U.S. Indices closed firmer on Tuesday in broader risk-on sentiment, as despite the constant flow of Middle East headlines, there were few escalatory or de-escalatory developments. There have been conflicting reports regarding the health of Iran’s Top Security Chief, Larijani, as Israel and the US said he was killed in an airstrike, but Iran has yet to confirm this. In terms of some of the more notable remarks, the EU’s Kallas remarked that a model similar to the Black Sea could be used in the Strait of Hormuz, but the question is what neighbouring countries, including Iran, could agree on; and the door is not closed on participation in the Strait. From the US side of things, President Trump spoke heavily and did not garner much reaction, but he noted they are not ready to leave Iran yet, although they will leave in the near future, and won’t be too long before ships can go through the Strait of Hormuz. Sectors were largely firmer, with only Health and Consumer Staples in the red, while Energy sat atop the pile. WTI and Brent saw gains, retracing some of Monday’s losses, while Treasuries were firmer across the curve with the 20-Year Treasury Auction coming in strong. Precious metals were weaker, with spot silver underperforming its peer, while the Dollar Index saw losses, to the benefit of most G10s. The Australian Dollar outperformed after the RBA hiked rates overnight, as widely anticipated, with Bullock’s press conference also deemed hawkish as participants debated whether they will raise rates for the third time in May. There was no tier 1 US data, although pending home sales impressed with the US PPI, FOMC and SEPS, the upcoming highlights on Wednesday. Pending home sales for February rose 1.8% M/M from January’s decline of 0.8%, and above the expected -0.5%. Gains occurred in the Midwest, South and West, but declined in the Northeast. NAR Chief Economist Lawrence Yun writes that improved affordability seems to have led to a climb in pending contracts, but regions like the NW continued to be held back by the combination of higher home prices and a shortage of supply. Yun warns, “conditions could reverse if higher oil prices lead to an uptick in mortgage rates.” He further added, “For first-time homebuyers, purchasing a home is not a snap decision. It takes time to build credit, save for a down payment, and fulfill existing rental lease agreements. Still, there is sizable pent-up demand that could be released into the market.” Elsewhere, Oil closed Tuesday’s session with a gain of 2% while Gold was flat.
To mark my 3350th 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 made 601 points yesterday and is now ahead by 4081 points for March having closed February with a strong gain of 5482 points after ending January with a gain of 4757 points, having closed December with a gain of 2599 points, after ending the month of November with a gain of 4542 points, after ending October with a nice gain of 5110 points after closing September with a gain of 3774 points whe ending August with a gain of 3362 points after closing July with a gain of 3753 points after closing June with a gain of 3530 points, having closed May with a gain of 3606 points, 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 0.25% higher at a price of 6716.
The Dow Jones Industrial Average closed 46 points higher for a 0.10% gain at a price of 46,993.
The NASDAQ 100 closed 0.51% higher at a price of 24,780.
The Stoxx Europe 600 Index closed 0.67% higher.
Yesterday, the MSCI Asia Pacific closed 0.4% higher.
Yesterday, the Nikkei closed 0.09% lower at a price of 53,700.
Currencies
The Bloomberg Dollar Spot Index closed 0.20% lower.
The Euro closed 0.33% higher at $1.1545.
The British Pound closed 0.31% higher at $1.3361.
The Japanese Yen fell 0.12% closing at $158.92.
Bonds
U.K.’s 10-Year Gilt closed 14 basis points lower at 4.63%.
Germany’s 10-Year Bund Yield closed 8 basis points lower at 2.91%
U.S.10 Year Treasury closed 8 basis points lower at 4.20%.
Commodities
West Texas Intermediate crude closed 2.05% higher at $95.42 a barrel.
Gold closed 0.05% higher at $5008.10 an ounce.
This morning on the Economic Front we have Euro-Zone CPI at 7.00 am followed at 12.00 pm by U.S. MBA Mortgage Applications. Next, we have PPI at 12.30 pm and the Bank of Canada Rate Decision at 1.45 pm. At 2.00 pm we have U.S. Factory Orders and Durable Goods Orders. Finally at 6.00 pm we have the FOMC Statement and Powell Press Conference at 6.30 pm.
Cash S&P 500
Stocks finished higher on the day, as the S&P 500 gained for the second consecutive trading session. This should come as no surprise given how weak the McClellan Oscillator closed on Friday. Most of the move was driven by a decline in implied volatility following the drop in oil prices. Equity market IV had been very elevated, so a volatility compression was inevitable—it was just a matter of whether it would occur on Monday or Tuesday, ahead of VIX expiration on Wednesday. The Index stalled right at 6,750, which corresponds to the mid-December low before falling over 30 Handles into the close. As for what happens from here, the path is not an easy one. The big outlier, of course, is the price of oil, but assuming the war does not take an unexpected turn for better or worse and oil remains in the $90s, S&P 500 implied volatility should naturally drift higher into the Fed meeting on Wednesday. The Index also remains below the 10-day exponential moving average, and as long as it stays there, the path of least resistance remains lower. Oil fell by more than 5% on Monday before rising 2% yesterday. However, oil remains stuck between the upper Bollinger Band and the 10-day exponential moving average. Nothing has really changed here. However, if oil continues to decline, it would be a significant positive for stocks and markets overall, as financial conditions would ease, rates would fall, and the Dollar would weaken. The Dollar Index fell sharply over the past two days, which is not surprising given the decline in oil prices. The Dollar remains just below 100.00, and it will likely take a move higher in oil to drive a breakout from here. Finally, XLK is one to watch because it appears to be forming a descending triangle. A break below $138 could lead to a move down toward $127, based on a measured move from the peak of the triangle to the base. At this point, XLK would need to move above $141 to invalidate the pattern. I am glad I was able to post Monday’s Daily Commentary a couple of hours ahead of the re-opening of the Futures Market on Sunday. Both the NDX and S&P opened below the levels that I was long at giving anyone who was not long a better entry level. The S&P hit a low at 6607 before rallying to yesterday’s 6754 afternoon high. This move higher saw my 6668 T/P level triggered on my 6635 average long position and I am still flat. Ahead of the FOMC Statement and Powell Press Conference, my only interest in buying the S&P is on a dip lower to 6640/6665 with a 6619 ‘Closing Stop’. I still have no interest in shorting the market at this time. If I am taken long, I will have a T/P level at 6693. If this view changes, I will be back with a new update for my Platinum Members.
EUR/USD
It took a while but finally my 1.1480 long Euro position worked as the market rallied yesterday to my revised 1.1545 T/P level and I am now flat. I would expect some two-way volatility in the Euro following this evening FOMC Statement and Powell press conference. The Euro has short-term support below from 1.1380/1.1450 where I will be a strong buyer with a lower 1.1315 ‘Closing Stop’. If I am taken long, I will have a T/P level at 1.1520. I still do not want to be short the Euro at this time.
Dollar Index
To reduce risk, I used Monday’s Dollar weakness to exit my 100.00 short position at my revised 99.70 T/P level and I am now flat. The Dollar has short-term resistance from 100.30/101.00 where I will again be a seller with a higher 101.75 ‘Closing Stop’. If I am taken short, I will have a T/P level at 99.75.
Russell 2000
The Russell never came close to Monday’s buy range and I am still flat. Today, I will raise my buy level 2400/2470 with a higher 2345 ‘Closing Stop’. If I am taken long, I will have a T/P level at 2520.
FTSE 100
I am still flat as the FTSE never came close to Monday’s buy range. Gilt Yields falling 14 basis points over the past two days has certainly helped the FTSE to recover most of Friday’s losses. The FTSE has short-term resistance from 10500/10600 where I will be a seller with a 10705 ‘Closing Stop’. The FTSE has short-term support from 10130/10230 where I will be a small buyer with a 10055 tight ‘Closing Stop’. If I am taken short, I will have a T/P level at 10420. If I am taken long, I will have a T/P level at 10310.
Dow Rolling Contract
I am still flat as the Dow fell shy of Monday’s buy range before rallying over 700 points. Today, I will raise my buy level to 46300/46600 with a higher 46095 ‘Closing Stop’. If I am taken long, I will have a T/P level at 46880. I still do not want to be short the Dow at this time.
Cash NASDAQ 100
My latest 24525 average long NDX position worked well as the market rallied to my revised 24675 T/P level and I am now flat. Today, I will again be a buyer on any dip lower to 24350/24550 with a lower 24195 ‘Closing Stop’. If I am taken long, I will have a T/P level at 24730. I still do not want to be short the NDX at this time.
December BUND
The Bund found support at the 3% resistance area, with yields falling 10 basis points following last week’s rise. This move higher in the Bund saw my revised 127.36 T/P level triggered on my 127.10 long position and I am now flat. The Bund has short-term support from 126.00/126.70 where I will again be a buyer with a lower 125.35 ‘Closing Stop’. If I am taken long, I will have a T/P level at 127.20. I still do not want to be short the Bund at this time.
Gold Rolling Contract
No Change: I am still flat. Gold has strong support below from 4650/4750 where I will continue to be a strong buyer with the same 4545 ‘Closing Stop’. If I am taken long, I will have a T/P level at 4920.
Silver Rolling Contract
I am still flat. Silver has traded in a wide range over the past 48 hours. Ahead of the Fed this evening I will now lower my Silver buy level to 72.50/75.00 with a lower 70.95 ‘Closing Stop’. If I am taken long, I will have a T/P level at 78.10.
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