U.S. Equity Markets ultimately closed mixed on Monday with outperformance in the NASDAQ 100, the only Index to close green in the US thanks to strength in Technology. Tech was the only sector to close green, with all others lower with Real Estate and Health Care underperforming. The tech sector was primarily buoyed by gains in Nvidia (NVDA) and Apple (AAPL), while Communications closed flat; it was still a relative outperformer, buoyed by gains in Google (GOOGL) and Netflix (NFLX). Elsewhere, T-notes were sold hard across the curve in little newsflow with the downside following on from weakness in EGBs after a flurry of supply while higher oil prices also weighed, but the move in T-notes was above recent averages, particularly on a day with little news/data to drive the action. Some were citing the “Trump Trade” with Trump showing no loss of momentum in the polls; the 538 averages show Trump leading in four of seven Swing States. The upside in oil prices was driven by geopolitics as participants await the Israeli response, which will be “very large” and “carried out soon”, there are also fears of an escalation after Netanyahu’s residence was targeted in a drone attack, albeit no one was home at the time. The Dollar outperformed on account of higher yields which weighed on the Yen while cyclical currencies also underperformed. Fed Member Logan reiterated she expects gradual rate cuts if the economy meets forecasts, noting the Fed will need to be nimble with monetary policy choices. She noted the economy is strong and stable but sees downside risks to the job market and ongoing risks to the inflation goal. The Dallas Fed President said that balance sheet cuts and rate cuts are working in the same direction. Logan added liquidity is still abundant in money markets, and she is not surprised there is some money market volatility, noting the Fed should tolerate some volatility there. She expects money markets close to or just above interest on reserves rate. Over time, Logan wants to see ‘negligible’ balances in the reverse repo facility, adding the Fed could change the reverse repo rate if cash does not leave the facility. Logan added that selling Fed-owned mortgage bonds is not a current issue. Meanwhile, Kashkari, the Minneapolis Fed President said that a rise in the budget deficit would mean that on the margin interest rates would be higher. He added it was not the labour market that caused inflation, noting immigration policy will affect their reading of the labour market. On Tariffs, he said they should not themselves lead to ongoing inflation, but probably a one-time change in price level. He noted the Fed definitely wants to avoid a recession, adding the Fed saw signs of labour market weakening, which is why they cut by 50bps. Going forward, the Fed will look at all the data to decide on rate policy. Evidence of a quick labour market weakening could lead to faster rate cuts. Resilience makes him wonder if the neutral rate is higher. Right now he sees modest cuts over the next quarters. On the consumer, he said by many measures, excess savings have been spent down. Lower credit score borrowers’ delinquencies are climbing; on average consumers seem like they are doing fine. Meanwhile, he stressed monetary policy’s role in bringing down inflation was probably mainly in anchoring inflation expectations, not on reducing demand. Elsewhere, Oil closed Monday with a gain of 1.92% while Gold was flat.
To mark my 3075th issue of TraderNoble Daily Commentary I am offering a special 2-Year rate of Euro 2750 for my Platinum Service which includes 1 monthly subscription over the same period would cost 4440 euro in total This offer represents a 38% discount and is open to both new and existing members. If anyone is interested in this offer can you please email me on bryan@tradernoble.com for details
For anyone following my Platinum Service it was made 140 points yesterday and is now ahead by 1440 points for October after ending September with a gain of 4402 points following a 301-point loss 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 0.18% lower at a price of 5853.
The Dow Jones Industrial Average closed 344 points lower for a 0.80% loss at a price of 42,931.
The NASDAQ 100 closed 0.18% higher at a price of 20,361.
The Stoxx Europe 600 Index closed 0.66% lower.
Yesterday, the MSCI Asia Pacific closed 1.1% lower.
Yesterday, the Nikkei closed 0.07% lower at a price of 38,954.
Currencies
The Bloomberg Dollar Spot Index closed 0.46% higher.
The Euro closed 0.4% lower at $1.0815.
The British Pound closed 0.52% lower at 1.2983.
The Japanese Yen fell 0.7% closing at $150.77.
Bonds
Germany’s 10-year yield closed 9 basis points higher 2.29%.
Britain’s 10-year yield closed 9 basis points higher at 4.14%.
U.S.10 Year Treasury closed 10 basis points higher at 4.18%.
Commodities
West Texas Intermediate crude closed 1.92% higher at $70.55 a barrel.
Gold closed 0.1% lower at $2719 an ounce.
The only data of note on either side of the Atlantic is the Richmond Fed Manufacturing Index will be released at 3.00 pm. However, we have multiple Central Bank Members speaking: the Bank of England’s Greene, Gov Bailey, and Breeden at 12.15 pm, 12.25 pm and 1.15 pm respectively, the ECB’s Lagarde and Lane at 1.30 pm and 2.00 pm respectively. Finally, we have Fed Member Harker at 1.00 pm.
Cash S&P 500
Monday saw the strongest downside breadth in two-and-a-half months accompanied by a relatively low NYSE Trin (Arms Index). On the NYSE there were four stocks down for every one that closed higher. This suggests a good deal of volume was used to keep the market from declining even further yesterday. However, a late last 15 minutes rally sees the S&P trading close to where we were late Friday. There are two weeks left in the month of that has so far defied all historic seasonality, negative divergences, valuations and any sudden correlation disconnects. This day two weeks (Nov 5th) the American people will vote for their next President while amazingly the next FOMC Meeting has been scheduled the next day which just adds to my conspiracy theories. It is one thing to intervene with Fiscal Stimulus during a crisis but to do it during a monetary tightening cycle defies all logic. The U.S. National Debt is on course to double in just eight years meaning no matter who wins on November 5 the liquidity injection will continue as the Fed do not know any other policy. You can make the case that the ‘’Monetary Tightening’’ was an illusion as Fiscal dominance drowned it all out. No wonder Buffett is reducing his equity holdings as we now have the highest valuations in history induced by ever easing financial conditions. Given this background I just cannot get my head around why the Fed cut by 50 Basis points last month as this will loosen financial conditions even further. Well know trader Stanley Druckenmiller sold bonds aggressively after the Fed cut rates on September 17. I just watched a you tube interview with him and is well worth a look as to his views of the world. He has decided to take on the Fed as like me he sees no protection in Bond Yields so low. Last night the 10-Year Treasury closed at 4.20% which is 55 basis points higher from when the Fed cut rates. This is a huge move. Back to the S&P: Frustratingly the S&P missed yesterday’s sell level by four Handles before falling 50 Handles to Monday’s 5824 low print. Of course, buyers showed up, rallying the market 30 Handles into its Chicago close. Today, I will lower my sell level slightly to 5871/5889 while leaving my wider 5911 ‘’Closing Stop’’ unchanged. I still do not want to be long the S&P at this time.
EUR/USD
The one-day winning streak for the Euro did not last long as the market fell over 0.4% yesterday, closing at a price of 1.0815. I am still long at 1.0865 from last week. I will continue to look to add to this position on any further move lower to 1.0795 while leaving my 1.0745 ‘’Closing Stop’’ unchanged. I will now lower my T/P level to 1.0920. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
The Dollar quickly reversed Friday’s late sell-off, trading higher on Monday to my 103.95 sell level. I am still short and I will add to this position on any further move higher to 104.75 while leaving my 105.25 ‘’Closing Stop’’ unchanged. I will now raise my T/P level to 103.50. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash DAX
The DAX never came close to yesterday’s sell range and I am still flat. I will now lower my sell level to 19700/19800 with a lower 19905 ‘’Closing Stop’’. I still do not want to be long the DAX at this time. If I am taken short, I will have a T/P level at 19620.
Cash FTSE
The FTSE never came close to yesterday’s sell range and I am still flat. We have short-term resistance from 8390/8470. I will now lower my sell level to this area with a now lower 8545 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 8340.
Dow Rolling Contract
My latest 43100 short Dow position worked well as the market sold off to my 42960 T/P level and I am now flat. The Dow has resistance from 43150/43400 where I will again be a seller with the same 43605 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 42980. I still do not want to be long the Dow at this time.
Cash NASDAQ 100
I am still flat the NDX. The NDX has resistance at 20440 which is the high from last Monday. Today, I will continue to be a small seller from 20450/20610 with the same tight 20705 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 20335. I no longer want to be long the NDX at this time. If this view changes I will be back with a new update for my Platinum Members.
December BUND
Thankfully we did not chase the price of the Bund higher yesterday as the market is now trading over 100 points lower from where we closed on Friday. As I have said over the past few weeks that in my opinion Bond Yields are too low across the board as inflation is not beaten. If I am right and inflation starts to rise then there is no protection for the Bond Market or eventually the Equity Market. You cannot have the easiest financial conditions ever and ease rates at the same time as this is madness. If you have a mortgage in Europe, I would certainly look at fixing for 5/10 years. I am still flat the Bund as the market fell shy of yesterday’s buy range. I will now lower my buy level to 132.00/132.80 with a lower 131.35 ‘’Closing Stop’’.
Gold Rolling Contract
I am still flat Gold as the market consolidated Friday’s move to new all-time highs. Today, I will continue to be a buyer on any dip lower to 2650/2676 with the same 2639 tight ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2625.
Silver Rolling Contract
Following last week’s 6% rally, Silver traded in a narrow range on Monday, and I am still flat. Silver has support from 32.00/33.20 where I will continue to be a buyer with the same 30.55 wider ‘’Closing Stop’’. If triggered, I will have a T/P level at 34.30.
Recent Comments