U.S. stocks rose above their record high at the start of a week packed with data that will provide clues on global economic growth. Bonds fell. Financial companies led gains in the S&P 500 Index, while real-estate shares retreated. Benchmark Treasury yields climbed after a large five-year block sale. The U.S. Dollar was little changed and the Euro rallied. Crude had a volatile session as a severe crackdown on Iranian oil exports ticked closer. Investors are assessing whether the economy and corporate earnings will continue to support the equity bull run. U.S. consumer spending rebounded in March while the Federal Reserve’s preferred underlying inflation gauge eased to a one-year low, according to a Commerce Department report on Monday. Policy makers are expected to hold rates steady on Wednesday, though new growth and prices data may affect their characterization of the economy. The next round of trade talks with China will get under way this week with significant issues still unresolved, but with enforcement mechanisms “close to done,” according to U.S. Treasury Secretary Steven Mnuchin.
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Equities
The week started off very quiet as we wait for the Fed Meeting tomorrow. Almost 80 percent of the S&P 500 companies that have reported quarterly earnings beat analyst estimates, data compiled by Bloomberg show. The S&P made a new cash high of 2949 yesterday surpassing its September 2018 high of 2941 before having a small sell-off into the close and this move lower has continue overnight as I go to press. The S&P 500 rose 0.1 percent to close at 2944. Elsewhere, the Stoxx Europe 600 Index rebounded as a rally in banks outweighed a drop in Euro-area economic confidence to a two-year low, also closing 0.1% higher.
Currencies
Last Friday’s CFTC report showing Euro shorts at the highest level since 2016 certainly played on the market today with Euro closing 0.3% higher at $1.1185. The British pound rose 0.2 percent to $1.2937 as I still believe the Pound to be a buy on dips.
Bonds
The yield on 10-year Treasuries reversed Friday’s sell-off closing three basis points higher at 2.53 percent. In Europe both Germany’s and Britain’s 10-year yield climbed three basis points to 0.00 percent and 1.157% respectively.
Commodities
Yesterday’s boring session extended to the commodity markets with Crude and Gold closing unchanged while the Bloomberg Commodity Index declined 0.3 percent.
This morning on the Economic Front we have German Import Prices and the GFK Consumer Confidence at 7.00 am. Next, we have German Unemployment and Euro-Zone GDP at 8.55 am and 9.00 am respectively, followed by German CPI at 1.00 pm. At 1.30 pm we have US Employment Cost Index. This is followed at 2.45 pm by the Chicago Purchasing Mangers Survey. Finally at 3.00 pm we have Pending Home Sales and Consumer Confidence.
June S&P 500
Despite the S&P making an all-time high and new-time closing high, worryingly the VIX rose to close at 13.13. Yesterday’s 2952 high just missed my 2955 sell level before the market fell to trade at a price of 2939 as I go to press. Today I will lower my sell level to 2952/2962 with a 2969 stop. As we have the Fed Meeting tomorrow I would expect any sell-off in the S&P to be contained and today I will be a buyer of the market from 2920/2928 with a 2912 stop.
EUR/USD
I am still flat the Euro and today I will raise my sell level slightly to 1.1220/1.1260 with a 1.1295 stop. My only interest in buying the Euro is still on a dip lower to 1.1040/1.1080 with a 1.1005 stop.
June Dollar Index
I am still flat the Dollar and today I will lower my sell level slightly to 97.90/98.30 with a 98.65 stop.
June DAX
No change as I am still a buyer on any dip lower to 12180/12240 with the same 12125 stop. Remember the DAX needs to close over the 12400 key resistance level for higher prices.
June FTSE
Unfortunately the FTSE just missed my 7430 sell level and I am still flat. Today I will raise my sell level slightly to 7440/7480 with a 7510 stop. I still do not want to be long the market at this time.
Dow Rolling Contract
We continue to have a large negative divergence between the Dow and S&P/NASDAQ. The Dow’s recent high is 26695 which is well below the 26951 October 3, 2018 all-time high. As long as the Dow stays below this latter level the market can have a decent correction at any stage. With the FOMC Meeting tomorrow any sell-off ahead of this meeting is likely to be contained. Today I will be a small buyer from 26200/26380 with a 26095 tight stop. As I have sell levels in both the S&P and NASDAQ I no longer want to be a seller of the Dow at this time.
June NASDAQ
Frustratingly the NASDAQ fell short of my 7865 sell level with a 7862 high print before the market fell 70 points and I am still flat. Today I will lower my sell level to 7855/7895 with a 7935 stop. I still do not want to be long the market at this time.
June BUND
Shortly after the European Markets opened the BUND traded lower to my 165.45 buy level on my average 165.55 short position and I am now flat. The Bund has strong resistance from 166.00/166.40 and I will be a seller in this area with a 166.75 stop.
Gold Rolling Contract
No Change as I am still a buyer on any dip lower to 1264/1272 with a 1256 stop.
Silver Rolling Contract
Shortly after the US Markets opened yesterday Silver traded lower to my 14.90 buy level. I am still long with a higher 14.55 stop and a now lower 15.05 T/P level. If any of the above levels are hit I will be back with a new update for my Platinum Members.
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