Stocks were choppy on Monday with early optimism unwound at the open in a tech-led sell-off as Huawei AI chip ambitions continue to hit Nvidia (NVDA). Meanwhile, the only data point released yesterday also caused some concern. The Dallas Fed Manufacturing survey was very disappointing and accentuated the downside in equities. However, as E-mini S&P 500 futures tested 5,500, a sharp reversal was seen into the closing bell on little newsflow in what was likely technical-driven trade after a convincing break of 5,500 was rejected. T-Notes, however, pared the morning downside (induced by a slew of corporate issuance) with the risk-off trade post-opening bell supporting T-Notes to session highs, with the aforementioned data also supporting. As such, the Dollar underperformed on more economic fears ahead of an important week for US data (GDP, PCE, ISM Mfg. PMI, NFP). The lower moves and choppy risk environment helped support the Japanese Yen to outperform while the Canadian Dollar was flat ahead of Canadian election results overnight. Elsewhere, crude prices were sold as risk soured but settled marginally off lows amid the weaker Dollar and commentary from Energy Secretary Wright that the US is refilling the SPR, while some brief upside was seen earlier on India/Pakistan escalation fears. On trade, Treasury Secretary Bessent said the first trade deal could be announced as early as this week or next while noting they are doing bespoke deals with 18 trading partners, but noted China is more complex. The Treasury Secretary added that it is up to China to de-escalate and that Chinese exemptions show they want de-escalation on trade. However, Bessent said he has an escalation ladder in his back pocket but is anxious not to use it. The Dallas Fed Manufacturing Business Index tumbled to -35.8 in April from -16.3, the lowest reading since May 2020. Meanwhile, the company outlook index also retreated to a post-pandemic low of -28.3. The outlook uncertainty index pushed up 11 points to 47.1. The production index was largely unchanged at 5.1, indicative of modest growth. Delving into the report, it noted “Labor market measures suggested a slight decrease in head counts and shorter workweeks this month.” While price pressures accelerated and wage growth remained fairly stable. Looking ahead, expectations for manufacturing activity six months from now remained mixed. Elsewhere, Oil closed lower by 1.68% while Gold rallied, ending Monday with a gain of 0.85%following another volatile trading session.
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For anyone following my Platinum Service it was flat yesterday and is still ahead by 7440 points for April 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 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 0.06% higher at a price of 5528.
The Dow Jones Industrial Average closed 114 points higher for a 0.28% gain at a price of 40,227.
The NASDAQ 100 closed 0.03% lower at a price of 19,427.
The Stoxx Europe 600 Index closed 0.53% higher.
Yesterday, the MSCI Asia Pacific closed 0.7% higher.
Yesterday, the Nikkei closed 0.38% higher at a price of 35,839.
Currencies
The Bloomberg Dollar Spot Index closed 0.56% lower.
The Euro closed 0.51% higher at $1.1423.
The British Pound closed 0.92% higher at 1.3437.
The Japanese Yen rose 1.11% closing at $142.03.
Bonds
Germany’s 10-year yield closed 4 basis points higher at 2.51%.
Britain’s 10-year yield closed 3 basis points higher at 4.51%.
U.S.10 Year Treasury closed 4 basis points lower at 4.22%.
Commodities
West Texas Intermediate crude closed 1.68% lower at $61.96 a barrel.
Gold closed 0.85% higher at $3347.10 an ounce.
This morning on the Economic Front we have the German GFK Survey at 7.00. This is followed by Euro-Zone Money Supply at 10.00 am and Consumer Confidence at 11.00 am. Next, we have the U.S. Trade Balance, Wholesale Inventories and the House Price Index at 1.30 pm. Finally, we have the JOTS Job Openings at 3.00 pm and the Atlanta Fed GDP Now at 3.30 pm.
Cash S&P 500
Monday was an unlucky session for me as a number of my sell levels just missed before each market had a decent sell-off only to recover most of these losses into the close. Despite all the doom and gloom the S&P is now trading over 11% higher off its April 7 low which has surprised a number of investors as they continue to sit on the sidelines having missed this impressive rebound. We are now entering a squiggly period of discovery as following the rally over the past two weeks, the S&P is heading towards key technical resistance points and the key question will resistance hold and we retest the lows or is the low in for the year and ultimately leads to new highs. I think we will have a combination of all of the above, especially as we are short-term overbought and no tariff deal has so far been agreed with anyone. The news uncertainty, noise and intensity off the charts with the widest intra-day ranges up or down the most intense any of us have been subject to in many years or ever in the case of the number of point moves on a daily basis. Asset Managers have completely missed this move higher and need a pullback or retest of the lows or have to face the prospect of being forced to chase prices higher. The April turnaround has been spectacular. However, with markets short-term overbought as shown by the McClellan Oscillator which closed at +230 last night I will continue to look to sell the S&P on any further rally to 5560/5590 with the same 5625 ‘Closing Stop’. I will now raise my buy level to 5410/5440 with a higher 5385 ‘Closing Stop’. If I am taken short, I will have a T/P level at 5528. If I am taken long, I will have a T/P level at 5472.
EUR/USD
The Euro has traded in a narrow range over the past week and I am still flat. Today, I will continue to be a seller from 1.1450/1.1550 with the same 1.1635 ‘Closing Stop’. If I am taken short, I will have a T/P level at 1.1360. I still do not want to be long the Euro at this time.
Dollar Index
I am still long the Dollar at 99.30 as the market just fell shy of Monday’s T/P level. I will now lower my T/P level to 99.70 while leaving my 97.65 ‘Closing Price’ unchanged. I will look to add to this position on any further move lower to 98.50. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Russell 2000
I am still flat the Russell Index. Today, I will raise my buy level to 1840/1910 with a higher 1775 ‘Closing Stop’. If I am taken long, I will have a T/P level at 1965. I still do not want to be short the Russell at this time.
FTSE 100
I am still short the FTSE at an average rate of 8360 with the same 8475 ‘Closing Stop’. I will leave my T/P level unchanged at 8325. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
It was an interesting day in FX, with the Japanese Yen strengthening by more than 1% against the dollar and the Swiss franc gaining 80 bps. Recently, we have grown accustomed to seeing stocks and bonds sell off amid Dollar weakness, but Monday was different—stocks were essentially flat, and yields moved lower. We have a situation where stocks have gone their own way somewhat. It does not necessarily mean stocks are wrong, but it also does not mean they are right. I seriously doubt they can continue diverging from credit spreads, equity financing costs, and the yen for long, especially knowing that IV is likely to rise. It is possible that yesterday’s price action was just part of a broader process of the stock market starting to reverse course. In fact, the index stopped rising Monday precisely at the 78% intraday retracement level. If you wanted to get a bit creative, you could actually argue that the index formed a rising flag pattern, which suggests the S&P 500 could return to the origin of the recent rally at around 5100 and the Dow back below 37,000. With the McClellan Oscillator close to overbought, I will continue to be a seller of the Dow on any further rally to 40550/40850 with the same 41105 wider ‘Closing Stop’. If I am taken short, I will have a T/P level at 40230.
Cash NASDAQ 100
I am still flat. Given the number of negative divergences in the NASDAQ following last week’s aggressive rally I will continue to look to sell the NDX on any further rally. The NDX has short-term resistance from 19650/19850 where I will be a seller with a 20005 tight ‘Closing Stop’. If I am taken short, I will have a T/P level at 19530. The NDX has short-term support from 18600/18800. I will continue to be a buyer on any dip lower to this area with the same 18375 ‘Closing Stop’. If I am taken long, I will have a T/P level at 19030.
December BUND
The Bund hit a morning high at 132.05 before falling 50 points into the New York close. This sell-off occurred despite Treasury Yields continue to fall in America. I will now lower my Bund sell level to 132.20/133.10 with a lower 133.85 ‘Closing Stop’. If I am taken short, I will have a T/P level at 131.40. I still do not want to be long the Bund at this time.
Gold Rolling Contract
The volatility in Gold is insane. Gold hit a low at 3268 early Monday morning before rallying $80 off this low into the New York close. I am still flat. I will now raise my buy level 3240/3280 with a higher 3215 ‘Closing Stop’. If I am taken long, I will have a T/P level at 3302. I still do not want to be short Gold at this time.
Silver Rolling Contract
Frustrating! Silver missed yesterday’s buy range by 15 points before turning around and following the price of Gold higher. I will now raise my Silver buy level to 31.80/32.70 with a higher 30.45 ‘Closing Stop’. If I am taken long, I will have a T/P level at 33.45.
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