U.S. Indexes closed lower on Monday, with the NASDAQ 100 underperforming as major Indices fell around 0.6-1.1%, while the equal-weight S&P declined 0.6%. Sectors were predominantly lower, led by Communication Services, Consumer Discretionary and Financials, while Staples, Health Care and Energy were the only sectors to finish higher. Treasuries sold off across the curve, with yields rising around 7-9bps amid choppy US-Iran headlines. Yields pared from highs alongside crude as reports suggested potential progress towards sanctions relief and a nuclear agreement, although subsequent reports said the chances of a deal remain extremely slim. Thereafter, Press TV said reports of Iranian flexibility on the nuclear issue are false. Fed Governor Cook meanwhile warned of continued inflation pressures. Crude was choppy but ultimately settled marginally higher as conflicting US-Iran headlines dominated trade. Reports of potential sanctions relief and Iran halting uranium enrichment pressured crude, before doubts over the prospects of an agreement helped prices recover. Saudi Arabia’s East-West pipeline also resumed oil exports. In FX, the Dollar was marginally firmer, with price action largely tracking crude. Both the New Zealand Dollar and Stirling outperformed, while CHF, CAD, EUR and AUD lagged. The Japanese Yen was choppy amid further jawboning from Japanese officials, while attention turns to the RBA overnight, where a 25bp hike is expected. Attention now turns to a key week of US data, with ISM Manufacturing, PCE and NFP set to test the strong growth, elevated inflation and solid labour market narrative. Fed Governor Cook warned of continued inflation pressures in the coming months but noted that the labour market is well positioned to handle an increase in rates. Money Markets currently price around 17 basis points of tightening for October, implying a 68% probability of another 25bp hike, while December prices around 38bps, fully pricing one additional hike and implying roughly a 52% probability of a second. This week’s data will therefore be key in shaping those expectations further. Elsewhere, Oil closed higher by 1% while Gold was hit hard closing lower on Monday by 4%.
To mark my 3425th 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 430 points yesterday and is now ahead by 6777 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 0.77% lower at a price of 7683.
The Dow Jones Industrial Average closed 347 points lower for a 0.67% loss at a price of 51,481.
The NASDAQ 100 closed 1.08% lower at a price of 30,276.
The Stoxx Europe 600 Index closed 0.05% higher.
This morning, the MSCI Asia Pacific closed 0.5% lower.
This morning, the Nikkei closed 0.76% higher at 65,513.
Currencies
The Bloomberg Dollar Spot Index closed 0.21% higher.
The Euro closed 0.19% lower at $1.1368.
The British Pound closed 0.08% higher at $1.3258.
The Japanese Yen fell 0.11% closing at $157.43.
Bonds
U.K.’s 10-Year Gilt closed 6 basis points higher at 5.42%.
Germany’s 10-Year Bund Yield closed 2 basis points higher at 3.63%
U.S.10 Year Treasury closed 7 basis points higher at 5.25%.
Commodities
West Texas Intermediate crude closed 0.87% higher at $93.21 a barrel.
Gold closed 3.91% lower at $4121.10 an ounce.
This morning on the Economic front we have U.K. Money Supply and Net Lending to Individuals at 9.30 am. Next, we have Euro-Zone Consumer Confidence at 10.00 am and a speech from ECB President Lagarde at 12.00 pm. This is followed by U.S. Composite Index and the Housing Market Index at 2.00 pm. At 3.00 pm we have Consumer Confidence and the JOLTS Job Openings. Finally, we have speeches from Fed Members: Bowman, Barr, Goolsbee, Williams and Waller at 4.00 pm, 5.40 pm, 6.00 pm, 7.00 pm and 8.00 pm respectively.
Cash S&P 500
Interest Rates continue to move higher, with the 10-year pushing up to resistance at 5.25%. Bond volatility, as measured by the VXTLT, also rose on the day. With the PCE report on Wednesday and the jobs report on Friday, it is a pretty big week for markets. Clearly, numbers that come in higher than expected in either report could be enough to send yields even higher. The trouble is that above 5.25%, a move to 5.5% becomes a fairly easy path, with little resistance in the way. The thing that stands out, or perhaps does not stand out enough, is how much of what is happening with rates is not just a U.S. phenomenon. It is a global one. Japan’s 30-year JGB finds itself in a really uncomfortable spot, with a large ascending triangle pattern that has formed in recent weeks and resistance at 4.17%. Imagine where the 30-year JGB could go should it clear resistance at 4.17%. I am guessing 5% isn’t all that unreasonable. Thank goodness Nvidia did that $150 billion deal, (buyback) or else the S&P 500 could have been down even more than it was. But hey, the credit market has a different opinion on Nvidia, with its CDS widening even further yesterday to 89 basis points. Broadcom and AMD saw their CDS widen as well. Gold definitely does not like those rising real yields. The metal fell nearly 4% on Monday and is back below $4,200. It makes a move back to $4,000 look increasingly possible. Assuming the 5Y5Y forward inflation expectation runs at around 2.3%, that implies a nominal 5-year rate five years from now of roughly 5.3%, perhaps 5.4%. We have returned to pre-QE rates. The days of easy monetary policy are over, at least based on current market expectations. Whether stocks care or not, I would argue that they do care about rising rates. You can see it directly in the S&P 500 earnings yield, which has been rising right along with the 10-year nominal yield. The only thing keeping the index up is that the “E” has seen several upward revisions. However, as the earnings yield risks falling below the 10-year yield, the S&P 500’s ability to hold up may be nearing the end of the road, especially if credit spreads really start to widen. TBD. My S&P plan worked well as after the market traded the whole of my buy range for a 7679 average long position the S&P rallied over 50 Handles off its 7667 low. This move higher saw my revised 7705 T/P level triggered and I am now flat. This morning the S&P is opening lower at 7666. We still have a large ‘Open Gap’ from the post FOMC close at 7551/7611. As we know, all gaps are eventually filled. I am amazed how well the S&P has so far been able to absorb the rise in bond yields. For me to turn bearish I need to see the S&P break and close below 7507. Until this happens, I will continue to be a buyer of dips. Today, my buy level will be from 7628/7653 with a lower 7599 ‘Closing Stop’. If I am taken long, I will have a T/P level at 7687. I still do not want to be short the S&P at this time.
EUR/USD
No Change: I am still long the Euro from last Thursday at a price of 1.1385. I will continue to look to add to this position at 1.1305 while leaving my 1.1245 ‘Closing Stop’ unchanged. Meanwhile, I will leave my 1.1470 T/P level 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 short the Dollar from last week at a price of 101.30. The Dollar is overbought and due a correction before moving higher. I will add to this position at 102.10 while leaving my 102.75 ‘Closing Stop’ unchanged. I will now raise my T/P level to 100.80. 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 long the Russell from last week at a price of 2850. I will add to this position at 2780 with the same 2725 ‘Closing Stop’. I will now lower my T/P level to 2890. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
FTSE 100
The FTSE just missed Monday’s buy range before having a late rally into the New York close. I will not chase the FTSE higher as I continue to be a buyer from 10580/10660 with the same 10495 ‘Closing Stop’. If I am taken long, I will have a T/P level at 10730.
Dow Rolling Contract
My Dow plan worked well after the market hit my 51430-buy level the Dow rallied over 300 points. The Dow has short-term support from 50980/52280 where I will again be a buyer with a lower 50795 ‘Closing Stop’. If I am taken long, I will have a T/P level at 51520.
Cash NASDAQ 100
Higher Treasury Yields saw the NDX hit my buy range for a now 30260 long position. I will add to this position at 30060 while leaving my 29895 ‘Closing Stop’ unchanged. I will now lower my T/P level to 30450. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
December BUND
I am still long Bund at an average rate of 120.40 with the same 119.45 ‘Closing Stop’. I will now lower my T/P level to 120.60 and reassess if triggered. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
Gold closed 4% lower on Monday and in the process has now trapped a lot of long positions at much higher price levels. This move lower saw my second buy level at 4150 triggered for a now 4185 average long position. I will leave my 4075 ‘Closing Stop’ unchanged while lowering my T/P level to 4240. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Silver Rolling Contract
I am still long Silver at an average rate of 63.30. I will now lower my T/P level to 64.50 with the same 59.95 ‘Closing Stop’. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
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