U.S. Equity Markets sold off throughout Monday’s session with underperformance in the NASDAQ 100 while Utilities, Communication Services and Consumer Discretionary sectors lagged, as Energy was the only sector to close in the green. Nvidia (NVDA) saw notable gains while Super Micro (SMCI) surged after it said it is shipping 100k GPUs per quarter. Oil prices rallied throughout the session with participants awaiting Israel’s response to Iran, which is reportedly due “imminently”. There is also attention on Hurricane Milton, which was upgraded to Category 5, however, Reuters reports that while some oil facilities have shut, it is expected to miss most oil infrastructure. T-Notes sold off throughout the session in a continuation of the post-NFP trade on Friday while higher oil prices also likely weighed with the 10yr yield rising back above 4.00%. Elsewhere, there was no tier 1 US data to digest while Fed’s Kashkari noted that he sees the neutral rate closer to 3%. In Europe, Retail Sales Y/Y disappointed while both ECB’s Villeroy and Kazaks were supportive of an October rate cut. The downside in equities saw haven FX (CHF and JPY) outperform, while JPY was supported after commentary from the top FX diplomat in Japan warning against speculative moves after the recent Yen weakness. Cyclical currencies (AUD, NZD, CAD, GBP) lagged its peers with both the Dollar and Euro flat on the session. The Fed’s Kashkari noted that the balance of risks have shifted away from higher inflation towards maybe higher unemployment, but noted that overall the US economy is resilient. He stated the labour market still looks strong and he wants to keep it that way. He is not seeing signs of resurgent inflation, adding that the reduction in new rents gives the Fed confidence that housing inflation will come down. Kashkari suggests that underbuilding is a big source of housing inflation, while supply chain disruptions and labour shortages are another source, as is the rise of work from home. He stated the balance sheet shrinking has a way to go yet, and that he has pencilled in the neutral rate at closer to 3% (vs Fed median of 2.9%), but there is huge uncertainty about the neutral rate. On CRE, he said the “shoe is yet to drop” from office sector CRE, noting he is looking very carefully but is not seeing evidence of systemic risk. Elsewhere, Oil closed 4% higher while Gold was lower by 0.4%.
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For anyone following my Platinum Service it made 180 points yesterday and is now ahead by 910 points for October after ending September with a gain of 4402 points following a 301-point loss for August after closing July with a gain of 1918 points while June closed with a gain of 2074 points, having made 1843 points in May. The Platinum Service made 4010 points in April after ending March with a gain of 2113 points. February closed with a gain of 1606 points, after closing January with a gain of 3675 points. December saw a gain of 1890 points after finishing November with a gain of 1734 points. October ended with a gain of 3184 after closing September with a small gain of 228 points, after finishing August with a gain of 1485 points, 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 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 0.96% lower at a price of 5695.
The Dow Jones Industrial Average closed 398 points lower for a 0.94% loss at a price of 41,954.
The NASDAQ 100 closed 1.17% lower at a price of 19,800.
The Stoxx Europe 600 Index closed 0.18% higher.
Yesterday, the MSCI Asia Pacific closed 0.4% higher.
Yesterday, the Nikkei closed 1.80% higher at a price of 39,332.
Currencies
The Bloomberg Dollar Spot Index closed 0.01% higher.
The Euro closed 0.1% lower at $1.0965.
The British Pound closed 0.3% lower at 1.3071.
The Japanese Yen rose 0.3% closing at $148.10.
Bonds
Germany’s 10-year yield closed 5 basis points higher 2.26%.
Britain’s 10-year yield closed 8 basis points higher at 4.21%.
U.S.10 Year Treasury closed 6 basis points higher at 4.03%.
Commodities
West Texas Intermediate crude closed 3.9% higher at $77.23 a barrel.
Gold closed 0.4% lower at $2641 an ounce.
This morning on the Economic Front we have Euro-Zone Retail Sales at 10.00 am. The only other data of note is U.S. Consumer Credit which will be released at 8.00 pm. Meanwhile, Fed Members Bowman, Kashkari, Bostic and Musalem are speaking at 6.00 pm, 6.50 pm, 11.00 pm and 11.10 pm respectively.
Cash S&P 500
The S&P reversed Friday’s late rally yesterday by basically closing at last Thursday’s Chicago close. Overnight the S&P finally traded lower to my 5681 buy level. We have rallied small and as I want to bank some points for yesterday’s session I have now exited this long position here at 5699 and I am now flat. It is fair to say that with the S&P less than 1.5% from all-time highs nothing has mattered all-year long while markets continue to ignore even standard seasonality valuations, technical warnings and anything that can be construed as risks which I wrote about in Yesterday’s Daily Commentary. In summary ‘’everybody is long and so far nobody is wrong’’. Last week’s low saw Yellen appearing at the low print promising a soft landing knowing full well over $370 Billion in new debt would be hitting the books inside the first four trading sessions of October while at the same time China setting asset prices on fire with massive stimulus. The Hang Seng has rallied over 23% in the past week which is just insane. I still cannot believe that we will not get through the next few weeks ahead of the election unscathed. Bank earnings reports start on Friday at a time when all the main technical signals that I follow are severely overbought despite yesterday’s small sell-off. Q3 earnings estimates have come down as the S&P has continued to rally to new highs. So it now becomes an exercise if companies can beat lowered expectations or if there are really signs of earnings not matching the valuation run. We can’t know the answer until we see the market’s reactions to the earnings reports. The S&P has support from 5645/5665 where I will again be a buyer with a lower 5629 ‘’Closing Stop’’. I will also lower my sell level to 5730/5750 with a wider 5771 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 5683. If I am taken short, I will have a T/P level at 5715.
EUR/USD
Despite the aggressive sell-off in Equity Markets on Monday the Euro traded in just a 30-point range. I am still long at an average rate of 1.1015 with the same 1.0915 tight ‘’Closing Stop’’ I will now lower my T/P level to 1.1045. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
No Change: I am still short the Dollar from last Friday at an average rate of 102.40 with the same 103.15 ‘’Closing Stop’’. Meanwhile, I will leave my 102.10 T/P level unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members
Cash DAX
The DAX is trading 200 points lower from where I marked prices 24 hours ago and I am still flat. I will now lower my sell level to 19200/19300 with a lower 19405 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 19120.
Cash FTSE
I am still flat the FTSE as the market continues to trade in a narrow range. I have no interest in chasing the market higher as I continue to be a strong buyer on any dip lower to 8160/8230 with the same 8095 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 8280. I still do not want to be short the FTSE at this time
Dow Rolling Contract
No Change: The Dow never came close to Thursday sell range and I am still flat. I have no particular edge in the Dow at these levels. I just cannot be a buyer given how overbought the market is trading while I am afraid to chase the market much lower. The Dow has resistance from 42300/42550 I will now lower my sell level to this area with a lower 42805 wider ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 42110.
Cash NASDAQ 100
Frustratingly the NDX missed yesterday’s sell range by just 35 points before falling over 450 points from its early morning high and I am still flat. The NDX has short-term support from 19400/19560 where I will be a small buyer with a 19265 ‘’Closing Stop’’. If triggered, I will have a T/P level at 19680.
December BUND
Higher Global Bond Yields saw the Bund close lower yesterday. I am still flat. I will now lower my buy level slightly to 132.20/133.00 with a lower 131.55 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 133.60. I still no longer want to be short the Bund at this time.
Gold Rolling Contract
I am still flat Gold as I refuse to chase the market given how short-term overbought this precious metal has become. I am not brave enough to put on a short position as anyone shorting Gold in 2024 has been slammed. Today. I will continue to be a buyer from 2570/2588 with the same 2559 tight ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2602.
Silver Rolling Contract
The small retracement in Gold saw Silver trade lower to yesterday’s buy range for a now 31.50 long position. I will continue to look to add to this position on any further move lower to 30.60 while leaving my 29.55 ‘’Closing Stop’’ unchanged. I will now lower my T/P level to 32.20. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
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