U.S. Equity Markets closed lower as broad risk-off trade was seen on Tuesday after a significant escalation of Middle Eastern tensions, which saw Iran launch an attack on Israel in what was ‘double the size’ of the April attack and said they targeted three Israeli military bases. The moves on Tuesday began alongside the cash equity open after Axios’ Ravid reported that “US has indications that Iran intends to carry out a ballistic missile attack against Israel in the immediate future”, and then extended to extremes once the attack was carried out. In terms of the move, Treasuries, Dollar, and Gold saw a notable bid on flight-to-quality, while stocks sold off as did activity currencies against the Dollar. Moreover, and as expected, the crude complex saw significant strength. Do note, that the moves did pare slightly after Israel lifted restrictions on their population and signalled the end of the Iranian missile attacks. Following the strikes, the IDF said they will respond at the right time and place, and the attack was serious and will have consequences. In addition, the US said it helped Israel defend itself and shoot down missiles, it fully supports Israel’s right to defend itself, and Defense Secretary Austin spoke with Israel’s Gallant and discussed ‘severe consequences’ for Iran in the event Iran chooses to launch a direct military attack against Israel. Elsewhere, in what was a day dominated by geopolitics, US data was mixed as there was above-forecast JOLTS, while ISM Manufacturing was unchanged, short of the expected bounce, while prices paid were soft. In wake of the data, the latest Atlanta FedGDP Now Model for Q3 fell to 2.5% from 3.1%. For the record, sectors were predominantly lower and hit by risk-off as Tech was the clear laggard and Energy the clear gainer. ISM Manufacturing PMI for September was 47.2, unchanged from the prior, but beneath the expected 47.5. Looking at the sub-components, prices paid encouragingly decline to a 9-month low of 48.3 (prev. 54.0, exp. 53.5), even beneath the bottom end of the forecast range, 52.0. New orders and production rose to 46.1 (prev. 44.6) and 49.8 (prev. 44.8), respectively, while employment dipped to 43.9 from 46.0. Inventories tumbled to 43.9 (prev. 50.3), with Oxford Economics noting the decline may in part reflect the rush to bring in goods ahead of the port strike, which appeared to be frontloaded in August and was more subdued in September. Backlog of orders, new export orders, and imports all fell further beneath 50. Overall, Oxford adds, “The high level of interest rates and uncertainty over the outcome of the presidential election continue to weigh on the manufacturing sector.” However, the consultancy adds, “With the Fed set to deliver at least 100bps in rate cuts this year, investment in capital and inventory should boost production, while support from the IRA and CHIPS act remains in place”. Headline JOLTS was hotter than expected, rising to 8.04 million in August, above the 7.66 million forecast and up from the prior 7.711 million. It also came in just above the highest forecast of 8.00 million. The BLS noted that in August, hires changed little at 5.3 million, while total separations were also little changed at 5.0 million. Within separations, quits (3.1 million) continued to trend down and layoffs and discharges (1.6 million) changed little. The Quits rate, however, fell to 1.9% from 2.0%, while the vacancy rate moved higher to 4.8% from 4.6%. Analysts at Oxford Economics highlight that the decline in the quits rate is consistent with other data showing workers view the labour market less favourable, and it is at a level consistent with wage growth at or slowing to a pace consistent with the Fed’s 2% target. Overall, this report will unlikely sway Fed thinking, Powell suggested on Monday that providing the economy evolves as expected, there will be two 25bps rate cuts by year-end. Attention will turn to the September NFP report to help determine the Fed’s upcoming easing pace, where Bostic himself suggested a print sub 100k would warrant a closer examination on the labour market. Elsewhere, Oil closed higher by 2.44% while Gold ended Tuesday with a gain of 1.3%.
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 280 points yesterday on the first trading session of 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 0.93% lower at a price of 5708.
The Dow Jones Industrial Average closed 173 points lower for a 0.41% loss at a price of 42,156.
The NASDAQ 100 closed 1.43% lower at a price of 19,773.
The Stoxx Europe 600 Index closed 0.38% lower.
Yesterday, the MSCI Asia Pacific closed 0.4% higher.
Yesterday, the Nikkei closed 1.93% higher at a price of 38,651.
Currencies
The Bloomberg Dollar Spot Index closed 0.42% higher.
The Euro closed 0.6% lower at $1.1069.
The British Pound closed 0.7% lower at 1.3280.
The Japanese Yen rose 0.1% closing at $143.45.
Bonds
Germany’s 10-year yield closed 8 basis points lower 2.05%.
Britain’s 10-year yield closed 6 basis points lower at 3.95%.
U.S.10 Year Treasury closed 4 basis points lower at 3.73%.
Commodities
West Texas Intermediate crude closed 2.44% higher at $69.83 a barrel.
Gold closed 1.3% higher at $2663 an ounce.
This morning on the Economic Front we have no data of note from either the U.K. or the Euro-Zone. At 12.00 pm we have U.S. MBA Mortgage Applications followed by the ADP Employment Change at 1.15 pm. Next, we have speeches from Fed Members Hammack, Musalem and Boman at 2.00 pm, 3.05 pm and 4.00 pm respectively. Finally, at 6.00 pm we have a Five -Year Treasury Auction.
Cash S&P 500
Finally, we saw a market that opened strong followed by a strong sell-off that continued for all of Tuesday with no late buy extreme into the close. There are so many technical signals that are overbought there is no reason to be a buyer of the markets at these inflated price levels. Even the Fear & Greed Index printed ‘’Extreme Greed’’ early yesterday morning. The S&P made a high at 5765 shortly after I posted yesterday morning, before falling to an intra-day low at 5682. This morning the S&P is trading at a price of 5710 as I go to press. This move lower saw my 5742 T/P level triggered on Monday’s late 5760 short position and I am still flat. Today, I will continue to be a strong buyer on any further dip lower to 5628/5648 with the same 5606 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 5669. My only interest in selling the S&P is from 5750/5770 with a now lower 5785 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 5734.
EUR/USD
My patience finally paid off as the Euro sold off to my 1.1050 buy level late yesterday. I am still long with a now lower 1.1085 T/P level. I will add to this position on any further move lower to 1.0970 while leaving my tight 1.0915 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with anew update for my Platinum Members.
Dollar Index
The Dollar has now rallied over 1% off last Friday’s 100.22 low print. I am still flat. The Dollar has short-term resistance from 102.00/102.60 where I will be a small seller with a tight 103.15 ‘’Closing Stop’’.
Cash DAX
I know the DAX had a small sell-off yesterday but trying to short this market is extremely dangerous. Fundamentals have gone out the window for the German Stock Market. Germany has negative GDP growth, falling production with growth sentiment and the economy in full stagnation mode. Does it matter? No as a stimulus announcement out of China leads to new highs. For these reasons I will not chase the DAX lower, continuing to be a seller on any further rally to 19520/19620 with the same 19705 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 19450. I still do not want to be long the DAX at this time.
Cash FTSE
Shortly after I posted yesterday morning the FTSE rallied to my 8280 T/P level on my latest 8230 long position and I am now flat. Today, I will again be a buyer on any further dip lower to 8100/8180 with a lower 8015 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 8240. I still do not want to be short the FTSE at this time
Dow Rolling Contract
Despite the two-way volatility in both the NDX and S&P, the Dow traded in a narrow range on Tuesday just below last week’s all-time high. It is worth noting that during World War 11 the Dow was seen as a safe haven for money. This news may go a long way to explaining why the Dow has been so strong over the past six months. However, given the overvalued nature of U.S. Indexes I have no interest in buying the Dow at these levels. The Dow has resistance from 42600/42850 where I will continue to be a seller with the same 43105 wider ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 42380.
Cash NASDAQ 100
Unfortunately, the NDX yesterday missed my 20150 initial sell level by just 30 points before falling over 350 points into the close and I am still flat. I will now lower my NDX sell level to 19900/20050 with a lower 20205 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 19790. I still do not want to be long the NDX at this time.
December BUND
Better inflation numbers out of Europe saw the Bund surge yesterday, trading the whole of my sell range for a now 135.80 average short position. I will now raise my T/P level on this position to 135.40 while leaving my 136.75 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
The worsening geo-political situation saw Gold reverse Monday’s loss, closing higher on Tuesday by 1.3%. I am still flat. As I have said for the past two weeks, I have no interest in chasing the price of Gold higher, preferring to be a buyer of Silver. Gold has short-term support from 2570/2588. I will continue to be a buyer on any dip to this area with the same 2559 tight ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2602.
Silver Rolling Contract
My latest 31.30 long Silver position worked well as the market rallied to my 31.80 T/P level and I am now flat. Silver has support from 30.20/31.10 where I will again be a buyer with the same 28.95 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 31.80.
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