Following an afternoon reversal, U.S. Equity Markets finished the day lower led by the 0.89% decline in both the Dow and NASDAQ 100. Markets remained under steady pressure after starting the day near the highs. The drop began after Russian energy provider Gazprom declared a force majeure for gas supplies to Europe via its Nord Stream 1 pipeline. The company said it could no longer guarantee meeting its contractual obligations due to “extraordinary circumstances beyond its control.” The development drove energy prices higher, pointing to higher inflation growth down the road. At the same time, iPhone maker Apple (AAPL) was said to be increasingly cautious on hiring and spending. Bloomberg reported the company was preparing to make these changes to adjust to slowing economic growth. Investors are worried that a slowdown in demand for technology products could ensue. That would bode poorly for a slew of earnings announcements from tech companies that start next week. Within the S&P 500, eight of 11 sectors finished higher. European Markets closed higher on investor optimism that the Federal Reserve would slow interest rate hikes going forward – a follow-through move from Friday’s gains in the U.S. The central bank’s biggest policy hawk (i.e., one inclined to raise rates), St. Louis President James Bullard, stuck to his guns for policy guidance despite strong inflation growth in June. This was the first time this year the policymaker had not adjusted his interest rate outlook higher after the inflation numbers’ release. The change points to the potential for the Dollar to weaken and the Euro to strengthen. And it could support a better sales outlook for S&P 500 Index members as the cost of goods becomes cheaper abroad. In Asia, Markets gained on stimulus commentary from China. People’s Bank of Chin Governor Yi Gang said it will do more to support the economy. At the same time, state-run media outlet China Banking and Insurance News said Beijing will enhance the capitalisation of small- and medium-sized banks to support economic growth. The change could help stabilise the country’s real estate market, which accounts for roughly one-third of China’s economic output. Elsewhere, Oil rose 4.76% while Gold closed flat.
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For anyone following my Platinum Service it lost 115 points yesterday and is now ahead by 2182 points for July after closing June with a gain of 3371 points June, while making 3651 points in May, having made 762 points in April, following a gain of 5883 points in March. The Platinum Service made an impressive 5324 points in February, after ending January with a gain of 3878 points, more than making up for December’s 932 points loss. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 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 0.84% lower at a price of 3831.
The Dow Jones Industrial Average closed 215 points lower for a 0.69% loss at a price of 31,072.
The NASDAQ 100 closed 0.89% lower at a price of 11,877.
The Stoxx Europe 600 Index closed 0.5% higher.
This morning, the MSCI Asia Pacific Index rose 0.4%.
This morning, the Nikkei closed 0.72% higher at a price of 26,980.
Currencies
The Bloomberg Dollar Spot Index closed 0.7% lower.
The Euro closed 0.7% higher at $1.0151.
The British Pound closed 0.8% higher at 1.1965.
The Japanese Yen rose 0.4% closing at $13805.
Bonds
Germany’s 10-year yield closed 8 basis points higher at 1.21%.
Britain’s 10-year yield closed 7 basis points higher at 2.15%.
US 10 Year Treasury closed 6 basis points higher at 2.98%.
Commodities
West Texas Intermediate crude closed 4.76% higher at $102.23 a barrel.
Gold closed 0.03% higher at $1706.10 an ounce.
This morning on the Economic Front we already had the release of UK Payrolls which rose 31K versus +90K expected. Next, we have ECB Bank Lending Survey at 9.00 am, followed by Euro-Zone CPI and Construction Output at 10.00 am. Finally, we have U.S. Building Permits and Housing Starts at 1.30 pm.
Cash S&P 500
The S&P surged on the open before reversing after Apple announced a slowdown in hiring and spending concerns about their upcoming earnings report. This is exactly what we need to see to accelerate the recession risk, which enhances my view that the Fed will soon flip flop on Interest Rates. Adding to the gloom was a report from the New York Fed releasing a recessionary Business Activity Index with a -10.7 reading. Considering the big reversal yesterday, one would have expected internals to be weak, but they were not as shown by the McClellan Oscillator which closed higher at +55. The key event this week is the ECB Meeting on Thursday and what effect a rate hike will have on the U.S. Dollar. Already there is chatter that the ECB cannot actually raise rates much as the recession case in Europe is getting more likely. In addition, the ECB may actually keep net expanding their balance sheet to bail out Italy. After the S&P traded the whole of my buy range for a 3862 average long position, I was stopped out of this trade at 3836 and I am now flat. The S&P has support from 3805/3825 where I will again be a buyer with a 3789 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 3843. Bulls need to see the S&P close above yesterday’s 3905 high to gain more control and this will be the key resistance level to follow this week. I still do not want to be short the S&P at this time.
EUR/USD
I am still flat. I will now raise my Euro buy level to 1.0030/1.0110 with a higher 99.85 ‘’Closing Stop’’.
March Dollar Index
I am still flat the Dollar. I will now lower my sell level to 107.90/108.50 with a tight 109.05 stop.
Cash DAX
The DAX held on to most of yesterday’s gains and I am still flat. I will now lower my buy level slightly to 12700/12780 with a tight 12635 ‘’Closing Stop’’.
Cash FTSE
No Change. I am still a buyer on any dip lower to 7090/7150 with the same tight 7035 ‘’Closing Stop’’.
Dow Rolling Contract
I was lucky with my Dow call yesterday. After the Dow hit an afternoon high at 31635, we fell almost 400 points to my initial 31250 buy level. As I was already long the S&P, I emailed my Platinum Members to exit any long Dow position at 31295 and I am still flat. Despite the large reversal, the ‘’Fear & Greed Index closed slightly higher at 30 which is still a reading of ‘’Fear’’. This is another reason not to press the downside given how oversold stocks are across the board. The Dow has support from 30800/31000 where I be a strong buyer with a 30645 ‘’Closing Stop’’.
Cash NASDAQ 100
The NDX hit a high at 12156 before Apple’s warning saw the NDX fall 200 points and rule out any chance we had of closing above the 50-Day MA which comes in at 12017 this morning. In my opinion, it is only a matter of time before this key resistance level is broken as we have not had a reconnect with the 200 Day MA since April. Today, I will be a buyer from 11700/11850 with a 11595 ‘’Closing Stop’’. If I am taken long I will have a T/P level at 12010. I am still long from April at 14327. I continue to hold my April long position at 14327. I will leave my exit level unchanged at 12900 on this position.
September BUND
My Bund plan worked well as the market hit my 151.55 buy level before rallying to a high at 152.45 this morning. I covered my long position last night at my revised 151.90 T/P level and I am still flat. Today, I will again be a buyer on any dip lower to 150.80/151.40 with the same 150.45 ‘’Closing Stop’’. We have resistance from 153.20/153.90 where I will again be a seller with a higher 154.45 ‘’Closing Stop’’.
Gold Rolling Contract
No Change. My only interest in buying Gold is still on a dip lower 1673/1688 with the same 1659 ‘’Closing Stop’’.
Silver Rolling Contract
Silver rallied yesterday allowing me to cover my latest 18.25 long position at my 18.90 revised T/P level and I am still flat. Silver has support from 17.80/18.50 where I will again be a buyer with the same 16.95 ‘’Closing Stop’’.
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