U.S. Equity Markets closed off earlier lows seen at the cash open with DJI (+0.4%) turning positive while SPX (-0.5%), NDX (-1.2%) and RUSSELL (-0.4%) remained in the red. Behind the selloff, fears resumed around the consumer with the latest US Consumer Confidence gauge from the Conference Board exhibiting a similar tone seen in last Friday’s University of Michigan report, namely consumer confidence tumbling below the most pessimistic analysts forecasts. The print saw its largest monthly decline since August 2021, with the Expectations Index dipping below the level of 80 which “usually signals a recession ahead”. Despite the selling pressure, Consumer Staples and Real Estate outperformed with decent gains. On the former, Walmart (WMT +4.3%) relief rally from lows seen last week on underwhelming guidance helped while positive earnings reports from American Tower (AMT, +6.1%) and Public Storage (PSA, +1.7%) buoyed the Real Estate sector. Communications were at the bottom of the pile as Meta (META) continued its retreat from All-Time-Highs while heavyweight loser Tesla (TSLA, -8.4%) weighed on the Discretionary sector following European sales dropping 45% in January. In FX, the Dollar wiped out recent strength with Bond Yields across the Treasury curve lower. The move higher in Treasuries leading up to the US data had little fresh drivers behind it, but many have been becoming wary over the recent consumer woes and economic implications from DOGE’s incoming Federal layoffs. Fed Member Barkin downplayed impacts from Federal layoffs, acknowledging that federal layoffs could be significant for regional economies but represent only 2% of the national job market. The Euro, Sterling and Havens all saw gains, with the Euro helped by positive developments regarding US-Ukraine relations. The latest FT reports note that Kyiv has agreed terms with Washington on a minerals deal after the US dropped demands for a right to USD 500 billion in potential revenue from exploiting the resources. Later, Bloomberg reported Ukraine’s cabinet is expected to recommend a US critical minerals deal to be signed on Wednesday. In crude, WTI and Brent were lower by ~ USD 1.70/bbl at USD 69/bbl and USD 72.60/bbl, respectively. Prices were weighed on by subdued consumer sentiment while energy-specific newsflow was light. US President Trump commented on Truth that they want the Keystone XL Pipeline built and suggested easy approvals. Post-US close, US Commerce Secretary said they will investigate possible impositions of tariffs to build the US copper industry, however, no timeline was given. Going forward, Nvidia (NVDA) earnings on Wednesday are the big event and looking beyond to Friday, the PCE report remains of focus, with Fed’s Barkin expecting it to show a further decline. U.S. Consumer Confidence in February tumbled to 98.3 from 105.3, well beneath the 102.5 consensus and also beneath the most pessimistic forecast of 99.3. Within the report, the Present Situation Index fell to 136.5 from 139.9, with forward-looking expectations tumbling to 72.9 from 82.2. Meanwhile, inflation expectations jumped to 6% from 5.2% on the 12-month forecast. The report also highlights that “For the first time since June 2024, the Expectations Index was below the threshold of 80 that usually signals a recession ahead.” It was also the largest monthly decline since August 2021. The downbeat data follows that of the latest University of Michigan Survey, but Fed’s Barkin reminds us that consumer confidence does seem heavily influenced by political affiliation but stressed it does still matter a lot. The CB Consumer Confidence report echoes sentiment from the UoM with fears of tariffs and government spending costs hitting confidence data. Nonetheless, when coupled with a downbeat S&P Global Services PMI, Walmart (WMT) cutting guidance and the woeful Retail Sales report does mark a cause for concern regarding the outlook for the US consumer. Given there is a lot of uncertainty regarding actual government policies and the impact of such policies, the question still remains over whether such a weak outlook is realised. Barkin, the Richmond Fed President stressed that uncertainty argues for caution in the final stages of the inflation fight. He believes policy should remain modestly restrictive until there is greater confidence that inflation will return to target. He expects upcoming PCE data to show further declines, highlighting significant progress made by the Fed. Barkin said the economy is in a good place and he favors a “wait and see” approach to assess the impact of future policy changes. After the data, Barkin said that business and consumer confidence play a significant role in the economy and that small business confidence has been rising, which could support hiring, while noting how consumer confidence appears strongly influenced by political affiliation. Barkin acknowledged that federal layoffs could be significant for regional economies but represent only 2% of the national job market. Elsewhere, Oil closed lower by 2.5% while despite a weaker Dollar, Gold ended Tuesday with a 1.1% fall.
To mark my 3150th 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 140 points yesterday and is now ahead by 3065 points for February. 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 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 0.47% lower at a price of 5955.
The Dow Jones Industrial Average closed 159 points higher for a 0.37% gain at a price of 43,621.
The NASDAQ 100 closed 1.24% lower at a price of 21,087.
The Stoxx Europe 600 Index closed 0.15% higher.
Yesterday, the MSCI Asia Pacific closed 0.3% lower.
Yesterday, the Nikkei closed 1.37% lower at a price of 38,237.
Currencies
The Bloomberg Dollar Spot Index closed 0.28% lower.
The Euro closed 0.3% higher at $1.0513.
The British Pound closed 0.2% higher at 1.2662.
The Japanese Yen rose 0.7% closing at $149.05.
Bonds
Germany’s 10-year yield closed 3 basis points lower at 2.46%.
Britain’s 10-year yield closed 5 basis points lower at 4.52%.
U.S.10 Year Treasury closed 8 basis points lower at 4.30%.
Commodities
West Texas Intermediate crude closed 2.5% lower at $68.93 a barrel.
Gold closed 1.1% lower at $2914.10 an ounce.
This morning on the Economic Front we have German GFK Consumer Confidence at 7.00 am. This is followed by the U.S. MBA Mortgage Applications at 12.00 pm and Building Permits at 1.00 pm. Finally, we have New Home Sales at 3.00 pm and a Seven Year Treasury Auction at 6.00 pm.
Cash S&P 500
Although the S&P hit a low of 5909 yesterday afternoon, internally the market was positive, setting up a strong rally into the close. The initial sell-off saw the whole of my buy range triggered for a 5947 average long position. Subsequently, the S&P rallied to my revised 5956 T/P level and I am now flat. The 100 MA comes in at a price of 5945 and it was important for the bulls that this key pivot point was recovered into the close. As I go to post the S&P is trading higher at 5976. We have support from 5922/5942 where I will be a strong buyer with a lower 5899 wider ‘’Closing Stop’’. As I mentioned yesterday, structurally the S&P remains far from oversold, and it is why I prefer to be a buyer of dips rather than chase the S&P higher. With Trump headlines hitting the wires every day it will be a while before we know the full market reaction to next week’s proposed Mexico and Canadian Tariffs if and when they do come into effect. Worryingly, last week’s highs saw asset managers have their largest long position in many months and are now trapped, which is another reason not to chase the market for a move higher. It is amazing that just a 4% drop in the main Indexes in the past week sees the Fear & Greed Index hit a reading of 23 which is ‘’Extreme Fear’’. On top of that we have the third highest bear reading in many months. Now while this may get ugly short-term any dip will see me look to put on a more sustainable long position given how quickly the market has become oversold. The top 10% earners now account for half of all consumer spending. They own 90% of stocks after all. Hence my larger point: See markets fall hard you risk ending in a recession, hence the Fed and everyone else always wanting to protect markets. Lose the top 10% and you lose the economy. Bitcoin got hit hard, falling by 8% yesterday and is now down over 22% since the Trump post November 5 Presidential win. We have had an excellent start to the year. I have no interest in taking large risks, preferring to wait for a dip to buy. Given the ‘’Fear & Greed’’ reading I have no interest in shorting the S&P. If this view changes, I will be back with a new update for my Platinum Members.
EUR/USD
No Change. I am still flat the Euro. I will now raise my Euro buy level to 1.0380/1.0450 with a higher 1.0295 wider ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 1.0510. I still do not want to be short the Euro at this time.
Dollar Index
No Change: I am still long the Dollar from last week at a price of 106.60 with the same 107.10 T/P level. I will add to this position on any further move lower to 106.00 while leaving my 105.55 ‘’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
Despite Treasury Yields have fallen over 30 basis points in the past week it is not giving any respite to the Russell Index. I am still long at a price of 2210 with the same 2115 ‘’Closing Stop’’. I will continue to look to add to this position at 2150 while lowering my T/P level to 2230. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash FTSE
The FTSE never came close to Tuesday’s buy range, instead leading the afternoon recovery into the New York close. I am still flat. I will now raise my buy level to 8560/8630 with a higher 8495 ‘’Closing Stop’’. If triggered, I will have a T/P level at 8685. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
No Change: Friday’s aggressive sell-off saw the Dow close below its 50 Day Moving Average (43715) and this pivot point should act as resistance on any bounce. However, following last week’s 4% drop the Dow is close to oversold. The Dow has left a large ‘’Open Gap’’ below the market from 42500/42700 where I will be an aggressive buyer on any tag with no stop. Meanwhile, the Dow has short-term support from 42900/43150 where I will again be a buyer with a tight 42755 ‘’Closing Stop’’. If triggered, I will have a T/P level at 43390.
Cash NASDAQ 100
The NDX got hit hard yesterday, trading the whole of Tuesday’s buy range for a now 21175 average long position with a now lower 20045 ‘’Closing Stop’’. I will now lower my T/P level to 21260. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
December BUND
My latest 131.70 long Bund position worked well as the market rallied to my 132.20 T/P and I am now flat. Today, I will again be a buyer of the Bund on any dip lower to 130.50/131.30 with a lower 129.85 ‘’Closing Stop’’. If triggered, I will have a T/P level at 131.80. I still do not want to be short the Bund at this time.
Gold Rolling Contract
Gold never came close to Tuesday’s sell range before accelerating lower and I am still flat. As I am now long Silver, I will stay flat Gold to see how the market reacts to yesterday’s 8% fall in Bitcoin. If this view changes, I will be back with a new update for my Platinum Members.
Silver Rolling Contract
Silver traded lower to my second buy level at 31.30 for a now 31.75 average long position. I will leave my 29.95 ‘’Closing Stop’’ unchanged while lowering my T/P level 32.20. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
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