U.S. Equity Markets While the NASDAQ 100 led Tuesday’s gains ahead of the Presidential debate, the Small Cap Russell ended the session with a loss of 0.9%. Markets rebounded from the initial Financial induced losses they saw in choppy trade. It was a day catalysed by a slew of headlines, but no tier 1 US data as participants await the US Presidential debate overnight and US CPI this afternoon. Nonetheless, the downbeat updates from Ally Financial (ALLY) (-17.6%) and JPMorgan (JPM) (-5.2%) just after the cash open sparked risk-off trade and clear flight-to-quality, as the Dollar pared losses and Treasuries saw upside and the crude complex plunged, hitting levels not seen in years with Brent even dipping beneath USD 70/bbl, which significantly weighed on commodity FX. Elsewhere for the crude complex, in the September MOMR, OPEC+ revised down its demand growth for 2024 by 80k BPD. Back to sectors, they were largely in the green aside from Energy and Financials, which saw notable weakness on the aforementioned themes, although there was a slightly more upbeat update from Bank of America (BAC). The Dollar was flat on the day and within tight ranges, while safe-haven FX (JPY and CHF) outperformed amid haven appeal and also lower UST yields. Note, there was a stellar US 3yr auction but had little sway on T-Notes, ahead of the 10yr and 30yr later in the week, but possibly helped T-Notes keep the bid. Lastly, and as widely expected, Fed’s Vice Chair for Supervision Barr said Basel and GSIB surcharge re-proposals would together increase capital for GSIBS by 9% and the original plan had raised their capital by 19%. Overall, a very strong 3yr note auction, highlighted by the stop-through of 1.7bps which compares to the prior 0.2bps stop-through and the six auction average 0.1bps tail. Bid-to-cover at 2.66x was also above recent averages (prev. 2.55x, avg. 2.56x) indicating strong demand, and was further illustrated with ‘’indirects’’ taking 78.2% of the auction, vs. the prior 64.4% and the six-auction avg. 64.7%. Directors took 11.3% (prev. 20.3%, avg. 18.8%), leaving dealers with 10.5% (prev. 15.4%, avg. 16.4%). Looking ahead, we will wait and see if the 10 and 30yr perform just as well. The Presidential Debate overnight was a fiery 90 minute ‘’contest’’. This was the first time that Trump and Harris had met and by all accounts its seem that Harris was able to get under Trump’s skin with a number of notable comments. Following the debate pop icon Taylor Swift in an Instagram post to her 284 million followers endorsed Kamala Harris writing that she saw Harris as a ‘’steady handed, gifted leader’’. In an election that is expected to be won by a small margin, she signed the post ‘’Taylor Swift, Childless Cat Leader’’, an apparent dig at Trump’s running mate JD Vance, who used the term during a 2019 interview. Elsewhere, Oil closed lower by 3.51% while despite a stronger Dollar, Gold ended Tuesday’s session with a 0.6% gain.
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For anyone following my Platinum Service it made 25 points yesterday and is now ahead by 1252 points for September having ended August with a loss of 301 points 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 0.45% higher at a price of 5495.
The Dow Jones Industrial Average closed 92 points lower for a 0.23% loss at a price of 40,736.
The NASDAQ 100 closed 0.90% higher at a price of 18,829.
The Stoxx Europe 600 Index closed 0.54% lower.
This morning, the MSCI Asia Pacific closed 0.3% higher.
This morning, the Nikkei closed 1.49% lower at a price of 35,619.
Currencies
The Bloomberg Dollar Spot Index closed 0.07% higher.
The Euro closed 0.1% lower at $1.1025.
The British Pound closed 0.1% higher at 1.3085.
The Japanese Yen rose 0.4% closing at $142.32.
Bonds
Germany’s 10-year yield closed 5 basis points lower 2.13%.
Britain’s 10-year yield closed 7 basis points lower at 3.82%.
U.S.10 Year Treasury closed 6 basis points lower at 3.64%.
Commodities
West Texas Intermediate crude closed 3.51% lower at $66.30 a barrel.
Gold closed 0.4% higher at $2516 an ounce.
This morning on the Economic Front we already had the release of U.K. July GDP which rose 0.0% versus +0.2% expected. Next, we have the U.S. MBA Mortgage Applications at 12.00 pm, followed at 1.30 pm by the key CPI data. Finally, at 6.00 pm we have a Ten – Year Treasury Auction.
Cash S&P 500
It is extremely hard to be short the S&P as any sell-off is met by strong buying in the knowledge that we will always get verbal intervention form Treasury Secretary Yellen. She has been on the wires over the past few days saying that the American Economy is strong and that we will get a soft landing. This is the same comments that she used in October 2007 just before the market crashed. Yellen is doing everything in her power to keep markets smooth ahead of the Presidential Election which is only seven weeks away. Trying to buy the market at these levels is tough as absolutely nothing is structurally oversold which is a very important point to remember. The $NYSI is fried to the upside. With Bond Yields closing under 3.7% last night the Fed have a lot of catching up to do and despite last Friday’s stronger than expected Employment data I expect the Fed to cut rates by 50 basis points at next week’s meeting. Ahead of today’s binary CPI event I will now raise my S&P sell level slightly to 5515/5535 with a higher 5541 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 5496. The S&P has short-term support from 5405/5421 where I will continue to be a small buyer as I do not want to chase the market higher ahead of CPI. If I am taken long, I will have a T/P level at 5437. If any of these views change, I will be back with a new update for my Platinum Members.
EUR/USD
The Euro traded lower to my initial 1.1020 buy level. As I wanted to ban some points for yesterday and be flat ahead of this afternoon’s CPI print, I have now exited this latest long Euro position here at 1.1045. The Euro has further support from 1.0945/1.1005 where I will be a strong buyer with a lower 1.0875 ‘’Closing Stop’’. I still no longer want to be short the Euro at this time.
Dollar Index
The Dollar traded in a tiny range yesterday and I am still flat. Today, I will continue to be a buyer from 100.30/100.90 with the same 99.75 ‘’Closing Stop’’.
Cash DAX
In contrast to the American Indexes the DAX got hit hard yesterday, trading as low as 18180 before rallying to sit at 18350 this morning. The DAX has short-term support from 18100/18200 where I will be a buyer with a wider 17995 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 18270
Cash FTSE
The FTSE continues to trade heavy and found aggressive selling above 8400 last week. I am still flat. Today, I will continue to be a buyer on any dip lower to 8070/8140 with the same 7995 ‘’Closing Stop’’. I still do not want to be short the FTSE Market at this time.
Dow Rolling Contract
The Dow witnessed plenty of two-way volatility again yesterday. Shortly after the Cash Equity Markets opened in New York, the Dow hit a high at 40950 before falling 500 points. A late rally saw the Dow close at 40736. I am still flat. Given how extended the Dow is trading I have no interest in being a buyer at these levels. Ahead of CPI, I will not chase the Dow lower as I continue to be a seller from 41050/41300 with the same 41505 ‘’Closing Stop’’ which is just above the all-time high. If this view changes I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
The NDX just missed yesterday’s buy range as any sell-off throughout Tuesday was met by strong buying. This morning, the NDX is trading at a price of 18765 as the market continues to ignore the weakness in the Nikkei which again closed lower by 1.5% overnight. The Nikkei is now lower by 8% over the past 10 days. The NDX has support from 18480/18640. I will now raise my buy level to this area with a higher 18255 ‘’Closing Stop’’. Despite the aggressive sell-off in the NDX over the past six weeks I still do not want to be short the NDX at this time. If this view changes I will be back with a new update form my Platinum Members.
December BUND
Bund Yields are now trading at 2.10 % this morning. This has been huge move lower in Yields over the past six months and signals a massive recession is coming in Europe. The ECB have a lot of catching up to do to bring rates lower to align with the Bund Market. With inflation still stubbornly high I find it hard to be a buyer of the Bund at these inflated levels. The Bund has resistance from 135.60/136.30 where I will be a small seller with a 137.05 ‘’Closing Stop’’. Meanwhile, my only interest in buying the Bund is still on a move lower to 133.40/134.10 with the same 132.65 ‘’Closing Stop’’.
Gold Rolling Contract
No Change: Gold continues to meander around the 2500 pivot point. On a valuation basis I much prefer to own Silver especially as we are in the seasonally weak September timeframe for the precious metals. I will not chase Gold higher preferring to only be a buyer on any dip lower to 2437/2452 with the same 2423 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2466.
Silver Rolling Contract
I am still flat Silver as the market again fell shy of yesterday’s buy range. I will now raise my Silver buy level to 27.00/28.00 while leaving my 25.35 wider ‘’Closing Stop’’ unchanged. If I am taken long, I will have a T/P level at 28.70.
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