U.S. Indices extended on gains seen on Monday, as largely cooler-than-expected US CPI provided an additional fillip to US equity futures, albeit only being short-lived. Thereafter, as sentiment continued to improve through the US afternoon, broad-based risk-on trade was seen, with US Indices closing at highs, as did the crude complex. Meanwhile, the Dollar reversed a lot of yesterday’s gains to the benefit of all G10 FX, with Antipodeans outperforming. Treasuries were lower across the curve with greatest weakness in the long-end, as the initial gains seen in wake of the aforementioned CPI were put aside as the Fed is likely to remain patient. On that, both Barclays and JPM moved their first Fed rate cut to December, from July and September, respectively, while Refinitiv money market pricing has the first full Fed 25bps cut for October. Sectors closed largely in the green, although Health was the distinct laggard and weighed on by UnitedHealth (UNH) (-17.8%), announcing leadership changes and suspending 2025 outlook. Technology sat atop the sectorial breakdown. Elsewhere, US President Trump spoke in the Middle East, where he announced a USD 600 Billion investment commitment from Saudi Arabia and stated how strong the ties are between the two countries. Note, there was no Fed speak on Tuesday as attention turns to Waller (Wed) and Chair Powell (Thurs). The April inflation report was largely cooler than expected, with monthly metrics for core and headline inflation at 0.2% (exp. 0.3%, prev. 0.1%) and 0.2% (exp. 0.3%, prev. -0.1%), respectively. Similarly, headline Y/Y was beneath expectations, rising 2.3%, below the forecasted and prior 2.4%. Meanwhile, Core Y/Y, as expected, was unchanged from the March figure at 2.8%. Despite CPI coming in soft, the report is likely to keep the Fed in its patient and wait-and-see approach to resume policy easing, given that members will want to ascertain the impact tariffs will have on prices before making a move. At ING, one economist thinks it might take until June for the April tariffs to show up in prices, and remember, Fed’s Barkin has made the case in the past that businesses usually have between 60-90 days of inventory. As such, businesses may wait until current inventories are exhausted to pass on costs to the consumer. Note, since the announced 90-day reduction in tariffs between the US and China, remarks have been made by Fed’s Kugler and Goolsbee. The former believes the shift in tariff policy is still likely to lead to higher prices and slower growth, though not to the same rate as before. Kugler also thinks the tariff rates are still pretty high and believes there could be some permanency from price increases related to tariffs. While the pause is likely to trim inflationary effects, the uncertainty that lingers with a 90-day pause is a strong reason for the Fed to maintain its stance of uncertainty over the economic outlook. Post-CPI, Morgan Stanley now sees April core PCE at 0.23% Y/Y, and 2.59% Y/Y. Note, PCE projections are likely to be updated again after PPI on Thursday. Elsewhere, both Oil and Gold closed higher on Tuesday by 2.8% and 0.37% respectively.
To mark my 3175th 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 lost 200 points yesterday and is now ahead by 1878 points for May 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 0.72% higher at a price of 5886.
The Dow Jones Industrial Average closed 269 points lower for a 0.64% loss at a price of 42140.
The NASDAQ 100 closed 1.58% higher at a price of 21,197.
The Stoxx Europe 600 Index closed 0.12% higher.
This Morning, the MSCI Asia Pacific closed 0.4% higher.
This Morning, the Nikkei closed 0.17% lower at a price of 38,120.
Currencies
The Bloomberg Dollar Spot Index closed 0.82% lower.
The Euro closed 0.94% higher at $1.1189.
The British Pound closed 0.98% higher at 1.3305.
The Japanese Yen rose 0.67% closing at $147.37.
Bonds
Germany’s 10-year yield closed 2 basis points higher at 2.68%.
Britain’s 10-year yield closed 2 basis points higher at 4.67%.
U.S.10 Year Treasury closed 4 basis points higher at 4.49%.
Commodities
West Texas Intermediate crude closed 2.81% higher at $63.69 a barrel.
Gold closed 0.37% higher at $3245.10 an ounce.
This morning on the Economic Front we already had the release of German final April CPI which rose 2.1% as expected. Next, we have a speech from Fed Member Waller at 10.15 pm and MBA Mortgage Applications at 12.00 pm. Finally, we have speeches from Fed Members Jefferson at 2.15 pm and Daly at 5.40 pm
Cash S&P 500
Wrong! With Monday’s gap, ramp and camp above the Daily 200 Moving Average and Weekly 20MA and the onus clearly now on bears to make anything happen or risk is this was all it again. A ‘’V Bottom’’ and go, the likes we have seen so many times before. This seems unfathomable given all that is going on, but how many times have bears fumbled the ball over the years and things that should have happened did not. Now obviously we are overbought and a pullback would be very reasonable here, but unless we have major failure of these MA’s in the next couple of weeks things look rather grim for bears. And on balance nothing has happened again as $SPX and $NDX are back to basically flat on the year with equal weight measures and $NYA actually positive on the year – incredible. And yesterday the Republican budget proposal was released and the headline: $4 Trillion debt ceiling increase. Different owners same menu. For all the talk of cost savings and having tariffs pay the debt off, reality is fiscal dominance will remain with us as will be massive budge deficits. Next month of course the boost from tax receipts will be gone, but if the plan was to show tariff revenues to then justify tax cuts then this was well played. But the ongoing tariff negotiations and “deals” will of course end up with lower tariffs over the next few months and then the revenue boost from these would revert lower again too. And let us not forget debt refinancing and interest payments are real and will continue to add massive pressure to the budget. And yes, high yields remain one of the key risk factors. The Daly Chart on the 10 Year Treasury note has a target of 5/6%. If this were to play out it is hard to see the S&P rally against this back ground. The two-hour chart is now at its most overbought level since the beginning of the year while the $NYSI is now maximum overbought, leaving me no choice but to be a seller. This strategy has not worked well this week as post CPI, the S&P traded the whole of my sell range for a 5856 average short position before stopping me out of this trade at 5676 and I am now flat. This morning, the S&P is trading higher at 5890. We have further resistance from 5895/5925 where I will again be a seller with a higher 5941 ‘Closing Stop’. If I am taken short, I will have a T/P level at 5868. The 200 Day Moving Average comes in at 5753 this morning. Any dip to this area will attract strong buying. Therefore, I will be a buyer from 5745/5765 with the same 5725 ‘Closing Stop’. If I am taken short, I will have a T/P level at 5818.
EUR/USD
I am still long the Euro at an average price of 1.1140 with the same 1.1045 tight ‘Closing Stop’. I will now lower my T/P level to 1.1210. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
The Dollar never came close to Tuesday’s sell range and I am still flat. I will now lower my sell level to 101.90/102.60 with a lower 103.25 ‘Closing Stop’. If I am taken short, I will have a T/P level at 101.30. I will not chase the market higher as I continue to be a buyer on any dip lower to 98.70/99.50 with the same 96.95 ‘Closing Stop’. If I am taken long, I will have a T/P level at 100.20.
Russell 2000
I am still flat. The Russell closed 0.5% higher last night at a price of 2107. I will now raise my buy level to 1960/2040 with a higher 1895 ‘Closing Stop’. If I am taken long, I will have a T/P level at 2080. I still do not want to be short the market at this time.
FTSE 100
The FTSE traded in a narrow range on Tuesday and I am still flat. Today, I will again be a seller on any further rally to 8670/8740 with a higher 8805 ‘Closing Stop’. If I am taken short, I will have a T/P level at 8620. I still do not want to be long the FTSE at this time.
Dow Rolling Contract
I am still flat the Dow with no edge as the market failed to hold its 200 Day Moving Average in yesterday’s session. Today, I am going to stay flat the Dow to see how the market reacts to Monday’s gain. If this view changes, I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
Due to the speed of the rally over the last two days, it took the NASDAQ 100 into an overbought position, with the Index crossing above the upper Bollinger Band and the RSI rising to 70. We have seen these conditions before, and we know that when these things tend to happen, the asset consolidates sideways or pulls back. It also seems like a reasonable place for resistance, given the prior support/resistance in this region. It is hard to believe that both the S&P and NDX have gone from oversold to overbought in the space of a month. The NDX has now rallied almost 5000 points off its 16310 low print from April 7 for a 30.5% increase. This is just insane in what are still some of the most overvalued conditions for stocks in our lifetime. The NDX is back above the top of its Daily Bollinger Band. History tells us that when this happens we normally get a decent pullback. Tuesday, saw the NDX trade the whole of my sell range for a now 20950 average short position. I am still short with a now higher 21305 ‘Closing Stop’. I will now raise my T/P level on this position to 20800. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
December BUND
The Bund never came close to Tuesday’s sell range and I am still flat. I will not chase the Bund lower as I continue to look to sell the market on any further rally to 131.70/132.50 with the same 133.25 ‘Closing Stop’.
Gold Rolling Contract
Following Monday’s 3% fall, Gold traded in a narrow range yesterday and I am still flat. This morning, Gold is trading lower at 3230. We have short-term support from 3155/3180 where I will be a strong buyer with a lower 3139 ‘Closing Stop’. If I am taken long, I will have a T/P level at 3206.
Silver Rolling Contract
I am still flat. Today, I will continue to be a buyer on any dip lower to 31.50/32.30 with the same wider 29.95 ‘Closing Stop’. If triggered, I will have a T/P level at 33.10.
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