U.S. Indices closed mixed yesterday ahead of this afternoon’s key CPI release (S&P +0.1%, NASDAQ 100 -0.1%, DJIA -0.5%, RUSSELL 2000 +1.1%), despite futures seeing an initial bounce on a cool US PPI print on the headline. Thereafter, stocks and Treasuries saw choppiness as markets continued to remain tentative over the direction of US yields, with the latest Reuters poll suggesting 2/3 of bond strategists surveyed see the 10 Year yield surpassing 5% in 2025. Concerning data, as mentioned the PPI report saw equity futures and Treasuries bid, but strength faded in both the S&P and NDX throughout the day, while the Russell 2000 benefitted from short-duration treasuries strength. Outperformance was seen in Utilities, Materials, and Real Estate, whereas Healthcare and Communications were the biggest losers, with the former weighed on by Eli Lilly’s disappointing Q4 preliminary weight loss drug numbers. As mentioned, Treasuries were bought across the curve which steepened, though, gains notably were trimmed on longer duration. In FX, dollar strength faded after the PPI report, as gains were initially present despite reports US -President-elect Trump’s team is considering less aggressive tariffs to avoid inflation spikes (M/M hikes of 2-5%). As such, gains arrived in the G10 space on the Dollar weakness, with EUR and CHF outperforming while the Japanese Yen was the sole laggard in the red after Bank of Japan Deputy Governor switched to a more neutral stance (previous hawk), refraining from committing to a rate hike in the January meeting, citing caution on various upside and downside risks at home and abroad. Post-PPI, Fed pricing still has one full 25 basis point Fed rate cut in 2025, with the first cut seen by September. Elsewhere, crude prices took a breather from their recent surge, as initial Dollar strength weighed, then followed by growing optimism surrounding a Gaza ceasefire deal, with CBS News reporting Israel and Hamas agreed in principle to a ceasefire draft deal. The December PPI report was mixed ahead of the US CPI data, where it appeared soft on the headline and core metrics but a surge in airfares has upside risk for the PCE report on January 31st (two days after the FOMC on January 29th). Headline PPI rose +0.2% M/M (exp. 0.3%, prev. 0.4%), while the annual rate rose to 3.3% (exp. 3.4%, prev. 3.0%) The core metrics saw the monthly figure unchanged, despite expectations for a move up to 0.3% from 0.2%, while the annual measure was unchanged at 3.5% Y/Y after revisions (exp. 3.8%). Within the report, the PPI components that feed into PCE were mixed, where airline passenger services skyrocketed 7.2% M/M after declining 1.6% in November, potentially due to seasonal factors due to high demand over the holiday period. Meanwhile prices of portfolio management, physician care, home health and hospice care, nursing home care accelerated, while hospital inpatient care decelerated with outpatient care unchanged. Aside from the jump in airline services, the other components do not appear too concerning. In wake of the report, Capital Economics said it looks like core PCE prices rose at a rate of 0.27% M/M (prev. 0.1% M/M), while Pantheon Macroeconomics expects a 0.3% rise, both citing the jump in airline services. Regarding CPI, Pantheon Macroeconomics continues to look for an above-consensus increase in the headline and core CPIs tomorrow of 0.5% and 0.3%, respectively. However, the desk adds that “a run of better CPI and core PCE prints likely lies immediately ahead, provided the BLS correctly updates the seasonals and Mr. Trump holds back on immediately imposing new tariffs”. Elsewhere, Oil closed 1.66% lower on Tuesday while Gold rose 0.5%.
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 made 235 points yesterday and is now ahead by 856 points for January after closing December with a gain of 1997 points 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 0.11% higher at a price of 5842.
The Dow Jones Industrial Average closed 221 points higher for a 0.52% gain at a price of 42,518.
The NASDAQ 100 closed 0.13% lower at a price of 20,757.
The Stoxx Europe 600 Index closed 0.08% lower.
This morning, the MSCI Asia Pacific closed 0.8% lower.
Yesterday, the Nikkei closed 1.83% lower at a price of 38,474.
Currencies
The Bloomberg Dollar Spot Index closed 0.62% lower.
The Euro closed 0.7% higher at $1.0297.
The British Pound closed 0.2% higher at 1.2196.
The Japanese Yen fell 0.1% closing at $157.92.
Bonds
Germany’s 10-year yield closed 4 basis points higher 2.63%.
Britain’s 10-year yield closed 1 basis points higher at 4.90%.
U.S.10 Year Treasury closed 1 basis points higher at 4.80%.
Commodities
West Texas Intermediate crude closed 1.66% lower at $77.51 a barrel.
Gold closed 0.5% higher at $2672 an ounce.
This morning on the Economic front we have U.K. CPI, PPI and RPI at 7.00 am. At the same time, we have German Wholesale Price Index, followed by German GDP at 9.00 am. Next, we have U.S. MBA Mortgage Applications at 12.00 pm and CPI at 1.30 pm, along with the New York Empire State Manufacturing Index. Next, we have speeches from Fed Members Barkin, Kashkari, Williams and Goolsbee at 2.00 pm, 3.00 pm, 4.00 pm and 5.00 pm respectively. Finally, we have the Beige Book at 7.00 pm.
Cash S&P 500
Despite a lower-than-expected PPI print the S&P could not hold on to its morning’s gains before selling off to a low at 5807. Subsequently the S&P rallied 50 Handles before giving this rally up to hit an evening low at 5805 before rallying 30 Handles into the close. This is the type of price action that I predicted in yesterday’s commentary and hopefully it is a taste of what is to come for the rest of the year. If you remember during Trump’s first Presidency, he was constantly tweeting about the stock market, and I do not expect this to change after Monday’s Inauguration. All eyes will be on this afternoon’s CPI where any higher-than-expected print will lead to a further sell-off that I will be happy to buy into ahead of Monday’s Inauguration. Technically we have a market that is severely oversold and due a more sustained bounce than what we witnessed off Monday’s 5770 low. The S&P is hovering around the key 5820 100 Day Moving Average. Below here the S&P has strong support from 5760/5775. Yesterday, my S&P plan worked well as the market traded the whole of my buy range for a 5818 long position before rallying to my revised 5835 T/P level as emailed to my Platinum Members and I am now flat. Ahead of CPI, I will not chase the market higher as I look to be a strong buyer from 5790/5806 with a lower 5765 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 5822. I still do not want to be short the S&P at this time.
EUR/USD
The Euro traded in a narrow range, consolidating Monday’s overdue rebound. The Euro is still severely oversold given its near 10% fall since last September. I am still long at an average rate of 1.0265 with the same 1.0330 T/P level. I will also leave my 1.0115 ‘’Closing Stop’’ unchanged. 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 short the Dollar at an average rate of 109.30 with the same 110.15 ‘’Closing Stop’’. This morning the Dollar is trading lower at 109.25. I will leave my 108.95 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
I am still flat the DAX as the market never came close to yesterday’s sell range. I have no interest in chasing the DAX lower. Ahead of this afternoon’s CPI, I will now raise my sell level to 20520/20620 while leaving my 20705 ‘’Closing Stop’’ unchanged. If I am taken short, I will have a T/P level at 20400.
Cash FTSE
Yesterday afternoon the FTSE traded lower to my 8190-buy level. I am still long with a now lower 8250 T/P level. I will continue to look to add to this position on any further move lower to 8130 while leaving my 8055 wider ‘’Closing Stop’’ unchanged. 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 yesterday as the market traded lower to my initial 42180 buy level before rallying to my revised 42360 T/P level and I am now flat. The Dow has further support below from 41800/42050 where I will again be a buyer with a lower 41595 ‘’Closing Stop’’. As the VIX trading with a 19 ‘’Handle’’ I would expect the market to continue to show plenty of two-way price action. However, I have no interest in shorting the market as I prefer to be a buyer of dips. If this view changes, I will be back with a new update for my Platinum Members. If I am taken long, I will have a T/P level at 42240.
Cash NASDAQ 100
The NDX just missed Tuesday’s buy range, and I am still flat. Ahead of this afternoon’s CPI, I will now lower my NDX buy level to 20360/20520 with a lower 20195 ‘’Closing Stop’’. Despite the bearish price action over the past two weeks, I still do not want to be short the market ahead of Monday’s Inauguration. If this view changes, I will be back with a new update for my Platinum Members. If I am taken long, I will have a T/P level at 20660.
March BUND
Wrong! The relentless rise in Bond Yields saw my 131.80 average long position stopped at 130.65 and I am now flat. I mentioned yesterday how oversold the U.S. Bond Market is and the Bund is no exception. Global Central Banks cannot afford for Yields to rise much further given the level of debt that has to be refinanced at much higher rates. The Bund has further support below from 129.10/129.80 where I will again be a buyer with a 128.45 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 130.60.
Gold Rolling Contract
Gold traded in a narrow range yesterday and I am still flat. While I believe Gold will rally long-term, I am convinced we will see a larger correction first to work off some of the euphoria built up in Gold over the past 18 months. Therefore, my only interest in buying Gold is still on a large move lower to 2575/2591 with the same 2559 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2603.
Silver Rolling Contract
I am still long Silver from Monday at an average rate of 30.00. I will leave my 28.95 ‘’Closing Stop’’ unchanged while lowering my T/P level slightly to 30.60. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Recent Comments