U.S. Equity Markets primarily closed in the red on Tuesday with underperformance in the NASDAQ 100 while Russell 2000 outperformed, closing green. The Nasdaq weakness was led by weakness in the tech space which accelerated after weak guidance from ASML (ASML NA). Semiconductors were already under pressure on Bloomberg reports that the US is looking to curb chip exports to the Gulf from Nvidia (NVDA) and AMD (AMD) in the interest of national security. Further adding to the risk-off was a woeful LVMH (MC FP) earnings report which missed analyst forecasts, and also noted that consumer confidence in mainland China is back in line with the all-time low during covid. The report also weighed on peers like Ralph Lauren (RL) and Tapestry (TPR) in the US. Sectors closed mixed with outperformance in defensives like Real Estate, Staples and Utilities, while Financials closed marginally buoyed after a slew earnings reports. Charles Schwab (SCHWB) rallied. Bank of America (BAC) held onto its gains, although Goldman Sachs (GS) pared all its pre-market gains to close flat, while Citi tumbled after the open. Note, Citi’s Net Interest Income (NII) disappointed, with soft guidance – but other metrics were strong. The crude space tumbled but settled off lows, the downside was predominantly led by reports that Israel will not target Iranian oil or nuclear facilities, but separate reporting via AP suggested such a commitment is not “iron-clad”. China demand woes also weighed on crude, and sentiment with the Yuan weaker versus the Dollar while the China ETFs (FXI, PGJ) slumped. Reports in WSJ noted that there were no measures to significantly boost China consumption, while sources noted such measures are in the works, but nothing substantial is imminent. Elsewhere, T-notes were firmer aside from the short end with the fall in oil prices supporting T-notes while a super soft Canadian CPI report saw a follow-through effect from Canadian Bonds as traders increased their 50bp bets for the Bank of Canada Meeting next week. In FX, the Dollar was flat but saw some strength as Trump touted more tariffs (again) in an interview with Bloomberg, while US data was mixed. The NY Fed manufacturing survey slumped but with an upside in prices and employment, while the NY Fed consumer expectation survey saw 3 and 5 year inflation expectations rise, with the 1 year unchanged, but the expectations of credit card delinquencies rose to the highest level since April 2020. Elsewhere, the Japanese Yen outperformed as US yields fell, while Antipodes were hit on risk appetite and China woes. The NY Fed Manufacturing Survey for October sharply dropped to -11.9, well below the expected 3.85 and forecast range, as well as September’s 11.5. Diving into the report, a plummet in New Orders to -10.2 from 9.4 sent the headline to its lowest level since May this year, in addition, to the large fall in General Business Conditions (from 11.5 to -11.9) and Shipments (from 17.9 to -2.7). On the flip side, Prices paid rose to 29 from 23.2 and the Number of employees grew by 9.8 to 4.1. Looking ahead, the six months expectations, however, saw prices paid slightly fall by 1.2 to 43, while General Business Conditions rose by 8.1 to 38.7, alongside increases in Shipments and Prices Received. On the report, Richard Deitz, the Economic Research Advisor at the New York Fed, notes “Manufacturing activity contracted modestly in New York State in October, with firms reporting that new orders declined. Despite this contraction, employment expanded for the first time in a year, though by a small degree, and optimism about the outlook grew strongly.” The NY Fed Survey of Consumer Expectations saw inflation expectations unchanged on the 1 Year projections at 3.0%, but the 3 and 5- Year forecast rose to 2.7% (prev. 2.5%) and 2.9% (prev. 2.8%), respectively. On the labour market, the mean probability of leaving one’s job voluntarily in the next twelve months increased to 20.4% from 19.1%, and the mean perceived probability of finding a job in the event of job loss increased to 52.7% from 52.3% in August. Elsewhere in the report, expectations around credit access improved but credit card delinquency expectations rose to the highest level since April 2020. Looking ahead, the year-end spending, income and growth forecasts eased while the median rise in home price expectations rate eased to 3.0% from 3.1%. Meanwhile Fed Member Daly said she is cautiously optimistic about the economic outlook and noted that talk of gradual rate cuts means less than it appears. She stressed the September 50bp cut was the tight size, noting the Fed must deliver its mandate, with risks to the mandate now more balanced. Looking ahead, she said if forecasts are met, she sees one or two more rate cuts this year, while on the balance sheet, she said there is still room to run down the balance sheet further, adding the Fed must watch markets carefully for signs of balance sheet wind down should stop. She acknowledged that keeping a large balance sheet has its costs, while also noting it is good for the Fed to be gradual with policy in uncertain times. Elsewhere, Oil closed 4.32% lower while Gold closed higher by 0.6%.
To mark my 3075th 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 10 points yesterday is now ahead by 785 points for October after ending September with 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 0.76% lower at a price of 5815.
The Dow Jones Industrial Average closed 324 points lower for a 0.75% loss at a price of 42,740.
The NASDAQ 100 closed 1.37% lower at a price of 20,159.
The Stoxx Europe 600 Index closed 0.80% lower.
Yesterday, the MSCI Asia Pacific closed 0.7% higher.
Yesterday, the Nikkei closed 0.77% higher at a price of 39,910.
Currencies
The Bloomberg Dollar Spot Index closed 0.02% lower.
The Euro closed 0.1% lower at $1.0890.
The British Pound closed 0.1% higher at 1.3068.
The Japanese Yen rose 0.3% closing at $149.32.
Bonds
Germany’s 10-year yield closed 5 basis points lower 2.23%.
Britain’s 10-year yield closed 7 basis points lower at 4.17%.
U.S.10 Year Treasury closed 6 basis points lower at 4.04%.
Commodities
West Texas Intermediate crude closed 4.32% lower at $70.64 a barrel.
Gold closed 0.6% higher at $2664 an ounce.
This morning on the Economic Front we have U.K. CPI, PPI and the Retail Price Index at 7.00 am. Next, we have U.S. MBA Mortgage Applications at 12.00 pm and the Import/Export Price Index at 1.30 pm. Finally, we have a speech from ECB President at 8.40 pm
Cash S&P 500
Frustrating! The S&P just missed yesterday’s sell range by two Handles before falling 55 Handles into the close and I am still flat. This is an incredibly difficult market to read as one of the key signals that I follow ($NYSI) is nearly maximum oversold after a one-day sell-off. I have never seen this scenario before as max oversold reading in this key signal wants me to be a buyer of the S&P. Until yesterday the S&P was totally disconnected from the strength in both the Dollar and the Bond Market. This is one of the toughest market environments that I have ever encountered. Remember we have a Presidential Election in 19 days yet no one cares. This promises to be one of the most contentious elections of our time yet the market just chooses to ignore the negative consequences that in my opinion will arrive after the initial results are in. The S&P has support below from 5745/5761 where I will be a small buyer with a 5729 ‘’Closing Stop’’. I will now lower my sell level to 5848/5868 with a lower 5885 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 5777. If I am taken short, I will have a T/P level at 5833.
EUR/USD
Wrong! I was stopped out of my latest 1.1015 long Euro position at 1.0895 and I am now flat. Given how oversold the Euro is trading I will continue to be a buyer of dips. The Euro has further support from 1.0810/1.0880 where I will again be a buyer with a 1.0745 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 1.0960.
Dollar Index
I am still flat the Dollar as the market traded in a narrow range, never coming close to Tuesday’s sell range. I will now lower my sell level to 103.60/104.30 with a now lower 105.05 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 103.10.
Cash DAX
No Change: Like any short position at the moment you have to quick to take your gain or it will quickly evaporate. This is not a fundamental rally but one based on liquidity. After all Germany has negative growth yet the DAX is trading at all-time highs. Chinese stocks have surged as yet again we saw more stimulus announcement after I posted on Sunday night. After the DAX hit my 19460-sell level we sold off to my revised 19404 T/P level and I am now flat. This morning the DAX is trading higher at 19550. I cannot be a buyer of the DAX at these levels and shorting the market requires full concentration given the explosiveness of the upward price action. I am going to stay flat the DAX for now until I feel I have a better edge.
Cash FTSE
The FTSE reversed some of Tuesday’s gains, eventually hitting my 8250-buy level. As I no longer want to be long the FTSE, I emailed my Platinum Members to exit any long position at 8260 and I am still flat. The FTSE has strong support below from 8110/8180 where I will be an aggressive buyer with a lower 8045 ‘’Closing Stop’’. If triggered, I will have a T/P level at 8230. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
Just like the S&P above the Dow also missed Tuesday’s sell range by a small margin and I am still flat. I will now lower my sell level to 43050/43310 with a lower 43505 ‘’Closing Stop’’. If triggered, I will have a T/P level at 42870. Despite the bullish price action in the Dow over the past six weeks, I still do not want to be long the market at this time. If this view changes, I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
The NDX had wild trading session yesterday, witnessing plenty of two-way price action. The NDX hit an intra-day high at 20480 before selling off over 300 points to my initial 20160 buy level. As I wanted to bank some points for yesterday’s session, I covered this long position at my revised 20210 T/P level and I am now flat. The NDX has further support below from 19700/19860 where I will again be a buyer with a lower 19595 ‘’Closing Stop’’. If executed, I will have a T/P level at 19990. I still do not want to be short the NDX at this time.
December BUND
The Bund never came close to yesterday’s buy range, and I am still flat. I am reluctant to chase the Bund higher given how low the Bund Yields are. It will be interesting to see the Bund’s reaction to tomorrow’s expected ECB rate cut. The Bund has support from 132.40/133.10. I will raise my buy level to this area with a higher 131.75 ‘’Closing Stop’’. I still no longer want to be short the Bund at this time.
Gold Rolling Contract
No Change: Gold traded in a narrow range yesterday and I am still flat. Today, I will continue to be a buyer from 2595/2611 with the same 2579 tight ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2625.
Silver Rolling Contract
My latest 31.00 long Silver position worked well as the market rallied to my 31.70 T/P level and I am now flat. Given the strength of the Dollar I am hoping we will see a small sell-off in Silver over the coming days as this will set up a strong long position for me. Silver has support from 29.80/30.80 where I will be an aggressive buyer with no stop for now if triggered. My T/P level will be at 31.70 on any executed long position.
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