U.S. Equity Markets fell the most in more than three weeks as Federal Reserve Chairman Jerome Powell warned the downside risks to the economy have increased and Trump administration officials signalled a trade deal at the Group of 20 meeting is unlikely. Treasuries and the US Dollar advanced. The S&P 500 fell for a third-straight session, the longest streak since May 9, as Powell reiterated the case for somewhat lower interest rates, but stopped short of signalling a cut was imminent. Markets have been pricing in a reduction of nearly 50 basis points in July. St. Louis Fed President James Bullard said a cut of that magnitude seemed unwarranted. Tech shares led losses, with the Nasdaq 100 falling more than 1.7%, after a senior Trump administration official told Bloomberg the U.S. won’t accept further conditions on tariffs as part of reopening negotiations and no detailed trade deal is expected from the leaders’ summit. The two-year Treasury was little changed around 1.73%, while the 10-year dropped below 2%, a level that until last week it hadn’t breached in three years. The dollar rose for the first time in six sessions.
To mark my 1850th 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@tradernoblecom for details
For anyone following my Platinum Service it made 87 points yesterday and is now ahead by 1147 points for June, having made 1722 points in May, 955 points in April, 1027 points in March, 1013 points in February and 1671 points in January. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
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Equities
With stress between the U.S. and Iran building and the White House apparently playing down hopes of a trade breakthrough when Trump and China’s Xi Jinping meet this week, investors have edged away from risk assets following the recent central bank-fuelled rally. The market has been betting the Fed will produce deep cuts to interest rates this year, and comments by officials Tuesday highlighted investor sensitivity to any hints that may not happen. Not helping the bullish case was the report showing Sales of new U.S. homes falling to a five-month low in May, adding to signs of weakness in the sector despite lower mortgage rates. Single-family home sales dropped 7.8% to a 626,000 annualized pace that missed all estimates in Bloomberg’s survey of economists, from an upwardly revised 679,000 rate in April, government data showed Tuesday. The median sales price decreased 2.7% from a year earlier to $308,000. The S&P 500 Index fell 0.95%, the biggest decline since May 31, to close at 2918 while the NASDAQ closed 1.7% lower. The Stoxx Europe 600 Index dipped 0.1% while overnight the Nikkei closed 0.50% lower at 21, 086.
Currencies
Here is a summary of the main changes in F.X. Markets:
The Bloomberg Dollar Spot Index rose 0.1%.
The Euro dropped 0.3% to $1.1370, the first retreat in a week, and is opening at this level in London this morning.
The British Pound declined 0.4% to $1.2696.
The Japanese Yen climbed 0.1% to 107.16 per dollar.
Bonds
The yield on 10-year Treasuries declined three basis points to 1.99%. This is the first close below 2% since November 2016. Meanwhile in Europe, Germany’s 10-year yield fell two basis points to -0.31%, the lowest on record, and Britain’s 10-year yield dipped two basis points to 0.794%.
Commodities
West Texas oil edged lower as investors weighed escalating tensions between the U.S. and Iran against the possibility of OPEC+ extending production cuts. Although Gold closed higher at $1,426.50 an ounce in New York last night, it is a different story this morning with Gold trading $20 lower at $1407. Bitcoin extended its gains through $12,500 overnight, up a cool 12%. Remember at the beginning of April Bitcoin was trading below $4,000.
This morning on the Economic Front we have the UK BBA Mortgage Approvals at 9.30 am and this is followed at 1015 am by a speech from Bank of England Governor Carney. At 12.00 pm we have US MBA Mortgage Approvals and this is followed at 1.30 pm by Wholesale Inventories and Durable Goods Orders. Finally at 4.30 pm we have a speech by Fed Member Daly.
September S&P 500
Having traded to a new all-time high at 2969 last Friday the S&P is now trading nearly 50 Handles lower as tension amounts ahead of the G-20 Meeting in Osaka which takes place this coming Friday and Saturday. As I mentioned yesterday the Fed Members really have no idea what they are doing as they keep changing their minds depending on the latest Economic Data. Yesterday we saw very weak Home Sales and Consumer Confidence which dropped from a previous reading of 131 to yesterday’s 121 print. The VIX closed 9% higher at 16.30, which is just below its 200 Day Moving Average which comes in at 17.22 this morning and this level needs to be watched closely. Yesterday the S&P traded the whole of my buy range for a now average long position at 2930. I have lowered my T/P level on this trade to 2932 with the same 2917 tight stop. If I am stopped out of this position I will be a more aggressive buyer from 2900/2910 with a 2892 stop.
EUR/USD
My Euro plan worked well with the market hitting my 1.1350 buy level before rallying to my 1.1375 T/P level and I am now flat. This profit yesterday makes up for some of Monday’s loss when I was stopped out at the top of the market at 1.1410. Today I will buy the Euro on any dip lower to 1.1280/1.1320 with a 1.1245 stop. I will also lower my sell level to 1.1410/1.1450 with a 1.1485 stop.
September Dollar Index
The Dollar just missed my 95.10 buy level before rallying to trade at 95.80 this morning. Today I will move my buy level up to 94.90/95.30 with a 94.55 stop.
September DAX
No Change as I am still a buyer on any dip lower to 12070/12130 with the same 12025 stop.
September FTSE
The renewed weakness in Sterling prevented the FTSE from following the other main Indices lower. I am still flat and today I will raise my buy level slightly to 7265/7305 with a higher 7230 stop. I still do not want to be short the market at this time.
Dow Rolling Contract
The Dow traded lower to my 26540 buy level before having a small rally which enabled me to cover this position at my revised 26590 T/P level and I am now flat. The reason I covered this trade was the fact that I am already long both the S&P and NASDAQ which is enough risk at this stage. While the S&P made a new all-time high on Friday the Dow is still trading below its equivalent 26951 high from last October. As long as this remains the case we still have ‘’Negative Divergence’’. Yesterday’ sell-off saw the McClellan Oscillator close in negative territory with a -25 print. However, for the market to turn bearish we need the Dow to break and close below 26100 for a few days. Today I will again look to buy the market on any dip lower to 26310/26460 with a 26225 tight stop.
September NASDAQ
Just like the S&P above the NASDAQ also traded the whole of yesterday’s buy range for a now average long position at 7645. I will leave my stop unchanged at 7580 which also lowering my T/P level on this trade to 7652. If any of the above levels are hit I will be back with a new update for my Platinum Members.
September BUND
Yesterday afternoon the Bund traded higher to my 172.88 sell level. As I wanted to be flat this market overnight I covered my position at my revised 172.76 T/P level and I am now flat. For those members who took the trade and stayed short overnight the market was trading at 172.60 shortly after the open this morning giving you the potential of a quick gain. Today I will again look to sell the Bund from 172.98/173.38 with a 173.65 tight stop.
Gold Rolling Contract
There is no doubt that the Daily Sentiment Index is one of the best technical indicators for trading markets especially when we see a reading above 90% for selling the market, or below 10% for buying. Back – to – back readings of 94% in Gold as mentioned at length in yesterday’s commentary saw Gold fall by almost $40 from where I marked prices 24 hours ago. Gold will have strong support from 1380/1390 and today I will be an aggressive buyer on any dip to this area with a wider 1369 stop. Remember last week’s breakout came after we traded above 1375.
Silver Rolling Contract
I am still long Silver at 15.37 with the same 15.05 stop. I will now lower my T/P level on this position to 15.50.
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