U.S. Indexes closed mixed on Monday, with the tech-heavy NASDAQ 100 the only major Index to finish marginally higher. Technology and Communication Services were the only sectors to outperform, alongside Energy, with the former supported ahead of Alphabet’s earnings on Wednesday after reports the company is developing a new server chip. Health Care and Materials lagged. There was little in the way of macro catalysts, with no US economic data and Fed officials in their blackout period ahead of next week’s FOMC meeting. The crude complex was volatile but ultimately settled higher following another barrage of geopolitical headlines. Overnight, the US and Iran exchanged strikes for a tenth consecutive night, while reports throughout the session suggested the conflict is more likely to escalate than de-escalate, despite officials indicating diplomatic channels remain open and talks continue. Treasury yields rose across the curve as higher oil prices and the escalating geopolitical backdrop lifted inflation concerns. Reports that Iran threatened the Bab el-Mandeb shipping route added to the risk premium, weighing on Treasuries. In FX, the Dollar was mixed against its peers. The Australian Dollar outperformed, supported by broad strength in Chinese assets, while Sterling and the Canadian Dollar were little changed despite UK political developments and softer-than-expected Canadian inflation data, respectively. The UK confirmed Andy Burnham as its new Prime Minister, although the appointment of Healey as Chancellor came as more of a surprise. Precious metals were mixed, with spot gold edging slightly lower while silver outperformed while oil ended Monday’s session with a 0.5% gain.
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For anyone following my Platinum Service it made 345 points yesterday and is now ahead by 5256 points for July 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 0.19% lower at a price of 7443.
The Dow Jones Industrial Average closed 307 points lower for a 0.59% loss at a price of 51,839.
The NASDAQ 100 closed 0.04% higher at a price of 28,604.
The Stoxx Europe 600 Index closed 0.30% lower.
This Morning, the MSCI Asia Pacific closed 0.5% higher.
This Morning, the Nikkei closed 3.01% higher at 66,067.
Currencies
The Bloomberg Dollar Spot Index closed 0.19% higher.
The Euro closed 0.23% lower at $1.1413.
The British Pound closed 0.19% lower at $1.3425.
The Japanese Yen fell 0.01% closing at $162.48.
Bonds
U.K.’s 10-Year Gilt closed 8 basis points higher at 5.05%.
Germany’s 10-Year Bund Yield closed 2 basis points higher at 3.16%
U.S.10 Year Treasury closed 4 basis points higher at 4.60%.
Commodities
West Texas Intermediate crude closed 0.44% higher at $82.85 a barrel.
Gold closed 0.18% lower at $4010.10 an ounce.
Today on the Economic front we already had the release of U.K. Unemployment which rose versus expected. Next, we have the ECB Bank Lending Survey at 9.00 am and the Euro-Zone and German ZEW Surveys’ at 10.00 am. The only other data of note is the U.S. ADP Employment Change at 1.15 pm.
Cash S&P 500
Monday started off strong for the S&P 500, but it did not end that way ahead of a sizeable liquidity drain that will commence on Tuesday. Treasury bill settlements are expected to result in net new issuance of $56 billion, followed by an additional $37 billion on Thursday and a smaller coupon settlement of $13 billion on Friday. Treasury bill issuance will likely remain heavy until Labor Day, creating a headwind for risk assets as we move through the summer. This is where things could get interesting, especially given how dispersed the market has been and how low implied correlations remain. If liquidity begins to be drained from the market and index-level volatility rises as stocks decline, one would expect implied correlations to increase and dispersion to begin unwinding. In other words, stocks should start trading more in unison rather than independently. As that happens, the spread between dispersion and implied correlations should begin to narrow. Rates rose sharply yesterday, with the UK leading the move. The new Prime Minister appears to be preparing to adjust the country’s fiscal position, pushing the 30-year gilt yield up by 9 basis points. It sounds a lot like what we have been watching unfold in Japan, where concerns over fiscal policy have also put upward pressure on long-term government bond yields and weakened the currency. The 30-year Treasury yield closed at 5.12%. If long-term yields continue to rise globally, as they have in the UK and Japan, it will be difficult for U.S. long-end yields not to move higher as well. The 30-year TIPS real yield closed at 2.93%, marking a new cycle high. The USD/JPY appears poised to make a significant move. The pattern resembles a continuation symmetrical triangle, suggesting the pair could break higher. Meanwhile, USD/KRW strengthened, with the pair falling by nearly 80 basis points on the day. It will be interesting to see how South Korean semiconductor stocks respond, given the pressure the market has come under in recent days. For the most part, the won and the Kospi have traded in unison. Small caps in the U.S. also tend to trade in line with the Kospi over time. I have never quite figured out why, but long-time readers of this commentary know this well, as we have seen it happen time and time again. If that relationship continues to hold, the IWM ETF could have a long way to fall. TBD. My S&P plan worked well as the market hit my 7500 sell level before falling 60 Handles. This move lower saw my revised 7483 T/P level triggered and I am now flat. A 3% rally in the Nikkei overnight sees the S&P trading higher at 7485 this morning. The S&P has short-term resistance from 7502/7527 where I will again be a seller with a higher 7545 ‘Closing Stop’. The S&P has short-term support from 7380/7405 where I will again be a buyer with a lower 7359 ‘Closing Stop’. If I am taken long, I will have a T/P level at 7432. If I am taken short, I will have a T/P level at 7476.
EUR/USD
Just before the New York close the Euro traded lower to my 1.1410 buy level. I will add to this position at 1.1340 while leaving my 1.1275 ‘Closing Stop’ unchanged. I will now lower my T/P level to 1.1460. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
The Dollar rallied to my revised 100.90 T/P level on my latest 100.50 long position and I am now flat. Today, I will again be a buyer of the Dollar from 99.70/100.40 with a higher 98.95 ‘Closing Stop’. If I am taken long, I will have a T/P level at 100.90.
Russell 2000
The Russell just missed Monday’s sell range by four points before having a small sell-off into the close. I will now chase the Russell lower as I continue to be a seller from 2980/3050 with the same 3105 ‘Closing Stop’. If I am taken short, I will have a T/P level at 2930.
FTSE 100
No Change: I am still flat. I will not chase the FTSE Market higher preferring to wait for a sell-off before initiating a new long position. Today, I will continue to be a buyer from 10300/10380 with the same 10215 ‘Closing Stop’. If I am taken long, I will have a T/P level at 10460. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
I am still flat. Today, I will lower my sell level to 52450/52750 with a lower 53005 ‘Closing Stop’. If I am taken short, I will have a T/P level at 52180. I still do not want to be long the Dow at this time.
Cash NASDAQ 100
My NDX plan worked well as the market traded the whole of Monday’s sell range for a 28875 average short position before selling off to my revised 28740 T/P level and I am now flat. Today, I will again be a seller of the NDX from 29050/29250 with a higher 29405 ‘Closing Stop’. If I am taken short, I will have a T/P level at 28790. I still do not want to be buyer of the NDX at this time. If this view changes, I will be back with a new update for my Platinum Members.
December BUND
Wrong! I was finally stopped out of my latest 125.55 average long position at 124.75 and I am now flat. The Bund is oversold and due a bounce especially as Yields have risen over 40 basis points over the past few weeks which is an enormous move for the Bund. The Bund has short-term support from 123.50/124.20 where I will be an aggressive buyer with a lower 122.85 ‘Closing Stop’. If I am taken long, I will have a T/P level at 124.90.
Gold Rolling Contract
I am still flat. Gold has support below from 3860/3940 where I will again be a buyer with a lower 3795 ‘Closing Stop’. If I am taken long, I will have a T/P level at 4000.
Silver Rolling Contract
Overnight, Silver rallied to my 58.30 T/P level on last week’s 57.50 long position and I am now flat. Today, I will again be a buyer of Silver on any dip lower to 54.40/57.40 with the same 52.95 ‘Closing Stop’. If I am taken long, I will have a T/P level at 59.20.
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