U.S. Indices closed lower as the moves on Monday were largely an unwind of the post-dovish Powell moves on Friday. Stocks and bonds were sold while the Dollar was stronger. Stocks were lower with all Indices in the red, while small caps took the largest hit after rallying on Friday. Sectors were predominantly lower, particularly defensives, Consumer Staples, Health Care and Utilities, while Communication, Tech and Energy outperformed. T-Notes had sold off across the curve led by the front-end, reversing some of the bull steepening on Friday. The Dollar also recouped a lot of lost ground throughout the US session, with DXY heading into APAC trade at 98.50 from a low of 97.50. There was little fresh fundamental news for the driver, but it is worth noting that even after Powell’s dovish speech at Jackson Hole, money markets are still not fully pricing in a 25bps cut in September, currently implying a c. 80% probability of such a move. There is still key data to digest between now and September, particularly the US NFP report on September 5th (next week). There will also be the July PCE on the 29th August, ahead of the August CPI on September 11th. The data ahead is largely the next market focus in terms of shaping Fed expectations – official commentary will be eyed between now and the blackout period, starting 6th September. Treasury traders are also eyeing 2s, 5s and 7year supply this week, which may have helped with some of the bear flattening on Monday. Crude prices were bid throughout the session with upside driven by geopolitical risk premium after Ukraine struck Russia’s Ust-Luga terminal even as Trump pushes the two sides to talks. The US President reiterated today that there could be consequences if they do not meet, suggesting he will “step in” if no progress is made within two weeks. On trade, Trump met with South Korean President Lee, and Trump suggested before the meeting he is open to renegotiating the deal. Bloomberg also reported that Canada officials are to meet with US Commerce Secretary Lutnick this week, after Canada dropped some retaliatory tariffs on the US. Reuters sources also reported that the US is considering visa sanctions for the EU and EU member state officials over the bloc’s Digital Services Act. New Home Sales fell 0.6% in July to 652k from an upwardly revised 656k, albeit remaining above the 630k consensus. The seasonally-adjusted estimate of new houses for sale at the end of July was 499k, -0.6% M/M, representing a supply of 9.2 months worth at the current sales rate, unchanged from the prior month. The median sales price of houses was -0.8% M/M and -5.9% Y/Y to USD 403.8k. Summarising the data, Oxford Economics write that price cuts and other building incentives are keeping a floor under new home sales. It adds that the buildup of supply (inventory at the highest level in 16 years), will keep a lid on single-family housing starts in the months ahead. Elsewhere, Oil closed higher by 1.62% while Gold was flat.
To mark my 3225th 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 177 points yesterday and is now ahead by 2822 points for August 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 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 0.43% lower at a price of 6439.
The Dow Jones Industrial Average closed 349 points lower for a 0.77% loss at a price of 45,282.
The NASDAQ 100 closed 0.31% higher at a price of 23,425.
The Stoxx Europe 600 Index closed 0.40% lower.
This Morning, the MSCI Asia Pacific closed 0.4% lower.
This morning, the Nikkei closed 0.93% lower at a price of 42,409.
Currencies
The Bloomberg Dollar Spot Index closed 0.82% higher.
The Euro closed 0.94% lower at $1.1605.
The British Pound closed 0.58% lower at $1.3447.
The Japanese Yen fell 0.63% closing at $147.86
Bonds
U.K.’s 10-Year Gilt closed 3 basis points higher at 4.70%.
Germany’s 10-Year Bund Yield closed 3 basis points higher at 2.76%
U.S.10 Year Treasury closed 2 basis points lower at 4.28%.
Commodities
West Texas Intermediate crude closed 1.62% higher at $64.69 a barrel.
Gold closed 0.09% lower at $3369.10 an ounce.
This morning on the Economic Front we have no data of note from either the U.K. or the Euro-Zone. At 1.30 pm we have U.S. Durable Goods Orders. Next, we have the House Price Index and Composite PMI at 2.00 pm, followed by Consumer Confidence and the Richmond Fed Manufacturing Index at 3.00 pm. Finally, we have the Atlanta Fed GDPNOW at 4.30 pm and a Two-Year Treasury Auction at 6.00 pm.
Cash S&P 500
Prior to Friday’s S&P melt up the S&P had been lower for six consecutive trading sessions before all of these declines were erased in a five minute candle based on one sentence from one man – Powell. Short positions instantly fried. There is no doubt that the financial system is designed and rigged by the necessity to keep pushing asset prices ever higher. This is why markets keep being saved and protected every time we see a sell-off for no one can afford the economic Armageddon that would ensue from a collapse in asset prices as the entire world has become a hyper debt bubble with everything tied to asset prices. This is insane as the bubble gets ever more extreme from cycle to cycle and I could make all sorts of reversion to the mean and CRASH cases. Most likely at some point this will happen but as I have said countless times I just do not know WHEN. The reality is we are set for a rate cut next month despite core inflation moving back higher and being at over 3% while at the same time introducing his new ‘’transitory’’ narrative: Fed’s Powell: The reasonable base case is that inflation effects of tariffs will be short-lived. Nobody knows why he changed his mind as he knows his time is up as Chairman and he only has a few months left. If he wanted to take a stand for Fed Independence, it sure does not look like it instead it is a cave in my opinion. I know it is extremely difficult to be short the markets but I will continue with my strategy of selling rallies with tight stops. Just before Monday’s close the S&P traded lower to my 6444 T/P level on my 6458 average short position and I am now flat. Today, I will again be a seller from 6455/6475 with a higher 6491 ‘Closing Stop’. If I am taken short, I will have a T/P level at 6439.
EUR/USD
The Euro reversed almost all of Friday’s post Powell rally yesterday. This move lower saw my revised 1.1653 T/P level triggered on my 1.1690 short position and I am now flat. Today, I will be a seller from 1.1670/1.1750 with the same 1.1825 ‘Closing Stop’. If I am taken short, I will have a T/P level at 1.1580.
Dollar Index
The Dollar Index continues to show strength, ripping higher and regaining most of what was lost on Friday. Every time the Dollar looks ready to break down, it manages to hold the key support levels needed to prevent it. The overall trend in the dollar remains bullish in my opinion and continues to be a buy on dips. Frustratingly, the Dollar missed Monday’s buy level by a few points before rallying almost 100 points into the New York close and I am still flat. Today, I will raise my buy level to 97.30/98.10 with a higher 96.55 ‘Closing Stop’. If I am taken long, I will have a T/P level at 98.70.
Russell 2000
The Russell led Monday’s losses as it gave back 2% of Friday’s gains. I am still flat as the market never came close to my sell range. I will now lower my sell level to 2360/2420 with a lower 2475 ‘Closing Stop’. If I am taken short, I will have a T/P level at 2315.
FTSE 100
Another reason not to be long American Indexes is the overvalued European Markets. I am glad that we took a break from trading the DAX as short positions have been obliterated over the past few months. The 14 Day RSI on the Monthly Chart for the DAX is a whopping and unsustainable 82. Germany has no growth, yet investors are piling into the German Equity Market which absolutely makes no sense to me. Same with the U.K. where inflation printed 3.8% last week yet the FTSE closed the week at all-time highs. The FTSE poked above the Monthly Bollinger Band right into a major trend line that just screams correction in my opinion. This morning, the FTSE is re-opening at 9300 having been closed yesterday. We have short-term resistance from 9330/9400 where I will be a strong seller with a 9455 ‘Closing Stop’. If I am taken short, I will have a T/P level at 9260.
Dow Rolling Contract
The Dow has been frustrating to trade over the past couple of months. This morning the Dow is trading 700 points lower from Friday’s 45900 high print at 45200. This is annoying as we were stopped out on Friday at 45505 and are still flat. One-year inflation swaps moved higher on Monday, reaching 3.36%. We will see what happens, but inflation swaps continue to point to higher inflation ahead. I find it hard to believe that if inflation expectations keep rising, Treasury yields won’t follow. In addition, there is a global trend of higher interest rates; both the ECB and the Bank of England have cut rates at the front end of the yield curve. However, the German 10-year has climbed to almost 2.75%, while the British 30-year has risen to 5.55%. Generally, both countries share the same backdrop of increased government spending. This is yet another reason why we could see 10- and 30-year Treasury yields rise in the US, even if the Fed cuts. Today, I will lower my Dow sell level to 45600/45850 with a lower 46105 ‘Closing Stop’. If I am taken short, I will have a T/P level at 45380.
Cash NASDAQ 100
I am still flat. I will now lower my NDX sell level 23520/23680 with a lower 23805 ‘Closing Stop’. If triggered, I will have a T/P level at 23350.
December BUND
I am still flat the Bund as the market missed Monday’s initial 128.80 buy level by three points before opening at 129.40 this morning. Today, I will raise my Bund buy level to 128.30/129.10 with a higher 127.75 ‘Closing Stop’. If I am taken long, I will have a T/P level at 129.60. Despite the low yields I still do not want to be short the Bund at this time.
Gold Rolling Contract
No Change: I am still flat. I will continue to look to buy Gold on any further dip lower to 3275/3295 with a the same 3259 ‘Closing Stop’. If I am taken long, I will have a T/P level at 3318. If this view changes, I will be back with a new update for my Platinum Members.
Silver Rolling Contract
I am still flat. Today, I will continue to be a buyer on any dip to 37.40/38.20 with the same 36.25 ‘Closing Stop’. If I am taken long, I will have a T/P level at 38.90.
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