U.S. Indexes closed in the green on Tuesday, with the NASDAQ 100 outperforming in a tech-led rally. Crude prices slumped on US-Iran optimism, with a further move lower seen in late trade after Russian press RIA reported that the US and Iran are close to a ceasefire agreement that includes freedom of navigation through the Strait of Hormuz. The report also weighed on the Dollar and supported Treasuries and stocks into the closing bell. However, at the time of writing, there has been no confirmation of the report from other outlets. Elsewhere, sectors were predominantly firmer, with Technology leading the gains, while Energy slumped alongside weaker crude prices. Consumer Discretionary was also pressured by weak Dick’s (DKS) guidance, which weighed on peers including Nike (NKE), Lululemon (LULU) and On Holding (ONON). Treasury yields fell across the curve as oil prices tumbled, with the late RIA report adding to the move. The USD 69 billion 2-year auction had little lasting impact but was met with stronger demand than recent averages, albeit was not quite as strong as the July offering despite a lower yield on offer. US data was mixed, as Consumer Confidence was mixed, New Home sales plunged, and Richmond Fed was soft, but the outlook was more encouraging. The only Fed speaker was 2028 voter Collins, who reiterated familiar Fed rhetoric and how she is concerned about price stability of the mandate. In FX, the Yen and Dollar underperformed, while the Antipodeans led the way amid the upside in stocks. Notably, the Yen failed to benefit from the decline in US Treasury yields. Gold managed to recoup its earlier losses, while Silver still settled in the red. Consumer confidence in August fell to 89.4 from 90.2, and shy of the expected 90.3. The Present Situation Index lifted to 121.2 from 114.4, but the Expectations Index fell by 5.8 points to 68.2. Looking at the present situation, 18.9% of consumers said business conditions were “good” (prev. 19.1% in July) and 17.6% said they were “bad” (prev. 17.9%). Views of the labour market improved as 27.0% said jobs were “plentiful” (prev. 24.4%), while 19.5% said “hard to get” (prev. 21.7%). Looking ahead it was not so promising, consumers were less optimistic about future business conditions, more negative about the labour market outlook, and income prospects were less optimistic. Consumers’ write-in responses on factors affecting the economy were slightly more pessimistic in August. References to prices in general, and oil and gas specifically, remain elevated. Conference Board chief economist Dana Peterson wrote “Consumer appraisals of current business conditions were mildly positive. Perceptions of the current labour market improved, reversing three months of moderate decline. Ahead, expectations for household incomes moderated but remained optimistic overall.” New Home Sales tumbled 10.5% in July to 607k, beneath the expected 620k, while June was revised higher to 678k from 628k. New home supply was 9.6 months’ worth at current pace (vs. 8.5 months in June) and median sale price was USD 393,800, -0.9% Y/Y. Overall, Oxford Economics writes that the housing market is not headed for a downturn, but rising mortgage rates and weaker growth in real disposable income due to elevated inflation will keep any rebound out of sight. Elsewhere, Oil closed lower by 3.5% while Gold was flat.
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For anyone following my Platinum Service it made 60 points yesterday and is now ahead by 2400 points for August after closing July with a gain of 8031 points, after ending June with a new record of 10527 points after ending May with a loss of 1104 points, having ended April with a gain of 1730 points, after ending March with a massive gain of 9002 points, 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 while 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 previous 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 0.32% higher at a price of 7677.
The Dow Jones Industrial Average closed 160 points higher for a 0.30% gain at a price of 53,577.
The NASDAQ 100 closed 0.64% higher at a price of 29,209.
The Stoxx Europe 600 Index closed 0.35% higher.
Yesterday, the MSCI Asia Pacific closed 0.3% higher.
Yesterday, the Nikkei closed 0.51%higher at 65,856.
Currencies
The Bloomberg Dollar Spot Index closed 0.09% lower.
The Euro closed 0.08% higher at $1.1673.
The British Pound closed 0.09% higher at $1.3643.
The Japanese Yen fell 0.05% closing at $159.22.
Bonds
U.K.’s 10-Year Gilt closed 6 basis points lower at 4.99%.
Germany’s 10-Year Bund Yield closed 5 basis points lower at 3.20%
U.S.10 Year Treasury closed 6 basis points lower at 4.64%.
Commodities
West Texas Intermediate crude closed 3.35% lower at $82.16 a barrel.
Gold closed 0.09% lower at $4647.10 an ounce.
This morning on the Economic front we have U.K. CBI Distributive Trade Survey at 11.00 am. This is followed by U.S. Durable Goods Orders, GDP and PCE Index at 1.30 pm. Next, we have the Dallas Fed PCE at 3.00 pm and a speech from Fed Member Barkin at 4.45 pm. Finally, we have a Five-Year Treasury Auction at 6.00 pm.
Cash S&P 500
Stocks finished Tuesday’s session higher but not by much. The trading range was tight, with the 1-day VIX finishing below 9. That probably won’t stay that way for long — with Nvidia’s results after the close this evening, the VIX 1-day is likely to be much higher by Wednesday’s close. Since 2022, it has not often been the case that the VIX 1-day has closed at such low levels, so the range of implied volatility is likely to expand from here. Implied volatility for the semiconductor sector continues to decline, with the VXSMH dropping to 38.9, its lowest level since August 14 and, before that, January. The thing is, semiconductor implied volatility is falling faster than S&P 500 implied volatility, which is somewhat surprising, given that Nvidia reports tonight. In fact, the VXSMH was in the mid-60s at the start of July, so it has nearly been cut in half in six weeks, while the VIX has only dropped a few points. That is leading my proxy for semiconductor-sector implied correlations to rise faster than index-level implied correlations. It means that semi options are becoming less expensive relative to index options, and that the market is starting to price the semiconductor sector more in line with the S&P 500, rather than on its own story. The problem is that, with semis and the index starting to be priced to move together, there is less cushion from the rest of the market. So, if semis drop after Nvidia reports, they are more likely to take the S&P 500 down with them. Another oddity heading into Jackson Hole, amid worries over the long end of the curve, is that VXTLT now trades just below 21-day realized volatility in TLT, and well below 9-day realised volatility. To me, that seems odd, given the event risk that Friday brings for the bond market and the risk of yields moving higher. It is as if the options market does not believe volatility in the long end of the curve will persist. I am still flat the S&P as neither my buy/sell levels were threatened on Tuesday. The S&P has short-term resistance from 7715/7740 where I will be a small seller with a 7761 ‘Closing Stop’. The S&P has short-term support from 7605/7630 where I will be a strong buyer with a 7578 ‘Closing Stop’. If I am taken short, I will have a T/P level at 7688. If I am taken long, I will have a T/P level at 7658. If these views change, I will be back with a new update for my Platinum Members.
EUR/USD
I am still flat as the Euro again traded in a narrow range. Today, I will continue to be a small seller from 1.1720/1.1790 with a 1.1865 ‘Closing Stop’. If I am taken short, I will have a T/P level at 1.1650. I no longer want to be a buyer of the Euro at this time.
Dollar Index
I am still flat as the Dollar never came close to Tuesday’s buy range. Today, I will again be a buyer from 98.80/99.50 with the same 96.95 ‘Closing Stop’. If I am taken long, I will have a T/P level at 99.10.
Russell 2000
I am still flat. Today, I will continue to be a seller from 3060/3130 with the same 3205 ‘Closing Stop’. If I am taken short, I will have a T/P level at 3005.
FTSE 100
I am still flat. Today, I will now raise my sell level to 10960/11040 with a higher 11025 ‘Closing Stop’. The FTSE has short-term support from 10650/10730. I will raise my buy level to this are with a higher 10555 ‘Closing Stop’. If I am taken short, I will have a T/P level at 10870. If I am taken long, I will have a T/P level at 10810.
Dow Rolling Contract
The Dow fell shy of Tuesday’s sell range and I am still flat. Ahead of Nvidia’s earnings I will now raise my sell level to 53980/54280 with a higher 54505 ‘Closing Stop’. If I am taken short, I will have a T/P level at 53710. I still do not want to be a buyer of the Dow at this time. If this view changes, I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
I am still flat. Today, I will raise my buy level to 28820/29020 with a higher 28695 ‘Closing Stop’. If I am taken long, I will have a T/P level at 29280. I still do not want to be short the NDX at this time.
December BUND
Finally, Bund yields dropped on Tuesday. This move lower saw the Bund rally to my 124.30 T/P level on my latest 123.70 long position and I am now flat. The Bund has short-term support from 123.30/124.00 where I will again be a buyer with a higher 122.65 ‘Closing Stop’. If I am taken long, I will have a T/P level at 124.60.
Gold Rolling Contract
I am still flat. Gold traded in a narrow range on Tuesday as it looks to consolidate the recent spike higher. I am reluctant to chase the price of Gold higher without a meaningful correction first. Therefore, I will continue to be a buyer from 4300/4380 with the same 4225 ‘Closing Stop’. If I am taken long, I will have a T/P level at 4470. If this view changes, I will be back with a new update for my Platinum Members.
Silver Rolling Contract
I am still flat. Today, I will continue to be a small buyer on any further dip lower to 63.50/66.50 with the same 61.85 ‘Closing Stop’. If I am taken long, I will have a T/P level at 68.30.
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