US Indices ended Tuesday’s trading session with modest losses, in what was, once again, a day dominated by Middle East headlines with conflicting rhetoric. Markets initially, and for much of the day, followed President Trump’s comments last night that the “war would be over soon”, which sparked pronounced risk-on trade. Despite these comments, there was no suggestion of it coming to fruition on Tuesday, highlighted by Secretary of War Hegseth saying that Tuesday will be the most intense strikes on Iran yet. As such, and on the Trump comment Monday evening, trade was initially risk on with Gold and stocks gaining, Dollar and oil slumping, with the latters move helping Treasuries firm. Further extending the oil downside, and to session lows, was US Energy Secretary Wright saying, in a now deleted post, the US Navy has escorted an oil tanker through the Strait of Hormuz. As he deleted this post, and a White House official confirmed this was not true, the moves reversed. Thereafter, and further flipping the moves already seen on Tuesday, which saw equities pare all gains, was multiple reports that US intelligence has begun to see indications Iran is taking steps to deploy mines in the Strait of Hormuz shipping lane, which would be a significant escalation and also further threaten the supply of oil. Following this, which saw broad risk-averse moves, Trump posted on Truth that if Iran has put out any mines in the Hormuz Strait, they want them removed, IMMEDIATELY, and if they do not, military consequences to Iran will be at a level never seen before. If, on the other hand, they remove what may have been placed, it will be a giant step in the right direction!. Overall, and at the time of writing, the Dollar sees slight gains with the Australian Dollar, the clear G10 gainer, which it has been for the duration of the session, on hawkish RBA rhetoric, while Treasuries are now weaker and also hit by a dismal auction. Precious metals retain strength, but well off peaks, as attention remains around further Middle East developments and US CPI on Wednesday, albeit likely taking a backwards seat. Elsewhere, Oil closed lower by 11% while Gold ended the day with a 1.25% gain.
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For anyone following my Platinum Service it made 75 points yesterday and is now ahead by 2698 points for March 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 whe 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 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 0.21% lower at a price of 6781.
The Dow Jones Industrial Average closed 34 points lower for a 0.07% loss at a price of 47,706.
The NASDAQ 100 closed 0.04% lower at a price of 24,956.
The Stoxx Europe 600 Index closed 1.88% higher.
Yesterday, the MSCI Asia Pacific closed 0.8% higher.
Yesterday, the Nikkei closed 2.88% higher at a price of 54,248.
Currencies
The Bloomberg Dollar Spot Index closed 0.34% lower.
The Euro closed 0.11% higher at $1.1626.
The British Pound closed 0.02% higher at $1.3432.
The Japanese Yen fell 0.04% closing at $157.86.
Bonds
U.K.’s 10-Year Gilt closed 9 basis points lower at 4.50%.
Germany’s 10-Year Bund Yield closed 2 basis points higher at 2.86%
U.S.10 Year Treasury closed 5 basis points higher at 4.15%.
Commodities
West Texas Intermediate crude closed 11.07% lower at $84.28 a barrel.
Gold closed 1.24% higher at $5202.10 an ounce.
This morning on the Economic Front we have German CPI at 7.00 am, followed by U.S. MBA Mortgage Applications at 11.00 am and the all-important CPI at 12.30 pm. Finally, we have a Ten-Year Treasury Auction at 5.00 pm.
Cash S&P 500
The VIX closing 2.25% lower at a price of 24.70 seems to smack of a high level of confidence and complacency. It has yet to hit the 40 mark that would represent true capitulation. The other thing to consider is that the S&P 500 was sitting at 6,879 just before the onset of the war, lower than it was near the end of October. Meanwhile, the stock market was already looking wobbly before this conflict began. And if America does manage to emerge victorious from this war (understanding that we will see a relief rally), and we go back to focusing on what was happening prior, the situation was hardly constructive for risk assets: (i) credit market stress, especially in the private market (ii) balance sheet/financing concerns in the AI space (iii) the new phase of the tariff file (iv) the ongoing K-shaped economy (v) an elevated CAPE multiple of 39x (vi) contracting employment (vii) the AI fallout on other sectors (viii) stubbornly high “measured” inflation and (ix) a Fed turning increasingly less dovish. You can trade a “relief rally” but cannot really invest in it beyond a few days or weeks. There remain plenty of unresolved issues. Today’s CPI will be interesting although it will not be affected by the 30% rise in Oil last week. I keep on saying to wait for the VIX to approach 40 before dipping any toes into the risk pool — and that worked like a charm back in Iraq War I, as the volatility index surged from 15 to nearly 37 and foreshadowed the October 1990 lows in the major averages. As for the economy, the YoY trend in real GDP swung from a pre-war pace of around +2% to a low of -1% at the bottom of the cycle. Inflation had spiked from 4.4% to 6.3% — so a near-two-point increase here. That would take the current reading back to around 4.5% if we see a repeat this time around. At least temporarily. The next issue is what happened after the war ended: Within a year, the S&P 500 posted a +16% total positive return, and the 10-year T-note returned +13%. The economy did embark on a nine-month recession (July 1990 to March 1991), but a year out, real GDP growth had recovered to nearly a +3% pace. But with oil prices more than retracing the wartime surge, down to $18.70 per barrel a year after the war ended, inflation reversed to +2.8% and was lower than the lows that preceded the conflict. A year after the war was successfully resolved, the Fed pushed the Funds rate down to 4.0%, on its way to 3.0% by the time the cycle was fully played out. And with the 10-year T-note bottoming at 5.2%. While this is a white-knuckle and nail-biting time, only the most gifted market timers should be doing anything right now. For the rest of us, when exactly will you know when to shift back to your pre-war portfolio? And keep in mind — we only just completed week number one. That Iraq War 1, the actual battle part of it, lasted six weeks. I will be the first to say that if this war lasts longer than that, then we will have some deeper problems on our hands. I did say that a move in the VIX towards the 40 threshold would be a classic capitulation “buy signal,” but the way things are going, we could actually be there any day now, even before the war ends. Remember — the S&P 500 did not bottom, and Treasury yields did not peak, until the fall of 1990, which was nearly six months before Saddam finally surrendered. With the Mid-Term Elections in November I cannot see Trump wanting a long drawn out war as this will keep oil prices high and putting huge pressure on the Republican Party hanging on to both the House and Senate. The S&P has support below from 6700/6725 where I will again be a buyer with a higher 6677 ‘Closing Stop’. With the Fear & Greed Index again closing at 28 and the McClellan Oscillator unchanged I have no interest in pressing the downside. If I am taken long, I will have a T/P level at 6754.
EUR/USD
I am still long the Euro at an average rate of 1.1670 as the market just fell shy of my 1.1695 T/P level. I will now lower my exit level to a small loss at 1.1660 while leaving my ‘Closing Stop’ unchanged at 1.1575. 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. Today, I will continue to be a seller from 99.50/100.20 with the same 100.95 ‘Closing Stop’. If I am taken short, I will have a T/P level at 99.00.
Russell 2000
I am still flat as the Russell never came close to Tuesday’s buy range. I will now raise my buy level to 2435/2495 with a higher 2385 ‘Closing Stop’. If I am taken long, I will have a T/P level at 2540.
FTSE 100
My FTSE plan worked well as the market traded higher to my 10460-sell level before trading lower to my revised 10385 T/P level and I am now flat. Today, I will again be a seller from 10470/10570 with a higher 10655 ‘Closing Stop’. I will wait for another move lower before looking to buy the FTSE. If this view changes, I will be back with a new update for my Platinum Members. If I am taken short, I will have a T/P level at 10390.
Dow Rolling Contract
I am still flat as the Dow never came close to Tuesday’s buy range. I am reluctant to chase the market higher as I believe that we are not finished with downside price action. However, I am reluctant to short the market despite the high valuations and sentiment at insane levels. Today, I will raise my buy level slightly to 46900/47200 with the same wider 46595 ‘Closing Stop’. If I am taken long, I will have a T/P level at 47490. I still do not want to be short the Dow at this time.
Cash NASDAQ 100
I am still flat. The NDX has short-term support below from 24450/24650. I will now raise my buy level to this area with a higher 24295 tight ‘Closing Stop’. If I am taken long, I will have a T/P level at 25840. If any of these views change, I will be back with a new update for my Platinum Members.
December BUND
The Bund just missed Tuesday’s buy range before having a small rally into the close. With Treasuries under pressure I will now lower my Bund buy level to 126.50/127.30 with a lower 125.75 ‘Closing Stop’. If I am taken long, I will have a T/P level at 127.95.
Gold Rolling Contract
No Change: I am still flat. Gold has strong support below from 4650/4750 where I will continue to be a strong buyer with the same 4545 ‘Closing Stop’. If I am taken long, I will have a T/P level at 4920.
Silver Rolling Contract
Silver continues to trade in wide daily ranges without threatening my buy range. I have no interest in chasing the market higher believing there are a number of trapped long positions above $100 and these positions will get stopped before the market moves higher in my opinion. Today, I will continue to be a buyer from 73.50/76.00 with the same 71.95 ‘Closing Stop’. If I am taken long, I will have a T/P level at 79.35.
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