U.S. Equity Markets were broadly hit on Monday with steep losses in AI and tech names leading the downside with NVDA closing down 17%. The weakness was observed with questions now hanging over the AI dominance in the US after China’s DeepSeek (an openAI rival) saw impressive performances at a fraction of the costs, bringing into question the need for extortionate CAPEX from tech companies expanding their AI portfolios. The sell-off sparked a flight to quality bid with T-notes higher across the curve while the Japanese Yen and Swiss Franc outperformed in FX. However, gold and the Dollar were lower with lower equity demand weighing on the Dollar and likely position squaring in gold to help cover the equity losses. Nonetheless, the Dollar is trading off its lows with the threat of tariffs still overhanging with more reports over the weekend suggesting US President Trump is to implement tariffs on Canada and Mexico, seeing the Mexican Peso tumble. There was also the threat of tariffs on Colombia after they refused to take deportation flights, but once Trump threatened high tariffs on all Colombian goods, they decided to accept the flights. T-notes were also off peaks with front-loaded supply weighing in likely dealer concession ahead of the auctions, which saw a soft 2 Year offering but a better 5 Year offering ahead of the 7 Year supply on Tuesday. Crude prices were weighed on by the downbeat risk sentiment. Meanwhile, US President Trump said he spoke with Saudi Arabia’s Crown Prince and discussed bringing oil prices down. However, Bloomberg reported that oil traders expect OPEC+ will stick with its current supply policy at a review meeting next week. Looking ahead, attention turns to the FOMC and Bank of Canada on Wednesday, ECB and US Q4 GDP and PCE on Thursday before the December PCE data on Friday. New Home Sales rose 3.6% in December to 698k, above the expected 675k from the upwardly revised 674k. Furthermore, the median price for homes was USD 427,000 while the average sales price was USD 513,600. Also, the inventory of homes for sale was 494,000, equivalent to 8.5 months at the current sales rate. Behind the move higher, Oxford Economics said sales may have been propped up by unseasonably warm weather in December, but “we think the pace of sales may also indicate that homebuyers are proving to be more resilient than expected to mortgage rates around 7%.” Once January is behind us, the consultancy expects new home sales to improve modestly in 2025, based on their forecast for mortgage rates to decline modestly over the course of the year, incentives offered by builders, a healthy amount of supply and a strong economy, and a healthy labour market .Elsewhere, Oil closed 2.12% lower, while Gold ended Monday with a loss of 1%.
To mark my 3125th 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 65 points yesterday and is now ahead by 1969 points for January after closing December with a gain of 1997 points after closing November with a gain of 3049 points having finished October with a gain of 2179 points. September saw 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 1.46% lower at a price of 6012.
The Dow Jones Industrial Average closed 289 points higher for a 0.65% gain at a price of 44,713.
The NASDAQ 100 closed 2.97% lower at a price of 21,127.
The Stoxx Europe 600 Index closed 0.08% lower.
Yesterday, the MSCI Asia Pacific closed 0.6% higher.
Yesterday, the Nikkei closed 0.92% lower at a price of 39,565.
Currencies
The Bloomberg Dollar Spot Index closed 0.08% lower.
The Euro closed 0.05% lower at $1.0490.
The British Pound closed 0.03% higher at 1.2489.
The Japanese Yen rose 0.85% closing at $154.63.
Bonds
Germany’s 10-year yield closed 4 basis points lower 2.54%.
Britain’s 10-year yield closed 6 basis points lower at 4.59%.
U.S.10 Year Treasury closed 9 basis points lower at 4.53%.
Commodities
West Texas Intermediate crude closed 2.12% lower at $73.08 a barrel.
Gold closed 1.14% lower at $2738 an ounce.
This morning on the Economic Front we have the ECB Bank Lending Survey at 9.00 am. Next, we have U.S. Durable Goods Orders at 1.30 pm and House Price Index at 2.00 pm. This is followed by the Richmond Fed Manufacturing Index and Consumer Confidence at 3.00 pm. Finally, we have a speech from ECB President Lagarde at 5.00 pm and a Seven-Year Treasury Auction at 6.00 pm.
Cash S&P 500
Out of seemingly nowhere, the market will get spooked by a piece of “surprise” news. The tech-heavy Nasdaq Composite Index sank almost 3% yesterday, and the U.S. benchmark S&P 500 Index closed about 1.3% lower. Many individual artificial-intelligence (“AI”)-related names like Nvidia (NVDA) and Broadcom (AVGO) were down by much more. The catalyst? News broke that Chinese AI startup DeepSeek has reportedly developed a free, open-source large-language model that is much cheaper and more energy efficient than a similar version created by U.S.-based OpenAI. DeepSeek released “R1” last Monday and published a paper with details on how it was developed last Wednesday. But it did not catch investors’ attention until Friday when noted venture capitalist Marc Andreessen (who once famously wrote “software is eating the world”), posted on social media platform X…’’Deepseek R1 is one of the most amazing and impressive breakthroughs I’ve ever seen – and as open source, a profound gift to the world’’. That might be true eventually, but enough people in the market took the news as an excuse to sell first and ask questions later. Mr. Market does not like unannounced change. And if true, a cheaper way to “do AI” – by a Chinese company no less – upsets the status-quo narrative of the U.S. AI boom. Jittery investors are questioning whether U.S. companies like OpenAI are still leaders in this emerging sector, along with the U.S. AI infrastructure boom in general. All of this could mean that American companies are overspending by tens of billions of dollars or more on AI… or being terribly inefficient… or won’t spend as much on AI in the future… or that AI infrastructure won’t need as much energy. NVIDIA share price got hit hard, closing lower by almost 17%. The world and his mother are long NVIDA leading to many margin calls yesterday afternoon which will carry into this afternoon’s session. Although we were stopped out of a short position at 6110 on Thursday, at least we were not long yesterday and are still flat. The S&P has support below from 5953/5969. I will be a buyer on any dip to this area with a 5939 wider ‘’Closing Stop’’. If triggered, I will have a T/P level at 5987. Ahead of the FOMC Meeting, I no longer want to be short the S&P at this time.
EUR/USD
Just before I went to post the Euro traded lower to my 1.0430 buy level. I am still long and I will add to this position on any further move lower to 1.0370. I will leave my 1.0315 ”Closing Stop” unchanged while lowering my T/P level to 1.0490. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
The Dollar traded in a narrow range yesterday and I am still flat. Today, I will continue to be a buyer on any dip lower to 105.80/106.50 with the same 104.95 wider ‘’Closing Stop’’. I still no longer want to be short the Dollar at this time.
Russell 2000
I am still flat the Russell 2000 as I refuse to chase the market higher. This morning the Russell is again trading below its 50-Day Moving Average, trading at a price of 2281 as I go to press. Ahead of tomorrow’s FOMC Meeting, I will continue to be a buyer on any dip lower to 2130/2210 while leaving my 2075 ‘’Closing Stop’’ unchanged. If I am taken long I will have a T/P level at 2270.
Cash FTSE
Despite the aggressive sell-off in the NDX and S&P, the FTSE rallied late to my 8550-sell level. I am still short with a now higher 8500 T/P level. I will add to this position on any further move higher to 8610 while also raising my ‘’Closing Stop’’ to a price of 8665. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
Despite the aggressive sell-off in both the S&P and NDX, the Dow rallied 700 points off its 44050-morning low into the close. This move higher saw my sell level triggered for a now 44610 short position. I will add to this trade at 44850 with a now 45005 ‘’Closing Stop’’. I am never comfortable in being short the Dow especially a day ahead of a Fed Meeting. As a result, I will now raise my T/P level to 44470. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
It is a long time since we have seen the NDX fall over 1000 points in one session but that was what happened yesterday, driven by the 17% fall in NVIDIA Share price. Whether DeepSeek is real or not the premise is devasting. Here are these guys that built AI platform at a fraction of the cost with a much lower computing need and they made it available for free. The potential implications for larger corporates that have just invested hundreds of billions of Dollars in expensive equipment with much more in CAPEX plans could be absolutely devasting. One open question was always the revenue model to justify all these expenses and suddenly one wonders if the expensive model just blew up along with a future revenue stream. For example: Why pay $200 a month for OpenAI when suddenly you can do it virtually free? I am not an expert, but, if this is the real deal, the timing could be absolutely brutal both fundamentally and technically. Remember we have the highest valuations ever, most concentrated market and everyone long to the hilt. Tomorrow’s FOMC Meeting just got more interesting. I am still flat the NDX which has support below from 20650/20800. I will be a small buyer on any dip to this area with a wider 20495 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 20970.
March BUND
My 131.10 long Bund position worked well as the market rallied to my 131.75 T/P level and I am now flat The Bund has support below from 130.60/131.30 where I will again be a buyer with a higher 129.85 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 131.95. I still do not .want to be short the Bund at this time. If this view changes, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
Gold closed over 1% lower and I am still flat. I will not chase the price of Gold higher as I continue to look for a larger correction. Gold has support from 2655/2670. I will leave my buy level unchanged with the same 2639 ‘’Closing Stop’. If I am taken long, I will have a T/P level at 2684
Silver Rolling Contract
I am still long Silver from Friday at a price of 30.40. I will continue to look to add to this position on any further move lower to 29.60 while leaving my 28.95 ‘’Closing Stop’’ unchanged. I will now lower my T/P level to 31.00. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
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