U.S. Indexes closed lower, putting the recent rally on standby for now. The sector breakdown saw Energy outperform amid a rebound in crude prices; meanwhile, Consumer Discretionary and Technology lagged. NVIDIA (NVDA, -2.8%) pared some of Monday’s upside on the OpenAI deal, which was the biggest weight contributing to SPX’s 0.6% and NDX’s 0.7% decline, followed by Amazon (AMZN, -3%). US data was contained to the S&P Global Flash PMI, which largely met expectations, resulting in a muted reaction across assets. PMIs out of Europe, however, diverged. France and the UK missed while Germany beat in Services. The Euro was initially weighed down by the French reading before later recovering after Germany’s reading. Both the Dollar and T-Notes saw a fleeting hawkish reaction towards Fed Chair Powell’s text release on the economic outlook. The Chair mostly reiterated his recent remarks but highlighted that most members’ base case on tariffs’ inflation impact is that it will be a one-time pass-through, finished by the end of next year. Other Fed speakers included the Vice Chair of Supervision, Bowman, who sees two more 25bps rate cuts, putting her in line with the FFR Fed median for 2025. The US sold USD 69 billion of 2 Year Treasury Notes, met with mediocre demand relative to the past and six-auction average; 2yr was muted in response. In commodities, crude prices benefited from Interfax reports that Russia is considering extending its gasoline export ban. Meanwhile, gold extended into a three-day rally, supported by BBG reports that China is aiming to become a custodian of foreign sovereign gold reserves as it aims to improve its standing on the global bullion market. S&P Global US Flash Manufacturing PMI for September slipped to 52.0 from 53.0, in line with expectations, while the Services gauge eased to 53.9 (exp. 54.0) from 54.5, leaving the composite PMI down 1 point to 53.6. S&P said the data points to 2.2% annualised GDP growth in Q3 (note: the Atlanta Fed’s GDPnow tracker is currently modelling growth of 3.3% in Q3), though growth slowed from July and hiring weakened in September. S&P said that the softening demand was limiting pricing power, and inventories suggest downside risks to future production, yet consumer inflation is expected to remain above the Fed’s 2% target in the near term. Pantheon Macroeconomics still looks for GDP growth of “2% in Q3, followed by just ½% in Q4”. Fed Chair Powell’s remarks and tone were generally very similar to his post-FOMC meeting remarks made last week, following the Fed’s 25bps rate reduction, conveying that the Fed cut rates due to downside risks to employment. Markets saw a fleeting hawkish reaction in the wake of his initial remarks but quickly pared back. Ahead of the Fed’s October 29th meeting, Powell said the Fed policy decision will depend on how the labour market is faring, growth, and inflation data. Powell said that policy must balance both employment and inflation goals, and he emphasised a readiness to adjust if current measures prove misaligned, while preparing for a range of possible economic outcomes. Ahead of PCE inflation data this week, Powell said that inflation has risen, with total PCE prices seen up 2.7% Y/Y (vs 2.6% Y/Y in July, and 2.3% in August 2024); Core PCE prices are expected to have increased 2.9% Y/Y (matching the July reading), driven by goods price rises, mainly reflecting tariffs. The Fed chair noted that services disinflation continues, and most long-term inflation expectations remain consistent with the 2% target, suggesting tariff-driven effects may be short-lived (Powell sees these as being a one-time pass-through, finished by the end of next year). On financial assets, Powell described equity prices as fairly highly valued, and the Fed is not targeting prices for financial assets. Bowman, the Fed’s Vice Chair of Supervision backed a 25bps reduction at last week’s meeting, arguing that it is important for the Fed to now proactively support the labour market. Overall, she showed more concern towards the labour market than inflation, expressing worries that the Fed is behind the curve amid labour market weakness. Bowman described last week’s rate cut as the first step towards a more neutral rate, if the economy evolves as expected. On inflation, she said the tariff impact will fade; inflation is otherwise near target. Bowman also expressed concerns that weakness in housing could lead to a decline in values. Ahead, she said, policy could need to adjust further if risks materialise, and businesses could begin laying off people if demand conditions do not improve. Bowman backed her previous stance looking for three 25bps Fed rate cuts in 2025 (one of which we got last week), putting her line with the Fed’s median view. Finally, Goolsbee a 2025 voter said the US remains in a “low hiring, low layoffs” phase and the labour market continued to cool at a moderate pace, but job stats show stability. Goolsbee called the current policy ‘mildly restrictive’ and said that current rates exceed neutral by between 100-125bps (note: the Fed pencilled in a neutral rate of 3.0% in its projections last week). When asked about the prospects for a potentially larger 50bps rate reduction, the Chicago Fed President said the Committee must be careful about getting aggressive. Ahead, he said that interest rates may stabilise at 3% once inflation returns to 2%, and that rates could fall significantly once stagflation concerns subside. Elsewhere, Oil closed higher by over 2% while Gold ended Tuesday’s trading with a small 0.5% gain.
To mark my 3250th 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 352 points yesterday and is now ahead by 2919 points for September after 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 0.55% lower at a price of 6656.
The Dow Jones Industrial Average closed 88 points lower for a 0.19% loss at a price of 46,292.
The NASDAQ 100 closed 0.73% lower at a price of 24,580.
The Stoxx Europe 600 Index closed 0.38% higher
This Morning, the MSCI Asia Pacific closed 0.4% lower.
This morning, the Nikkei closed 0.15% higher at a price of 45,563.
Currencies
The Bloomberg Dollar Spot Index closed 0.08% lower.
The Euro closed 0.08% higher at $1.1813.
The British Pound closed 0.02% higher at $1.3521.
The Japanese Yen rose 0.11% closing at $147.55
Bonds
U.K.’s 10-Year Gilt closed 3 basis points lower at 4.68%.
Germany’s 10-Year Bund Yield closed 1 basis points higher at 2.75%
U.S.10 Year Treasury closed 2 basis points lower at 4.13%.
Commodities
West Texas Intermediate crude closed 2.23% higher at $63.67 a barrel.
Gold closed 0.48% higher at $3762.10 an ounce.
This morning on the Economic Front we have the German IFO Business Survey at 9.00 am. Next, we have U.S. MBA Mortgage Applications at 12.00 pm and Building Permits at 1.30 pm. Finally, we have New Home Sales at 3.00 pm, a Five-Year Treasury Auction at 6.00 pm and a speech from Fed Member Daly at 9.10 pm.
Cash S&P 500
The S&P has not had a 3% fall since April. In my opinion the S&P is trading in a similar vain to just before the 1987 Crash and also the 1929 Crash as these relentless rallies continued with small retracements like we saw yesterday afternoon. The complete lack of two-way volatility leading to the vertical rally since April is unhealthy and unusual. It is not a good sign when the S&P makes one new high after another while internally the market is weak shown by the McClellan Oscillator which has closed with a negative print for the past three trading sessions. The VIX rose a further 3% yesterday highlighting that savy investors are trying to secure some protection in case we get a meaningful sell-off over the next two/three weeks as I mentioned in yesterday’s Commentary. Tuesday’s move lower saw the S&P hit my 6654 T/P level on my latest 6674 average short position and I am now flat. Today, I will again be a seller from 6682/6702 with a higher 6721 ‘Closing Stop’. If I am taken short, I will have a T/P level at 6658.
EUR/USD
I am still short the Euro from Monday at 1.1820 as the market just missed yesterday’s T/P level before rallying into the New York close. Today, I will leave my 1.1770 T/P level unchanged. I will add to this position on any further move higher to 1.1900 while leaving my 1.1965 ‘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
The Dollar traded in a narrow range on Tuesday. I am still long at 97.25 with the same 97.80 T/P level. I will add to this position on any further move lower to 96.55 while leaving my 95.95 ‘Closing Stop’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Russell 2000
The Russell was strong yesterday, hitting my sell range for a 2490 short position. Following a small sell-off I covered this position at my revised 2358 T/P level as emailed to my Platinum Members and I am now flat. Today, I will again be a seller from 2490/2550 with the same 2605 ‘Closing Stop’. If I am taken short I will have a T/P level at 2450.
FTSE 100
Frustratingly the FTSE missed Tuesday’s sell range by just three points before falling 70 points into the New York close. I am still flat. Today, I will continue to be a seller from 9270/9340 with the same 9405 ‘Closing Stop’. If I am taken short, I will have a T/P level at 9220. I no longer want to be long the FTSE at this time. If this view changes, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
My Dow plan worked well with the market rallying to my 43650-sell level before falling 400 points. This move lower saw my revised 46530 T/P level triggered and I am now flat. Today, I will again be a seller from 46650/46900 with a higher 47105 ‘Closing Stop’. If I am taken short, I will have a T/P level at 46390. I still have no interest in buying the Dow at this time.
Cash NASDAQ 100
I am still short from last week at an average rate of 24520. The market was lower yesterday but we need to see some follow through today for me to hold on this position. Today, I will leave my 24765 ‘Closing Stop’ unchanged while raising my T/P level to 24480. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
December BUND
The Bund has traded in an unbelievable tight 40-point range this week. I am still long the Bund at 129.00 with the same 129.60 T/P level. I will add to this position at 128.30 while leaving my 127.85 ‘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
Gold hit a new all-time high at 3791 before having a late $30 sell-off into the New York close. The fact that Gold is so overbought as shown by its Monthly RSI and the fact that it is trading so far outside the top of its Daily Bollinger Band, I emailed my Platinum Members to stay short with a now higher 3775 ‘Closing Stop’. It is easier to hold onto this position given the gains made in some of the other contracts this week. I will now raise my T/P level to 3720. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Silver Rolling Contract
No Change: Silver continued to build higher momentum throughout Monday’s session, hitting new highs for the year above $44. Today, I am going to stay flat the Silver market as I want to see the price action now that we are at new year-to-date highs. If this view changes, I will be back with a new update for my Platinum Members.
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