U.S. Indexes rallied on Monday, with much of the upside led by Meta (META), resulting in NASDAQ outperformance. Meta’s PT was upgraded at Wells Fargo, with the desk citing a strong start for its Muse AI agent, which in turn supported chip names such as INTC and AMD amid expectations for stronger CPU demand given high Muse usage rates. The majority of sectors were higher, with Communication Services, Technology and Consumer Discretionary outperforming, while Energy, Utilities and Consumer Staples lagged. Crude prices tumbled on Monday amid hopes for diplomatic progress at the UN General Assembly this week, with President Trump noting he is open to meeting Iranian President Pezeshkian. Elsewhere, participants will be watching the outcome of the Trump/Xi meeting for any developments on trade. Treasury Secretary Bessent said the US is looking to bring in more everyday items from China, while energy products on the US side and medical devices on the Chinese side could be suitable for tariff reductions. In FX, the Swiss Franc and U.S. Dollar outperformed, while the Canadian Dollar and Japanese Yen lagged. CAD was weighed on by lower oil prices despite hawkish-leaning comments from Macklem, while JPY remained soft amid the continued fallout from Friday’s Bank of Japan decision despite the subsequent rate check by Japanese authorities. The Dollar gained despite the risk-on tone, potentially finding support from weakness in the Yen and Euro, with the latter pressured following weak German state election results for the incumbent CDU over the weekend. Treasury yields were lower across the curve as oil prices tumbled, while hawkish Fed speak had little impact on T-notes. Both Musalem and Goolsbee warned about demand-driven inflation alongside ongoing supply pressures, with Goolsbee noting that if inflation is predominantly demand-driven, the policy response would need to be more aggressive and front-loaded. Gold and silver prices moved lower as risk assets rallied, while Bitcoin saw notable gains. Chicago Fed President Goolsbee said strong demand may be adding to inflation alongside energy, tariffs and other supply shocks, noting there is “no ambiguity” about what the Fed would do if demand is overheating. He said evidence is needed that supply-driven inflation is fading; otherwise, it is difficult to see a credible path back to 2%, while supply shocks are proving to have a more persistent impact on inflation and must therefore be accounted for when setting monetary policy. Goolsbee stressed that restoring price stability will not be painless and that the Fed must have the courage to fight inflation. Goolsbee said evidence on whether inflation reflects demand overheating or supply shocks remains conflicting, and he is still trying to determine the balance, although inflation data earlier in the year appeared to show supply shocks waning and some inflation now appears to be coming from demand. Goolsbee added that district contacts are relaying concerns that sound like traditional demand overheating. He warned that if inflation is predominantly demand-driven, the rate response will need to be more aggressive and more front-loaded. Meanwhile, if supply-shock inflation proves persistent, the Fed’s only choice would be to reduce aggregate demand. He added that if fiscal policy is contributing to inflation, the Fed must take it into account. On the labour market, Goolsbee said the Fed does not currently have an employment problem, but does have an inflation problem, and wants evidence that inflation is going away. Business contacts report that the labour market is tightening, with alternative measures telling a similar story, while the unemployment rate is “pretty close” to full employment. He added that monthly job growth is not a particularly useful gauge of labour market health given uncertainty around population growth stemming from immigration policies. On policy, Goolsbee said estimates of the neutral rate are not particularly useful for short-run decisions, although if there is convincing evidence that inflation is returning to 2%, there would be no problem with rates coming back down. He remains optimistic that inflation can return to target provided there is no further evidence of demand overheating. On the SEPs, Goolsbee said that without them, markets will still seek to understand officials’ reaction functions. He added that the Fed remains credible and that he does not view any forthcoming hikes as reversing last year’s cuts. Elsewhere, Oil closed lower by 5% and Gold by 0.75%.
To mark my 3450th issue of TraderNoble Daily Commentary I am offering a special 2-Year Rate of Euro 2750 for my Platinum Service which includes 1 to 4 updated emails throughout the trading day to demonstrate this value, a 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 made lost 260 points yesterday and is now ahead by 5364 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 1.49% higher at a price of 7764.
The Dow Jones Industrial Average closed 366 points higher for a 0.71% gain at a price of 52,048.
The NASDAQ 100 closed 2.83% higher at a price of 30,482.
The Stoxx Europe 600 Index closed 1.02% higher.
This Morning, the MSCI Asia Pacific closed 0.2% lower.
This Morning, the Nikkei closed 0.19% lower at 64,142.
Currencies
The Bloomberg Dollar Spot Index closed 0.03% lower.
The Euro closed 0.19% lower at $1.1462.
The British Pound closed 0.21% lower at $1.3366.
The Japanese Yen fell 0.48% closing at $157.48.
Bonds
U.K.’s 10-Year Gilt closed 8 basis points lower at 5.22%.
Germany’s 10-Year Bund Yield closed 7 basis points lower at 3.45%
U.S.10 Year Treasury closed 4 basis points lower at 4.96%.
Commodities
West Texas Intermediate crude closed 4.74% lower at $95.54 a barrel.
Gold closed 0.73% lower at $4346.10 an ounce.
This morning on the Economic Front we have the U.K. CBI Industrial Trends Orders at 11.00 am followed by a speech from ECB President Lagarde at 12.00 pm. Next, we have U.S. ADP Employment Change at 1.15 pm and the Richmond Fed Manufacturing Index at 3.00 pm. Also, at 3.00 pm we have Euro-Zone Consumer Confidence. Finally, we have speeches from Fed Members: Williams, Jefferson and Barkin at 3.05 pm, 3.20 pm and 1.00 pm respectively while also at 1.00 pm we have a Two-Year Treasury Auction.
Cash S&P 500
Wrong! Stocks finished the day higher. I could try to explain what happened today, but I do not think it is as obvious as I would like. The market looked like a giant gamma squeeze, but that is not obvious either, given that the VIX was flat and Index gamma was not negative. So, you really have to look at the index components, which point to the move in Meta, which seemed, let’s say, odd. I saw the stock was upgraded, but I can’t remember the last time I saw one move like this on an upgrade. Meta ended Monday’s session with a 11.5% gain and is now within touching distance of its all-time high. However, the jump in implied volatility, call volume, and deltas was the telling part, and it made you realise where the epicenter of the squeeze was. All of that helps explain why the equal-weight S&P 500 ETF, the RSP, rose by just 0.28%. The analysis is there, and you can find it. It just took a bit more digging than I really cared to do today. Finally, despite the big rally, the VIX did nothing. In fact, because of the size of the move, realised volatility rose on the day, on both a 9-day and 21-day basis, with the 9-day now at nearly 13 and only about 2 points below the VIX. In all likelihood, the VIX does not have much room to fall, not with implied correlation already at very low levels, and not if the VIXEQ keeps rising. Based on where implied correlation and the VIXEQ are today, the VIX model sits around 11.3, and the VIX has tended to trade about 4 points above that. Even if the VIXEQ rose to 50 and the COR1M fell to 4, that would still put the VIX around 13 to 14. With the NDX closing almost 3% higher on Monday, yesterday was not the day to try a short position which I have not done in many weeks and I apologise for this mistake. Thankfully, it was only the S&P that we sold. Monday’s move higher saw the whole of my sell range triggered for a 7705 average short position before getting stopped at 7737 and I am now flat. The 14 Day RSI closed at 59 last night so there is still room for the S&P to challenge its all-time high of 7817 before the next meaningful move lower commences. My ‘’Nothing Matters’’ theme shows no sign of ending anytime soon. The S&P has left its second large Open Gap since Wednesday’s post FOMC low of 7507. The reality is that the AI Revolution continues to ramp up despite the various headwinds ranging from the Iran war, to the Fed and investors remain keen to buy dips in names whose earnings have seen historic growth. The price action is telling you that the S&P will remain resilient even amid the plethora of headwinds that we are currently facing. Furthermore, in the absence of these headwinds it is probable that the S&P would be trading at a much higher price. The S&P has short-term support from 7717/7742. I will be a small buyer in this area with a 7695 ‘Closing Stop’. The S&P will have short-term resistance from 7810/7830 where I will again try to short with a 7851 ‘Closing Stop’. If I am taken long, I will have a T/P level at 7767. If I am taken short, I will have a T/P level at 7685. If any of these views change, I will be back with a new update for my Platinum Members.
EUR/USD
No Change: I am still long the Euro at an average rate of 1.1500 with the same 1.1395 ‘Closing Stop’. I will now lower my T/P level to 1.1550. 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 from 99.00/99.70 with the same 98.15 ‘Closing Stop’. If I am taken long, I will have a T/P level at 100.30.
Russell 2000
The Russell just missed Monday’s buy range and I am still flat. Today, I will continue to be a buyer on any further move lower to 2790/2860 with the same 2745 ‘Closing Stop’. If I am taken long, I will have a T/P level at 2905. Despite how heavy the Russell is trading I still do not want to be short the market at this time
FTSE 100
My latest 10660 long FTSE position worked well as lower Gilt Yields helped the FTSE to rally to my 10720 T/P level and I am now flat. The FTSE has short-term support from 10620/10700 where I will again be a buyer with a higher 10535 ‘Closing Stop’. If I am taken long, I will have a T/P level at 10770. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
I am still flat as the Dow never came close to Monday’s buy range, ending Monday’s session with a gain of 600 points. Today, I will raise my Dow buy level to 51530/51830 with a higher 51295 ‘Closing Stop’. If I am taken long, I will have a T/P level at 52090. I still do not want to be short the Dow at this time.
Cash NASDAQ 100
The NDX rose an incredible 900 points yesterday for one of its largest daily moves in points terms this year. Thankfully, we had no sell level in the NDX over the past few weeks as short positions were blown out of the water given the rally since late Wednesday. The NDX is now within touching distance of all-time highs despite the negative interest rate backdrop. The 14-Day RSI closed at 65 last night so this indicator is still a couple of trading sessions away from giving a sell signal. Today, I will raise my buy level to 30030/30230 with a higher 29895 ‘Closing Stop’. If I am taken long, I will have a T/P level at 30510. If this view changes, I will be back with a new update for my Platinum Members.
December BUND
No Change: I am still long the Bund at an average rate of 121.00. I will leave my 119.85 ‘Closing Stop’ unchanged while also leaving my T/P level unchanged at 121.30. Thankfully the Bund is opening higher this morning. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
I am still flat. I do not believe that Gold is finished with the downside, especially if the Dollar stays strong. Therefore, I will continue to be a buyer on any further dip lower 4200/4280 with the same 4095 ‘Closing Stop’. If I am taken long, I will have a T/P level at 4348. If this view changes, I will be back with a new update for my Platinum Members.
Silver Rolling Contract
I am still flat. Silver reversed some of Monday’s move. Silver has support from 61.70/64.70 where I will be a strong buyer with the same 59.95 ‘Closing Stop’. If I am taken long, I will have a T/P level at 66.90.
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