U.S. Equity Markets and Treasuries rocketed higher yesterday, helping the Dollar to fall the most in many months with a 1.5% fall. The aggressive move in equities after US CPI came in softer than expected across the board. Gains of 2%+ in the SPX and NDX were dwarfed by the 5%+ seen in the small-cap Russell 2k index, with resurrection for unloved sectors on falling yields and the major dovish shift in Fed rate path expectations – stocks closed near highs. The front and belly were strongest on the Treasury curve with yields seeing their largest one-day fall since the March banking crisis (5yr -24bps). Money markets have removed the December hike risk previously implied and are now pricing in 100bps of cuts for 2024 vs 75bps beforehand, with rate cut pricing jumping forward to see a 35% implied cut as early as the March FOMC. We heard from Fed’s Goolsbee and Barkin after the CPI report, but as has been the status quo, neither were eager to start talking about cuts. The Dollar Index has fallen from earlier highs of 105.73 to current lows of 104, with the major strength seen in all G10 pairs; USD/JPY is now probing 150 to the downside, to the MoF/BoJ’s delight; Euro buoyed by a rebound in German ZEW survey; Sterling had tailwinds of hot UK labour market data. Commodities rallied initially, but many, including oil, pared significantly later in the session. US CPI was cooler than expected in October, offsetting some fears of a hotter print due to the annual adjustments. Headline M/M prices were flat in October, beneath the expected +0.1% rise and cooling from September’s +0.4%, while the Y/Y eased to 3.2% from 3.7%, beneath the 3.3% forecast. The core metrics were also soft despite risks of upward pressure due to medical care annual adjustments: Core M/M rose 0.2%, softer than the prior and expected 0.3%, while Core Y/Y rose 4.0%, beneath the prior and expected 4.1%. Looking into the report, the Index for shelter continued to rise in October but was offset by the declines in gasoline prices, seeing the headline M/M unchanged. Food prices accelerated to 0.3% from 0.2%. Other indexes which increased in October include rent, owners’ equivalent rent, motor vehicle insurance, medical care, recreation, and personal care. Offset that, the indices for lodging away from home, used cars and trucks, communication, and airline fares were among those that decreased over the month. European Markets closed higher led by the 1.77% rise in the German DAX. Just like the American Indexes, it looks more and more likely that European Equity Markets also bottomed in late October. Elsewhere, Oil closed flat while a substantially weaker Dollar saw Gold end Tuesday with a gain of 0.8%.
To mark my 2900th 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 was flat yesterday and is still ahead by 980 points for November. October ended with a gain of 3184 points, after closing September with a small gain of 228 points, after finishing August with 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 1.91% higher at a price of 4495.
The Dow Jones Industrial Average closed 489 points higher for a 1.43% gain at a price of 34,827.
The NASDAQ 100 closed 2.13% higher at a price of 15,812.
The Stoxx Europe 600 Index closed 1.34% higher.
Yesterday, the MSCI Asia Pacific closed 0.8% higher.
Yesterday, the Nikkei closed 0.34% higher at a price of 32,695.
Currencies
The Bloomberg Dollar Spot Index closed 1.40% lower.
The Euro closed 1.69% higher at $1.0870.
The British Pound closed 1.78% higher at 124.97.
The Japanese Yen rose 0.9% closing at $151.37.
Bonds
Germany’s 10-year yield closed 11 basis points lower at 2.60%.
Britain’s 10-year yield closed 16 basis points lower at 4.16%.
U.S.10 Year Treasury closed 18 basis points lower at 4.45%.
Commodities
West Texas Intermediate crude closed 0.04% lower at $78.23 a barrel.
Gold closed 0.86% higher at $1964.10 an ounce.
This morning on the Economic Front we have German Wholesale Inventories at 7.00 am. At the same time, we have U.K. CPI, PPI and the Retail Price Index. Next, we have Euro-Zone Trade Balance and Industrial Production at 10.00 am. This is followed at 1.30 pm by U.S. PPI, Retail Sales, Wholesale Inventories and the New York State Manufacturing Index. Finally, we have Business Inventories at 3.00 pm.
Cash S&P 500
Wow! The S&P has now rallied over 400 Handles in 2.5 weeks culminating in yesterday’s 2% rise which was the largest daily increase for the S&P since January 6, this year. At the same time the S&P is not up against the top of its Daily Bollinger Band meaning I cannot justify a long position at these levels especially as the 14-Day RSI closed at 69 last night. The Fear and Greed Index has move from an October low at 16 (Extreme Fear) to close at continues to pay dividends despite bears getting more and more frustrated with the upward price action. Even though the S&P is short-term overbought, structurally the market is still oversold. Both Fund Managers and CTAs are caught short and will have to capitulate. If this scenario unfolds, we could see a melt-up in the market into 47 last night which is a neutral reading. Despite rising 10% the S&P on a long-term basis is still oversold which is mad. However, short-term we are severely overbought with negative divergences a constant theme. I will use any sell-off in the S&P over the coming days to get long for another year-end rally. Given the level of short positions in the market since the summer this has been one of the biggest losses that Bears have faced in many years. The S&P has resistance from 4513/4528 where I will be a small seller with a 4541 ‘’Closing Stop’’. I do not want to be long the S&P at this time. If I am taken short I will have a T/P level at 4499.
EUR/USD
I have had the correct view in buying all dips in the Euro but unfortunately, I was not long for yesterday’s 200-point rip higher. There is no reason why the Euro cannot test the year highs at 1.1260 over the coming weeks. I will now raise my buy level to 1.0750/1.0820 with a tight 1.0695 ‘’Closing Stop’’. Despite yesterday’s move higher, I still do not want to be short the Euro at this time. If I am taken long I will have a T/P level at 1.0870.
September Dollar Index
The Dollar fell 1.4% yesterday and I am still flat. The Dollar has resistance from 104.60/105.30 where I will lower my sell level with a 106.05 ‘’Closing Stop’’. I no longer want to be long the Dollar at this time. If I am taken short I will have a T/P level at 104.10.
Cash DAX
Incredible 1100-point rally in the DAX in two weeks. Thankfully we had no short position in this market. As I cannot buy the DAX at these levels, nor do I want to be short I am going to stay flat the DAX until I see a better risk/reward opportunity. Sometimes it is better to sit on your hands.
Cash FTSE
The FTSE continues to ignore the strength of the other major Indexes as the market again traded in a narrow range. I am still flat. I will now raise my buy level to 7340/7410 with a tight 7295 ‘’Closing Stop’’. If I am taken long I will have a T/P level at 7460.
Dow Rolling Contract
A 5% rally in the Russell 2000 helped the Dow to climb 1.50% yesterday. This move higher has me short at an average rate of 34715. With the 14-DAY RSI closing at 68 I am comfortable in having a small, short position with the same 35005 ‘’Closing Stop’’. I will now raise my T/P level to 34610. If any of the above levels are hit I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
Wow! The NDX has now risen over 1800 points in 2.5 weeks. This is an insane move reflecting the number of short positions in the market. Thankfully we had the correct view on the market until yesterday when the NDX traded the whole of my sell range for a now 15765 average short position. I will leave my 15965 ‘’Closing Stop’’ unchanged. I will now raise my T/P level to 15680. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
December BUND
Just like the DAX above I am going to stay flat the Bund. With Yields sub 2.60% I do not want to be a buyer at these low yields especially as I cannot see the ECB easing rates anytime soon. If this view changes I will be back with a new update for my Platinum Members.
Gold Rolling Contract
Gold rallied a further 0.8% yesterday and I am still flat. I will now raise my Gold buy level to 1935/1949 with a higher 1923 ‘’Closing Stop’’. I still do not want to be short Gold at this time. If I am taken long I will have a T/P level at 1959.
Silver Rolling Contract
No Change. I am still long Silver from six weeks ago at 24.05. Silver has traded in a narrow 100-point range with very small daily ranges over the past few weeks. I am extremely bullish of Silver while frustrated that Silver has not followed the price of Gold higher. In a change of strategy, I will have no stop or no T/P level on this position. This morning Silver is trading higher at 23.10. I am encouraged by the fact the despite the 2% fall in Gold since Thursday that Silver continues to trade with a 22 Handle. Silver has strong support below at 21.80. I will now add to my existing position on any move lower to this pivot level. If this price is triggered, I will be back with a new update for my Platinum Members.
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