U.S. Equity Markets closed lower on Monday with the overnight upside in futures pared once cash trade began. The losses were mixed, however, with the downside felt mostly in the NASDAQ with Tech, Consumer Discretionary and Health Care sectors underperforming, while Energy, Consumer Staples and Utilities outperformed. The S&P and NDX closed lower, but the RUSSELL 2000 was green. A lot of the tech downside stemmed from weakness in Semiconductors shares with SOXX -2% as all eyes turn to Nvidia (NVDA) earnings on Wednesday. Energy stocks outperformed tracking gains in the crude space on escalating geopolitics with Hezbollah firing at Israel, and Israel returning fire, while participants are wary of an Iranian response to Israel. Meanwhile, Libya’s eastern government announced it will be stopping all oil production and exports, seeing crude rally throughout the session. T-Notes were choppy but ultimately bear steepened. Initial upside was seen overnight in a continuation of Friday’s post-Powell price action, before selling off as oil prices caught a bid on the Libya news, with dovish remarks from Barkin seeing that pare, but a chunky option play took T-Notes back to lows, before more choppiness was seen throughout the rest of the session. Barkin sounded quite cautious on the outlook for the labour market, meanwhile, Daly suggested she is not hearing that firms are poised for layoffs. She also said it is too early to talk about tactics on rates this year, and it is too early to know how big rate cuts will be. FX trade was quiet with the Dollar seeing slight upside while the New Zealand Dollar underperformed and the Canadian Dollar prospering from higher oil prices. Durable Goods soared 9.9% in July (prev. -6.9%, exp. 5.7%) and outside the upper bound of the forecast range, but it was solely driven by transportation orders highlighted by the ex-transport gauge declining 0.2% (prev. +0.1%, exp. -0.1%). Ex-defense jumped 10.4% (prev. -7.5%), with Nondefense Capital goods ex-aircraft new orders marginally falling 0.1% (prev. +0.5%, exp. 0.0%). Explaining the headline, there was a 34.8% jump in transportation orders in July to USD 102.2 billion, in wake of a 20.6% collapse in June. Pantheon Macroeconomics notes, swings in aircraft orders explain these movements, and they have been even more volatile than usual in recent months, indicated by them swinging from minus USD 8.8 billion in June, the worst month since mid-2020, to plus USD 18.4 billion in July, a seven-month high. Nonetheless, the consultancy notes, the July rebound is unlikely to mark the start of a fundamental improvement and the 0.2% fall in ex-transport is a much better indication of the underlying trend, which essentially has flatlined since the end of last year. Fed Member Barkin said the Fed will be taking a “test and learn” approach to rate cuts, noting that the current low-hiring, low firing approach companies are taking is unlikely to persist. He added there is a risk that firms will resort to layoffs if the economy was to weaken. The Richmond Fed President still sees upside risks for inflation but supports a dialling down of rates in the face of a cooling labour market. He believes a large part of the economy is standing ready for the easing cycle to commence. Finally, Fed Member Daly largely reiterated Fed Chair Powell’s Jackson hole message, noting the time to adjust policy is upon us, but it is too early to know how big rate cuts will be and that it is too early to talk about tactics on rates for the year. She did admit it would be hard to imagine anything that could derail a September cut but noted if the economy weakness more than they expected, the Fed would need to become more aggressive. She also noted she does not want to declare that the Fed is on the path to neutral. The San Francisco Fed President said she does not see signs of an abrupt weakening in the labour market, and she is not hearing signs that firms are poised for layoffs. She believes the most likely outcome is that they continue to see a gradual slowing of inflation and a sustainable pace of labour market growth. Elsewhere, Oil ended Monday with a gain of 3.15% while Gold again closed 0.2% higher following another boring session.
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 made 330 points yesterday and is now down by 566 points 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 0.32% lower at a price of 5616.
The Dow Jones Industrial Average closed 65 points higher for a 0.16% gain at a price of 41,240.
The NASDAQ 100 closed 1.04% lower at a price of 19,516.
The Stoxx Europe 600 Index closed 0.02% lower.
This morning, the MSCI Asia Pacific closed 0.3% higher.
This morning, the Nikkei closed 0.47% higher at a price of 38,288.
Currencies
The Bloomberg Dollar Spot Index closed 0.10% higher.
The Euro closed 0.25% lower at $1.1160.
The British Pound closed 0.2% lower at 1.3187.
The Japanese Yen fell 0.1% closing at $144.56.
Bonds
Germany’s 10-year yield closed 2 basis points higher 2.25%.
Britain’s 10-year yield closed 2 basis points higher at 3.92%.
U.S.10 Year Treasury closed 2 basis points higher at 3.81%.
Commodities
West Texas Intermediate crude closed 3.15% higher at $77.19 a barrel.
Gold closed 0.2% higher at $2518 an ounce.
This morning on the Economic Front we already had the release of German GDP which came in at 0.0% for Q2 versus -0.1% expected. At the same the German GFK Consumer Confidence Survey was released printing -22 versus -18.2 expected. Next, we have U.S. Housing Price Index at 2.00 pm, followed at 3.00 pm by Consumer Confidence and the Richmond Fed Manufacturing Index. Finally, we have a two-Year Treasury Auction at 6.00 pm.
Cash S&P 500
Selling rallies in the S&P against the two trendlines that converge at the 5650-resistance level has worked well over the past 10 days. Yesterday, the S&P rallied to my 5649-sell level before falling over 40 Handles. This move lower saw my revised 5632 T/P level triggered and I am now flat. All eyes are now on NVIDIA’s earnings tomorrow and the PCE data which will be released on Friday. This week is also month end and the coming U.S. Bank Holiday on Monday when American Markets will be closed. All of which could lead to a bullish bias this week. My base assumption is that although September and October are traditionally fraught with corrections and market weakness, we may not see anything major happen until after the Fed Meeting on September 19 when the Fed cut rates which is now basically set in stone. This may mean we will face a period of chop, frustration and even new highs like we saw in the Dow yesterday before anything major happens. The S&P has support from 5575/5593 where I will be a small buyer with a 5559 tight ‘’Closing Stop’’. My only interest in selling the S&P is on a further rally to 5662/5680 with a higher and wider 5701 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 5612. If I am taken short, I will have a T/P level at 5645.
EUR/USD
I am still short the Euro at an average rate of 1.1120. With the DSI closing a multi-year high we should see the Euro weaken before a renewed rally attempt to new highs for the year. This morning the Euro is trading at 1.1160. I will now raise my T/P level to 1.1110 while leaving my 1.1205 ‘’Closing Stop’’ unchanged. 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 the Dollar. This recent low in the Dollar sees the Daily Sentiment Indicator close in singe digits which is the lowest level in over three years. Meanwhile the Weekly RSI is at its lowest level since 2018 with the Dollar way outside the bottom of its Daily Bollinger Band. History tells us that this scenario does not last long. The Dollar has support from 100.00/100.80. I will now raise my buy level to this support area with the same wider 99.25 ‘’Closing Stop’’. If triggered, I will have a T/P level at 101.40.
Cash DAX
No Change: I am going to stay flat the DAX as I have no edge in this market at the moment. August has been the toughest month for my Platinum Service since I started writing my Daily Commentary over 11 years ago in February 2013. I will stay flat the DAX until I feel my edge has returned. If this view changes, I will be back with a new update for my Platinum Members.
Cash FTSE
Despite the sell-off in American Indexes the FTSE is opening 60 points higher at 8380 this morning and is now within touching distance of a new all-time high. Despite the strength of the FTSE, I still do not want to be short even though we are short-term overbought. The FTSE has support from 8240/8310 where I will be a small buyer with a 8175 ‘’Closing Stop’’.
Dow Rolling Contract
My Dow plan worked well. The Dow rallied to a new all-time high at 41420. This move higher saw my 41360-sell level triggered before trading lower to my 41200 T/P level and I am now flat. Today, I will again be a seller on any further rally to 41600/41860 with a now higher 42105 ‘’Closing Stop’’. Given how extended the Dow is trading I no longer want to be a buyer of the Dow at this time. If this view changes, I will be back with a new update for my Platinum Members. If I am taken short, I will have a T/P level at 41425.
Cash NASDAQ 100
Frustratingly the NDX missed yesterday’s 19800 level by 30 points before falling to a low at 19435 and I am still flat. I do not like the price action in the NDX especially ahead of NVIDIA’s key earnings report which will be released after the close tomorrow evening. I will now lower my sell level to 19700/19860 with a lower 20005 ‘’Closing Stop’’. I still do not want to be long the NDX at this time.
September BUND
The Bund has traded in a 80 point range for much of the past 10 trading sessions. I am still flat. The Bund has support below from 133.20/133.90. I will continue to be a small buyer in this range while leaving my 132.35 ‘’Closing Stop’’ unchanged. The Bund has resistance from 135.50/136.20 where I will still be a seller with the same 136.85 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 134.55. If I am taken short, I will have a T/P level at 134.95.
Gold Rolling Contract
No Change: Gold continues to hold the 2500 support level. Seasonally September can be a difficult month for both Gold and Silver, hence my reluctance to chase the Gold market higher. Today I will continue to be a buyer on any dip lower to 2450/2465 with the same 2437 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2484.
Silver Rolling Contract
I am still flat. Silver has traded in a narrow range over the past 24 hours and I am still flat. Today, I will continue to be a buyer from 28.50/29.30 with the same 26.29 wider ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 30.10.
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