U.S. Indexes closed higher on Monday following the long Independence Day weekend, with the NASDAQ outperforming as Technology led the advance. Semiconductor stocks were among the strongest performers (SOXX +3%), while memory names rallied around 7% ahead of Samsung’s preliminary earnings release overnight. Alongside Technology, Communication Services, and Consumer Discretionary outperformed, while the traditional defensive sectors of Health Care, Consumer Staples and Real Estate lagged. In FX, the Dollar surrendered its early gains as Sterling and the Australian Dollar outperformed, supported by the broader risk-on tone and carry demand at the expense of the lower-yielding Yen and Swiss Franc. The Euro also posted modest gains against the Greenback. The New Zealand Dollar underperformed ahead of the RBNZ decision this week, where the NZIER Shadow Board recommended leaving the Official Cash Rate unchanged at 2.25%, compared with market pricing implying around an 80% probability of a 25bp hike to 2.50%. Precious metals also weakened, with both gold and silver closing lower. Energy prices edged lower after Saudi Aramco reduced the official selling price of its Arab Light crude to Asia by USD 11.00/bbl, taking it to a USD 1.50/bbl discount versus the regional benchmark—the largest reduction in 26 years. Geopolitical developments were limited, although reports suggested Islamabad is the leading candidate to host the next round of US-Iran technical talks, with July 11th emerging as the tentative meeting date. Treasuries settled little changed, with the curve modestly steepening as investors looked ahead to this week’s FOMC minutes and Treasury supply. Some pressure was also seen amid a busy slate of corporate bond issuance. On the macro front, the ISM Services PMI came in slightly below expectations, although the employment component returned above the 50 threshold while the prices paid index declined, providing a somewhat more constructive inflation signal. Fed Governor Waller also reiterated that the balance of risks has shifted, arguing that the labour market now appears broadly stable while inflation has become the more pressing concern for policymakers. On communications, he stated that forward guidance can be a useful policy tool in certain circumstances but is not always appropriate. Looking ahead, attention turns to the RBNZ policy decision on Tuesday night (EDT)/Wednesday morning (BST), the FOMC minutes on Wednesday, Fed Governor Williams on Thursday and this week’s Treasury supply. Equity investors will also be closely watching Samsung’s preliminary earnings for another read on conditions within the global memory chip sector. The ISM Services PMI eased to 54.0 in June (exp. 54.2, prev. 54.5), remaining firmly in expansion territory for a 24th consecutive month, with all four components of the Composite Index above their respective 12-month averages. Business Activity slowed to 55.4 from 57.7, while New Orders eased to 55.1 from 57.3, indicating activity and demand remained healthy despite moderating from May’s pace. The Employment Index returned to expansion for the first time in four months, rising to 51.2 from 47.9, while the Prices Index fell to 67.7 from 71.3, its lowest level since February, signalling that cost pressures remained elevated but continued to ease. Elsewhere, the Supplier Deliveries Index fell to 54.4 from 55.2, however there was an increase in commodities listed as “in Short Supply”, rising to nine from five. The Backlog of Orders Index rose to 54.9 from 51.3. Oxford Economics said the report points to a resilient services sector and is consistent with its forecast for US GDP growth of around 2% this year, despite the recent energy price shock. Oxford also noted that while supply-chain stress and price pressures are easing, some industries continue to expect higher input costs in the months ahead. Regarding the labour market, Oxford views the improvement in the employment index as a sign of stabilisation rather than reacceleration, supporting its expectation that the Federal Reserve will remain on an extended pause as it continues to focus on inflation. Fed Governor Waller stated risks have flipped around, noting the labour market seems stabilised, and inflation has been taking off, which changes how you think about policy. He stressed policymakers have always been committed to 2% inflation, and it is a credible pledge. However, he did say he would prefer the inflation target to be set as a range, but changing the target at this point would not be credible. Waller also stated that if the Fed’s reaction function is not well understood, policymakers need to talk about it. On forward guidance, which Chair Warsh is adverse to, Waller said that it can speed the impact of monetary policy and be a valuable tool, but it can be a hindrance if it is too strong or rigid, and it is problematic when policymakers confront different economic outcomes, all with a significant probability of occurring. Waller added that in some cases, it is best not to use forward guidance at all. Elsewhere, Oil closed flat while Gold ended Monday’s session with a 0.5% fall.
To mark my 3400th 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 290 points yesterday and is now ahead by 1297 points for July 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 0.72% higher at a price of 7537.
The Dow Jones Industrial Average closed 155 points higher for a 0.29% gain at a price of 53,055.
The NASDAQ 100 closed 1.26% higher at a price of 29,697.
The Stoxx Europe 600 Index closed 0.68% higher.
This Morning, the MSCI Asia Pacific closed 0.6% lower.
This Morning, the Nikkei closed 1.95% lower at a price of 68,385.
Currencies
The Bloomberg Dollar Spot Index closed 0.05% higher.
The Euro closed 0.01% higher at $1.1440.
The British Pound closed 0.29% higher at $1.3390.
The Japanese Yen fell 0.43% closing at $162.03.
Bonds
U.K.’s 10-Year Gilt closed 1 basis points higher at 4.80%.
Germany’s 10-Year Bund Yield closed 2 basis points higher at 2.95%
U.S.10 Year Treasury closed 2 basis points lower at 4.47%.
Commodities
West Texas Intermediate crude closed 0.09% higher at $68.83 a barrel.
Gold closed 0.50% lower at $4161.10 an ounce.
This morning on the Economic front we have the release of German Industrial Production at 7.00 am. Next, we have the Minutes from last month’s Bank of England Meeting at 10.30 am. At 1.15 pm we have the Weekly ADP Employment Change and the New York 1-Year Consumer Inflation Expectations at 4.00 pm. Finally, we have a Three-Year Treasury Auction at 6.00 pm.
Cash S&P 500
Margin debt continues to grow at an enormous rate. The latest figures for May saw the NYSE Margin Debt hit a high of $1.42 trillion which is an 8.5% increase on the April report. This is a whopping 54% increase from 12 months ago. At the end of the dot-com mania in March 2000, total margin debt was 3% of annual U.S. GDP. This measure surged to 4.4% in May, a new record that is nearly 50% higher than in 2000. But today’s leverage also comes in other forms. Financial engineering has come a long way since the dot-com bubble. In 2000, there were no leveraged ETFs as these instruments only hit mainstream in 2021. From March to May 2026, the total for funds bearing 3x leveraged jumped a remarkable 66%. Attempts to score big consume the minds of speculators at a market top. According to the Wall Street Journal: ‘’Buyers ranging from hedge funds to teenagers on Robinhood have poured money into leveraged ETFs. Together with margin loans, the funds may be a sign of trouble as this cycle can quickly spiral into heavy losses as stocks fall even faster than they went up’’. The article also notes that Charles Schwab has tightened margin requirements and stated that it will issue margin calls to investors ‘’who exceed new thresholds’’. The NYSE did the same thing right before the peak in 1929. I have long noted that Junk Credit Spreads and stocks tend to trend and reverse together. In the event of a bankruptcy, junk debt is one rung above equities in the pecking order of who gets paid. When the trend between the two assets diverges, it is meaningful. We are now witnessing a widening spread which in my opinion is a precursor to a decline in stock prices. The lead time is variable, but the outcome is almost always the same: stocks catch up to the widening move. Time is running out for stocks as the tug of widening spreads has broken a trendline from October 2022 flashing a major warning for the aging bull market in equities. TBD. Late Monday the S&P finally hit my 7541 sell level. The market has sold off overnight and I have now exited this position here at 7519 and I am now flat. Today, I will again be a seller from 7540/7565 with a 7583 ‘Closing Stop’. My only interest in buying the S&P is from 7420/7445 with the same 7399’ Closing Stop’. If I am taken short, I will have a T/P level at 7514. If I am taken long, I will have a T/P level at 7478.
EUR/USD
No Change: I am still long the Euro at an average price of 1.1460 with the same 1.1345 ‘Closing Stop’. Today, I will leave my T/P level unchanged at 1.1485 as I have this position too long. 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 flat. The Dollar has support below from 99.90/100.60 where I will be a buyer with a 99.35 tight ‘Closing Stop’. If I am taken long, I will have a T/P level at 101.20.
Russell 2000
The Russell has short-term resistance from 3030/3100. I will now lower my sell level to this range with a lower 3165 ‘Closing Stop’. If I am taken short, I will have a T/P[ level at 2980.
FTSE 100
The FTSE never came close to Monday’s sell range and I am still flat. Today, I will lower my sell level to 10680/10760 with a lower 10855 ‘Closing Stop’. If I am taken short, I will have a T/P level at 10610.
Dow Rolling Contract
The Dow closed at a new all-time high on again on Monday. Earlier in the session the Dow hit a low of 52640 before rallying 400 points. This move lower saw my revised 52770 T/P level triggered on my latest 52840 average short position and I am now flat. With the RSI closing at 72 the Dow is overbought and due a correction. Today, I will be a small seller from 53250/53550 with a higher 53805 ‘Closing Stop’. If I am taken short, I will have a T/P level at 52910. I still do not want to be long the Dow at this time.
Cash NASDAQ 100
I am still flat as the NDX just missed both my sell and buy levels over the past 24 hours. This morning the NDX is weak. I will now lower my buy level to 29000/29200 with a lower 28795 ‘Closing Stop’. If I am taken long, I will have a T/P level at 29410. The NDX has short-term resistance from 29800/30000 where I will again be a seller with a lower 30205 ‘Closing Stop’. If I am taken short, I will have a T/P level at 29590.
December BUND
No Change: Today, I will again be a seller of the Bund from 127.60/128.30 with a higher 129.05 ‘Closing Stop’. The Bund has short-term support below from 125.40/126.10 where I will be a strong buyer with a 124.75 ‘Closing Stop’. If I am taken short, I will have a T/P level at 126.95. If I am taken long, I will have a T/P level at 126.70.
Gold Rolling Contract
I am still flat. Gold has support below at 3970/4070. I will continue to be a buyer on any dip to this area with the same 3855 ‘Closing Stop’. If I am taken long, I will have a T/P level at 4140.
Silver Rolling Contract
I am still flat. Today, I will continue to be a buyer on any further dip lower to 56.80/59.80 with the same 54.95 ‘Closing Stop’. If I am taken long, I will have a T/P level at 62.15.
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