels as the two sides continued with the missile exchanges. Attention will largely be on any de-escalation (ceasefire, resumption of nuclear talks), or escalation (strikes on energy facilities, targeting of leaders, US gets involved). Elsewhere, data sparked little reaction but the New York Fed Manufacturing index saw a chunky miss due to a fall in New Orders and Shipments. Attention turns to US Retail Sales on Tuesday, ahead of FOMC and updated Dot Plots on Wednesday. The NY Fed Manufacturing Survey in June tumbled to -16.0 from -9.2, despite expectations for a rise to -5.5. The primary reason for the drop in the headline business conditions index was the fall in New Orders to -14.2 from +7.0. Shipments also declined, falling to -7.2 from +3.5. Meanwhile, delivery times held steady, and supply availability worsened. Inventories were little changed. Regarding prices, Prices Paid fell to 46.8 from 59.0, while Prices Received rose to 26.6 from 22.9, suggesting selling price increases accelerated somewhat, while the drop in prices paid suggests the pace of price increases slowed, but remained significant. The six-month outlook saw a large improvement, rising to +21.2 from -2.0, rising above zero for the first time since March. Elsewhere, both Oil and Gold closed lower by 2.15% and 1.37% respectively.
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For anyone following my Platinum Service it made 150 points yesterday and is now ahead by 2961 points for June, 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 0.94% higher at a price of 6033.
The Dow Jones Industrial Average closed 317 points higher for a 0.75% gain at a price of 42,515.
The NASDAQ 100 closed 1.42% higher at a price of 21,937.
The Stoxx Europe 600 Index closed 0.36% higher.
This Morning, the MSCI Asia Pacific closed 0.3% higher.
This Morning, the Nikkei closed 0.49% higher at a price of 38,499.
Currencies
The Bloomberg Dollar Spot Index closed 0.22% lower.
The Euro closed 0.23% higher at $1.1577.
The British Pound closed 0.17% higher at $1.3596.
The Japanese Yen fell 0.13% closing at $144.30.
Bonds
U.K.’s 10-Year Gilt closed 3 basis points lower at 4.53%.
Germany’s 10-Year Bund Yield closed 1 basis points higher at 2.55%
U.S.10 Year Treasury closed 2 basis points higher at 4.43%.
Commodities
West Texas Intermediate crude closed 2.15% lower at $71.41 a barrel.
Gold closed 1.37% lower at $3385.10 an ounce.
This morning on the Economic Front we have the German and Euro-Zone ZEW Surveys at 10.00 am, followed by U.S. Retail Sales at 1.30 pm. Next, we have Industrial Production and Capacity Utilisation at 2.15 pm. Finally, we have Business Inventories and the NAHB Housing Market Index at 3.00 pm.
Cash S&P 500
The U.S. trading session was relatively quiet overall followed the morning volatility crash, with no new developments in the Israel-Iran conflict over the weekend, making it relatively easy for IV to drop sharply. Mostly, it felt like standard operating procedure in the market: as soon as the VIX found its floor, the S&P 500 hit its ceiling. Additionally, implied correlation and volatility fell during the session, while my proxies indicated that realised correlation and volatility increased. This ties back to last week’s conversation about the market’s ability to produce big upward moves in the SPX without driving implied volatility higher, essentially limiting further downside in implied volatility at this stage. Overnight the Bank of Japan left interest rates unchanged as expected at its latest Monthly Meeting. Looking at the S&P 500 on Monday, after breaking the rising wedge on Friday, we came back and retested that breakdown level, and so far, it has held. Additionally, yesterday’s move filled the gap from Friday’s open. If the rising wedge pattern is valid, the index should start declining today and continue downward essentially uninterrupted. If this does not occur, it would suggest that a different pattern or scenario is unfolding. Monday’s move higher saw the S&P hit my 6040-sell level before selling off to my revised 6025 T/P level and I am now flat. This morning, the S&P is trading lower at a price of 6015 as I go to post. Today, I will again be a seller from 6038/6058 with the same 6071 ‘Closing Stop’. Meanwhile, I will continue to be a buyer on any further dip lower to 5915/5935 with a higher 5899 ‘Closing Stop’. If these views change, I will be back with a new update for my Platinum Members.
EUR/USD
I am still short the Euro at an average rate of 1.1530 with the same 1.1635 ‘Closing Stop’. Given how overbought the Euro is trading at this time I will now lower my T/P level on this position to 1.1450. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
Despite the fact that Bond Yields are not falling which is a concern considering how weak the recent economic data has been. Likewise, there remains no confidence in the Dollar which continues to keep dropping no matter what. The MACD is so oversold as we have only seen twice in the past 20 years. However, we have a first positive divergence for the Dollar since 2008. That divergence still has to confirm as a further drop could see it disappear. Meanwhile, sentiment is as bearish as we have seen in many years. In my opinion that always risks a sudden short squeeze on a change of dynamics. Getting trade deals out of the way with clarity and visibility as opposed to ongoing uncertainty would long a long way on one level. The same is true to some extent with regards to the tax cut bill and deficit funding requirements. If not as bad as feared with the bill pared back in negotiations for example could yield some relief. The reality is sentiment for the Dollar is on the floor following a rare six consecutive down months while at the same time on the Monthly Chart I can argue that the long-term up trend still remains intact. Monday’s further sell-off on the Dollar saw the market hit my 97.70 buy level. I will continue to look to add to this position at 96.90 while leaving my 96.35 ‘Closing Stop’ unchanged. I will also leave my 98.50 T/P level unchanged on this long position. If any of the above levels are hit, I will be back with a new update for my Platinum Members..
Russell 2000
No Change”. The Russell has short-term support from 2010/2080 where I will be a buyer with the same 1965 ‘Closing Stop’. I no longer want to be short the market at this time. If I am taken long, I will have a T/P level at 2130.
FTSE 100
The FTSE continues to trade sideways close to all-time highs and I am still flat. Today, I will continue to be a seller from 8920/8990 with the same 9055 ‘Closing Stop’. If I am taken short, I will have a T/P level at 8870.
Dow Rolling Contract
I am still flat the Dow as the market never came close to Monday’s buy range. The Dow has short-term support below from 41950/42200. I will now raise my buy level to this range with a higher 41795 tight ‘Closing Stop’. If I am taken long, I will have a T/P level at 42440. I still do not want to be a seller of the Dow at this time.
Cash NASDAQ 100
I am still flat as the NDX just missed Monday’s sell range before trading lower overnight. This morning, the NDX is trading at 21875 having hit an overnight low at 21770. The NDX has support from 21400/21550 where I will continue to be a buyer with the same 21255 ‘Closing Stop’. Today, I will again be a seller from 21990/22190 with the same 22355 ‘Closing Stop’. If I am taken long, I will have a T/P level at 21700. If I am taken short, I will have a T/P level at 21840.
December BUND
The boring sideways price action for the Bund continues and I am still flat. Today, I will continue to be a buyer on any dip lower to 129.10/129.90 with the same 128.35 ‘Closing Stop’. If I am taken long, I will have a T/P level at 130.55. I still do not want to be short the Bund at this time. If this view changes, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
No Change: There is no doubt that Gold is expensive. Any geopolitical situation sees investors pile into Gold. I have no interest in buying the Gold market at these levels and will use any rallies from here to go short. Gold has short-term resistance from 3490/3510. I will leave my sell level unchanged with the same 3531 ‘Closing Stop’. If triggered, I will have a T/P level at 3468.
Silver Rolling Contract
I am still flat. Given how short-term overbought Silver is at this time I will not chase the price higher. Therefore, I will continue to be a buyer on any dip lower to 34.40/35.40 with the same 32.95 ‘Closing Stop’. If I am taken long, I will have a T/P level at 36.50.
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