U.S. Equity Markets closed higher on Friday led by Russell 2000, which was helped by the 3% rally in Regional Banks. Friday’s Non-Farm Payrolls were mixed with the Unemployment Rate shooting higher to 3.8% as wages cooled. The core personal consumption expenditures (“PCE”) price index, the Federal Reserve’s preferred inflation gauge, increased 0.2% in July for the second month in a row. Inflation-adjusted consumer spending rose a solid 0.6%, driven by low unemployment, wage growth, and pandemic-era savings. The latest readings of the PCE, which excludes volatile food and energy prices, were the smallest consecutive gains since 2020. And they support expectations that the economy can avoid a recession. However, there are still concerns about the sustainability of spending due to dwindling pandemic-era savings, a cooling labour market, and rising delinquency rates. Federal Reserve Bank of Atlanta President Raphael Bostic cautioned against overtightening monetary policy. He said he feels policy is “appropriately restrictive” given the current dynamics of the macroeconomy. Bostic stressed that central bankers should be patient and allow the policy to be felt throughout the economy rather than overtightening and causing unnecessary harm. While the Fed president did say he could not rule out additional rate hikes, he emphasised the progress being made to combat inflation at a responsible pace. Dollar General’s (DG) stock toppled after the company cut its profit forecast for the second consecutive quarter. The discount retailer is now projecting annual earnings to drop as much as 34% on a per-share basis, significantly lower than its previous forecast of an 8% decrease. Dollar General is facing increased competition and rising labour costs. It’s struggling with declining sales while rivals like Dollar Tree (DLTR) and Walmart (WMT) record significant gains. However, the company plans to make sizable investments to improve the shopping experience, which should impact operating profits in the second half of this year. Salesforce (CRM) shares rallied more than 5% ion Thursday/Friday after the company released a strong earnings report. The business-software giant recorded an 11% increase in second-quarter revenue and a nearly 2,000% increase in net income, demonstrating successful cost-cutting measures and better-than-expected demand. Salesforce also raised its annual forecast for revenue, operating margin, and operating cash flow. So far, the company has implemented layoffs, reduced office space, and scaled back employee benefits to help boost profitability. Its strong earnings report has renewed investor confidence and dampened concerns over slowing growth. European Market reversed earlier gains yesterday morning, closing flat on the day. Euro-Zone inflation came in at 5.3% in August, unchanged from July’s reading and still well above the European Central Bank’s (“ECB”) 2% target. Core inflation, which excludes volatile items like food and energy, was in line with the headline figure. This raised concerns about whether the Euro-Zone’s weakening economic growth will be enough to cool inflation. Persistent inflation presents a dilemma for ECB officials as they are soon to decide if they should continue raising rates or instead pause and assess the state of the economy. Market participants are closely watching the ECB’s decision, with some traders pricing in a 30% chance of further rate hikes. UBS Group (UBS) has released its plan to integrate former rival Credit Suisse into its business. The plans include cutting 3,000 domestic jobs and achieving more than $10 billion in cost savings. UBS posted $29 billion in pre-tax profits in the second quarter due to accounting differences between the price it paid for Credit Suisse and the value of Credit Suisse’s balance sheet. The acquisition has raised UBS’s workforce to around 120,000, which the bank aims to eventually reduce by approximately 30%. It also plans to close two-thirds of Credit Suisse’s investment-banking business. The Swiss bank’s shares have climbed to their highest level since 2008, reflecting investor and client confidence in the integration. Elsewhere, Oil rose 0.3% yesterday while Gold again closed flat.
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For anyone following my Platinum Service it made 180 points on the first trading day of September, after finishing August with a 1485 points gain 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 3164 points in February, 4687 points in January 2054 points in December, 4789 points in November and 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 0.18% higher at a price of 4515.
The Dow Jones Industrial Average closed 115 points higher for a 0.33% gain at a price of 34,837.
The NASDAQ 100 closed 0.07% lower at a price of 15,490.
The Stoxx Europe 600 Index closed 0.08% lower.
This morning, the MSCI Asia Pacific closed 0.7% higher.
This morning, the Nikkei closed 0.1% higher at a price of 32,945.
Currencies
The Bloomberg Dollar Spot Index closed 0.35% higher.
The Euro closed 0.4% lower at $1.0800.
The British Pound closed 0.3% lower at 126.23.
The Japanese Yen fell 0.7% closing at $146.51.
Bonds
Germany’s 10-year yield closed 9 basis points higher at 2.55%.
Britain’s 10-year yield closed 10 basis points higher at 4.46%.
U.S.10 Year Treasury closed 9 basis points higher at 4.18%
Commodities
West Texas Intermediate crude closed 0.3% higher at $85.51 a barrel.
Gold closed 0.1% lower at $1936.10 an ounce.
This morning on the Economic Front we have the release of German, Euro-Zone and U.K. Services PMI at 8.55 am, 9.00 am and 9.30 am respectively. At 10.00 am we have Euro-Zone Producer Prices Index. Finally, at 3.00 pm we have U.S. Factory Orders.
Cash S&P 500
Last week was another frustrating period for anyone trying to shorth the S&P as the market rallied almost 200 Handles before having a late sell-off from the post 4541 NFP high on Friday. Given how overbought we are after this move, I am looking for a small pull back this week. Any retracement should find strong support at the 50 Day Moving Average (4469) with the seasonal chart telling us that it will be mid-September before we have a meaningful correction. The Seasonal Chart has been spot on all-year. Bears are looking for a mini-crash from Mid-sept to Mid -October but I am not so sure. Yes, I think we will get a retracement but given the strength of the economy despite Unemployment rising to 3.8% on Friday, my own view is any sell-off will be contained as they have been so far in 2023. With the Presidential Election just 14 months away it may be 2025 before a recession hits. I am still flat the S&P. I will now raise my buy level to 4477/4493 with a higher 4463 ‘’Closing Stop’’. Meanwhile, I will continue to be an aggressive seller from 4560/4575 with the same 4591 tight ‘’Closing Stop’’.
EUR/USD
Just before the New York Close on Friday, the Euro hit my second buy level at 1.0800 for a now 1.0830 average long position. So far, the 200-Day Moving Average at 1.0780 is holding. I will leave my tight 1.0745 ‘’Closing Stop’’ unchanged while lowering my T/P level to 1.0880. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
September Dollar Index
My latest 103.70 short position worked well as the market sold off to my 103.30 T/P level following the NFP release and I am now flat. This morning the Dollar is trading higher at 104.20, helped by the 0.7% fall in the Japanese Yen. The Dollar has resistance from 104.50/105.10 where I will be an aggressive seller with a higher 105.65 ‘’Closing Stop’’ .
Cash DAX
I am still flat the DAX despite the market again finding strong selling above 16,000. This morning, I will lower my buy level to 15580/15680 where I will be a strong buyer with a lower 15495 ‘’Closing Stop’’.
Cash FTSE
My FTSE plan worked well as the market rallied to my 7510-sell level yesterday morning before selling off to my 7460 T/P level and I am now flat. Gilt Yields rising 10 basis points weighed on equity markets yesterday which is no surprise. This morning the FTSE is trading at 7420 as I go to press. I will continue to be a seller on any further rally to 7470/7540 with a lower 7605 ‘’Closing Stop’’. I still do not want to be a buyer of the FTSE at this time.
Dow Rolling Contract
My latest 34770 long Dow position worked well as the market rallied to my 34860 T/P level ahead of the release of Non-Farm Payrolls and I am now flat. The Dow has short-term support from 34300/34550 where I will be a strong buyer with a lower 34195 ‘’Closing Stop’’. I still do not want to be short the Dow at this time.
Cash NASDAQ 100
I am still flat. The NDX traded in a narrow range on Friday, closing the week unchanged. I am seeing plenty of negative divergences which is no surprise given the near 1000-point rally in the past week. The NDX has strong resistance from 15700/15850 where I will be a seller with a 15955 ‘’Closing Stop’’. Meanwhile, I will continue to be a buyer on any dip lower to 15220/15370 with the same 15095 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 15485. If I am taken short, I will have a T/P level at 15590.
September BUND
The Bund got hit hard on Monday, following U.S. Treasury Yields higher. This sell-off has me long at an average rate of 132.25. With the September Contract expiring in a few days, I will now lower my exit level on this position to 132.20. Meanwhile my 131.35 ‘’Closing Stop’’ remains unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
No Change. Gold has barely moved in the past 48 hours, and I am still flat. I will continue to be a strong buyer on any dip lower to 1902/1917 with the same 1889 ‘’Closing Stop’’.
Silver Rolling Contract
Silver is trading 2% lower from where I marked prices last Friday morning. I am still long at 24.40. I will continue to look to add to this position at 23.70 while lowering my T/P level to 24.80. Meanwhile, I will leave my 22.95 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
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