The U.S. Dollar saw slight gains on Tuesday, albeit in pretty thin newsflow as participants await the pivotal US CPI report on Wednesday. In FX, Sterling and the Canadian Dollar were the relative G10 outperformers, while Antipodeans lagged and weighed on by the dovish RBA hold. US Equity Markets ground lower throughout the US session with the S&P 500, NASDAQ 100 and RUSSELL 2000 all seeing roughly similar weakness, although the latter continues to lag. Sectors were almost exclusively in the red with only Communication Services and Consumer Staples in the green as the former was the distinct gainer and buoyed by gains in Alphabet (GOOGL) (+5.7%). Real Estate and Technology lagged with the latter hit by Nvidia (NVDA) (-2.5%), Micron (MU) (-4.7%), and AMD (AMD) (-2.3%) weakness, albeit with a lack of headline newsflow. In terms of stock-specific highlights, Oracle (ORCL) (-7%) earnings and guidance disappointed, while JPM exec said the NII outlook has firmed up. On the M&A footing, Kroger’s (KR) USD 24.5 billion Albertsons (ACI) deal was reportedly blocked by a federal judge; Walgreens (WBA) are in talks to sell itself to Sycamore Partners, and President Biden plans to formally block the USD 14.1 billion sale of United States Steel (X) (-9.7%) to Nippon Steel (NPSCY) on national security grounds. Elsewhere, the US 3 Year Note Auction was pretty average while the US Q3 Unit Labor Costs were revised below expectations, albeit both saw little market moves. US unit labour costs for Q3 were revised lower to 0.8% from 1.9%, undershooting the expected 1.5% revision, while productivity was left unchanged at 2.2%, as expected. On the latter, Oxford Economics think the strength of productivity growth is partly a response to the tight labour market conditions over the past few years and may be seeing the start of more modest gains given the loosening in the labour market. Furthermore, and on the headline, OxEco says unit labour costs were revised lower, consistent with their view, and the Fed’s, that the labour market and wage growth are receding as a source of inflationary pressures. The Bank of Canada is widely expected to cut rates this afternoon, with the consensus looking for another 50bps rate cut, but with a risk of a smaller 25bp move. Recent data has been mixed, the latest inflation report was hotter than forecast while growth data disappointed. However, the November jobs report saw a notable rise in the unemployment rate, which led to a dovish shift in expectations towards a 50bps move. Before the jobs report, market pricing was more split between a 25 or 50bps move, but now prices in 47bps of easing, implying an 88% probability of such a move, with a 12% probability of a 25bps cut. The Reuters survey also noted that many economists shifted to a 50bps rate cut view after the jobs report. The prior BoC meeting saw the central bank cut rates by 50bps, a decision made to support economic growth and keep inflation close to the middle of the 1-3% target range. Participants have been questioning whether the BoC will go ahead with another 50bps rate cut to support economic growth, or perhaps slow to a 25bps rate cut due to the recent uptick in inflation, but the recent jobs report has seen these expectations lean towards the more dovish outcome. Elsewhere, Oil closed flat while Gold continues to move higher, ending Tuesday with a gain of 1.1%.
To mark my 3100th issue of TraderNoble Daily Commentary I am offering a special 2-Year rate of Euro 2750 for my Platinum Service which includes 1 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 was made 126 points yesterday and is now ahead by 283 points for December after closing November with a gain of 3049 points having finished October with a gain of 2179 points. September saw 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 0.3% lower at a price of 6035.
The Dow Jones Industrial Average closed 154 points lower for a 0.35% loss at a price of 44,247.
The NASDAQ 100 closed 0.34% lower at a price of 21,368.
The Stoxx Europe 600 Index closed 0.50% lower.
This morning, the MSCI Asia Pacific closed 0.3% higher.
This morning, the Nikkei closed 0.01% higher at a price of 39,372.
Currencies
The Bloomberg Dollar Spot Index closed 0.34% higher.
The Euro closed 0.3% lower at $1.0522.
The British Pound closed 0.05% higher at 1.2759.
The Japanese Yen fell 0.5% closing at $152.09.
Bonds
Germany’s 10-year yield closed 1 basis points lower 2.12%.
Britain’s 10-year yield closed 4 basis points higher at 4.33%.
U.S.10 Year Treasury closed 3 basis points higher at 4.23%.
Commodities
West Texas Intermediate crude closed 0.07% lower at $68.14 a barrel.
Gold closed 1.2% higher at $2691 an ounce.
This morning on the Economic Front we have no data of note from either the U.K. or the Euro-Zone. At 12.00 pm we have U.S. MBA Mortgage Applications followed by CPI at 1.30 pm. Next, we have the Bank of Canada Rate Announcement at 2.45 pm. Finally, we have a 10 Year Treasury Auction at 6.00 pm.
Cash S&P 500
Tuesday was the first consecutive loss for the S&P in three weeks and shows the first inkling of a potential pullback into Mid December. Given the fact that all three American Indexes hit potential trendlines last week at all-time highs I can make a case for a large sell-off. However, seasonality and the strong possibility of a Santa rally makes it difficult to see a larger sell-off with January the more likely option. The McClellan Oscillator continues to weaken closing at -73 last night. Remember any negative reading below -240 will be a strong buy signal for the S&P so I will be watching this key signal closely over the coming days. The 20- Day and 30-Day Moving Averages come in at 6000 so any tag of this level may attract some initial buying before subsequently moving lower. Incredibly despite all three American Indexes closing lower the VIX also fell closing at a price of 14 last night. If the VIX does spike on any further sell-off in the S&P, then the best we may hope for is a spike in the VIX to 20/21. Any move to this area will see me as a strong buyer of the S&P. Markets are technically set up for a much larger reversal, but given seasonality it may not trigger until next year when we can expect a daily 200-Day Moving Average tag. Currently the 200MA is at 5492 and rising. The most downside risk that I see in 2025 is a 20% correction to the 4700/4800 on the S&P. If this scenario plays out it would likely be the low for 2025 as Central Banks would cut Interest Rates aggressively and introduce QE on a wide scale. This 20% correction would see the Yearly 5 EMA tagged. This is a key support level as in the last 75 years we have had only three instances of closes below the yearly 5 EMA with 2 years each at the most. The last one in 2009 and it has been central bank intervention ever since. In 2020 the downside last six weeks before they saved it all for a close above the yearly 5 EMA. It took a global pandemic to even get below the 5 EMA. I was extremely unlucky yesterday as the S&P missed my 6066-sell level with a 6065.50 high print before falling 30 Handles into the close. Ahead of today’s key CPI data I will not chase the market lower as I continue to be a small seller from 6066/6086 with the same 6103 ‘’Closing Stop’’. The S&P has short-term support from 5980/5998 where I will continue to be a strong buyer with the same 5965 ‘’Closing Stop’’.
EUR/USD
The Euro sold off yesterday and this move has continued overnight as the market has just broken 1.05 as I go to post. I am still long the Euro at an average rate of 1.0665. Given how oversold the Euro is I will add to this position on any further move lower to 1.0440 with no stop for now. I will leave my T/P level unchanged at 1.0690. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
The Dollar is trading 70 points higher from where I marked prices yesterday morning, trading at 106.70. The Dollar has resistance from 107.30/108.00 where I will be a small seller with a 108.55 tight ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 106.80.
Cash DAX
The price action in the DAX continues to frustrate me as I cannot seem to get an edge on this market. The total MARKET CAP for the German Equity Market is an incredible $2.5 trillion. Yesterday after the DAX hit my 20390 sell level, we had a small sell-off to my revised 20356 T/P level and I am now flat. This morning the DAX is trading lower at 20310. Today, I will be a small seller from 20380/20480 with the same wider 20605 ‘’Closing Stop’’.
Cash FTSE
Overnight the FTSE traded lower to my 8245-buy level. I am still long and I will add to this position at 8175 while leaving my 8125 ‘’Closing Stop’’ unchanged. I will now lower my T/P level to 8295. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
My Dow plan worked well as after the market hit my 44220-buy level the Dow rallied 200 points before have a late sell-off into the close. Unfortunately, I exited my long position too early at my revised 44310 T/P level and I am now flat. The Dow has further support below from 43800/44050 where I will again be a buyer with a lower 43595 ‘’Closing Stop’’. Ahead of this afternoon’s CPI I still do not want to be short the Dow. If this view changes, I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
Just like the S&P above, the NDX missed my initial sell level by 10 points before falling over 200 points from this rebound high and I am still flat. This morning the NDX is trading at a price of 21390. We have short-term support below from 21120/21270 where I will be a small buyer with a 20995 tight ‘’Closing Stop’’. Meanwhile, I will continue to be a small seller from 21580/21780 with the same 21905 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 21390. If I am taken short, I will have a T/P level at 21450.
March BUND
No Change. The Bund traded in a narrow range, and I am still flat. I will not chase the price lower ahead of this afternoon’s American CPI Report. Therefore, I will continue to be a seller from 136.70/137.50 with the same 138.15 ‘’Closing Stop’’. Although Yields have risen seven basis points sine Thursday’s Commentary was posted I have no interesting in buying the market. If this view changes, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
Gold closed a further 1% higher last night in New York following continued aggressive buying by the Chinese. I still do not trust the price action in Gold given the fact that it already up nearly 30% for the year and as a result I have no interest in chasing the price higher. Gold has support from 2610/2625. I will move my buy level to this range with a higher 2597 tight ‘’Closing Stop’’. If triggered, I will have a T/P level at 2637.
Silver Rolling Contract
Despite Gold trading higher yesterday, Silver is struggling to build any momentum above $32. Silver has support below from 30.50/31.30 where I will continue to be a small buyer with the same 29.45 ‘’Closing Stop’’.
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