U.S. Indexes gained on Tuesday, helped by broad buying across sectors (RSP +0.5%) and particularly gains in AI-related stocks. Micron (MU +19.4%) drove the bulk of SPX’s gains (contributed ~19 Handles to SPX’s 46-Handle) as the rally in semiconductors and memory names showed no sign of stopping; UBS upped its MU PT to USD 1,625 (prev. 535), citing long-term memory supply agreements. Energy stocks underperformed on the drop in oil futures WTD, a function of the US and Iran nearing a finalisation of an agreement, with reports suggesting Iran’s blocked resources are the main sticking point left unresolved. Energy prices bounced off Monday’s lows as Iran looks to respond to the US attacks, in which the US said it conducted self-defence strikes in southern Iran. Staples were a sea of red, as appetite for the defensive sector remains subdued in the aftermath of cautious Q2 commentary seen in Walmart and Target earnings last week. Yields on global government bonds followed the move lower in energy prices, with money market pricing walking back its short-lived expectation for a 25 basis points Fed rate hike by year’s end on hawkish commentary from the Fed’s Waller seen last Friday. Amid the easing in global yields, the Dollar, alongside mixed signals out of the Middle East, was broadly firmer against peers. NZD was the worst G10 performer ahead of the RBNZ rate decision overnight, which is expected to see the OCR held at 2.25%. Precious metals were more mixed amid the stronger USD; gold was flattish; silver, platinum, and palladium all gained. Outside of geopolitics, updates had a limited impact on intraday movement. CB’s Consumer Confidence saw a drop in May as inflation impacts from the Middle East continue to act as a drag; meanwhile, an average US 2 Year Treasury Note Auction was met with a muted reaction. The Conference Board’s gauge of US consumer confidence eased to 93.1 in May (exp. 92), down from an upwardly revised 93.8 in April. The Expectations Index rose to 74.4 from 71.9, the Present Situation eased to 121.2 from 123; jobs are ‘hard to get’ fell to 18.6% from 19.8%, and the labour market differential fell by 0.6 points to 6.9. Pantheon Macroeconomics said the data was subpar, noting that while expectations recovered to a five-month high, the labour market picture deteriorated, with the share of households finding jobs plentiful falling to its lowest since February 2021, which PM says points to a renewed rise in unemployment ahead. The consultancy anticipates that Y/Y consumption growth is slowing modestly in Q2, and on inflation, says that a weakening labour market will limit the pass-through of elevated expectations into wages and prices. Elsewhere, Oil closed higher by 3% while Gold ended Tuesday’s session with a 1/75% fall.
To mark my 3375th 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 lost 305 points yesterday and is now down by 1930 points for May 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 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 0.61% higher at a price of 7519.
The Dow Jones Industrial Average closed 118 points lower for a 0.23% loss at a price of 50,461.
The NASDAQ 100 closed 1.76% higher at a price of 30,001.
The Stoxx Europe 600 Index closed 0.44% lower.
This Morning, the MSCI Asia Pacific closed 0.3% higher.
This Morning, the Nikkei closed 0.54% higher at a price of 65,349.
Currencies
The Bloomberg Dollar Spot Index closed 0.07% higher.
The Euro closed 0.12% lower at $1.1625.
The British Pound closed 0.38% lower at $1.3441.
The Japanese Yen fell 0.27% closing at $159.34.
Bonds
U.K.’s 10-Year Gilt closed 1 basis points lower at 4.89%.
Germany’s 10-Year Bund Yield closed 3 basis points higher at 2.98%
U.S.10 Year Treasury closed 5 basis points lower at 4.51%.
Commodities
West Texas Intermediate crude closed 3.1% higher at $93.99 a barrel.
Gold closed 1.75% lower at $4490.10 an ounce.
This morning on the Economic front we have a speech from Fed Member Logan at 9.00 am followed by MBA Mortgage Applications at 12.00 pm. Next, we have the Richmond Fed Manufacturing Index at 3.00 pm. Finally, we have an ECB Press Conference and a Five-Year Treasury Auction at 6.00 pm ahead of a speech from Fed Member Cook at 7.55 pm.
Cash S&P 500
Stocks managed to finish higher, with Micron doing much of the heavy lifting, rising just shy of 20% on the day. This is like silver and gold on steroids, and honestly, I am not sure there is a better way to describe the situation at this point. Call volumes are soaring, while 7-day implied volatility is sitting around 110%. Typically, stocks in these situations begin to run into trouble once implied volatility moves into the 100%+ range, as call options become extremely expensive. For example, a $1,000 call option on Micron expiring on May 29 is trading around $9.50, meaning the stock would need to rise above $1,009.50 for the buyer to profit if the option is held until expiration. That would require roughly another 12% gain between now and Friday, based on its closing price of $895. Clearly, the stock just rallied 20% yesterday, but that still feels like a significant hurdle. The higher the stock rises, the higher implied volatility climbs, and the more expensive the call options become. In many ways, what is happening here is not much different from what we saw in silver and gold starting October/November. To put Micron’s rally into context: At the end of March, Micron was trading at $325 per share before closing last night at $895. These moves are hard to fathom, making technical analysis extremely challenging. Dispersion within the Index remains elevated on both an implied and realised basis, with the XLK outperforming the S&P 500 by roughly 18 percentage points, while every other sector continues to lag the broader index. Meanwhile, realised correlations continue to sink as market leadership becomes increasingly concentrated. Meanwhile, 3-month implied correlation closed below 11, putting it near one of the lowest levels on record. Really, the only comparable period was around July 2024, just before Yenmageddon. Constituent implied volatility also remains very high. This is a fairly unusual setup for the market, largely driven by the sharp rally in the semiconductor sector. The reality is that this probably cannot continue indefinitely. Eventually, implied volatility becomes so elevated that options become too expensive, ultimately leading to an unwind in positioning. In many ways, it is not all that different from what we saw earlier this year in Silver and Gold. In fact, the setup does not look all that different. The S&P hit a high at 7539 yesterday afternoon just missing my 7540-sell level before falling to an afternoon low at 7502 – thus leaving a 35 Handle Gap from Friday’s Chicago close. Today, I will again be a seller from 7542/7562 with the same 7577 tight ‘Closing Stop’. If I am taken short, I will have a T/P level at 7515. The S&P has short-term support from 7450/7470 where I will be a strong buyer with a 7429 ‘Closing Stop’. If I am taken long, I will have a T/P level at 7502.
EUR/USD
The boring sideways price action in the Euro continues. The Euro has literally traded in a 200-point range for much of the past six months. I am still long the Euro at 1.1620. I will now lower my T/P level to 1.1660. I will add to this position at 1.1540 while leaving my ‘Closing Stop’ unchanged at 1.1475. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
No Change: The Dollar has short-term resistance from 100.00/100.80 where I will be a seller with a tight 101.50 ‘Closing Stop’. If I am taken short, I will have a T/P level at 99.30. The Dollar has support below from 98.10/98.80 where I will again be a buyer with a 97.55 ‘Closing Stop’. If I am taken long, I will have a T/P level at 99.50. If any of these views change, I will be back with a new update for my Platinum Members.
Russell 2000
The Russell rallied to my second sell level at 2920 for a now 2890 average short position. I will leave my 2975 ‘Closing Stop’ unchanged while raising my T/P level to 2845. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
FTSE 100
I am still flat. The FTSE has short-term resistance from 10580/10680 where I will be a small seller with a 10805 wider ‘Closing Stop’. If I am taken short, I will have a T/P level at 10510.
Dow Rolling Contract
My Dow plan worked well as the market traded lower to my 50380-buy level before rallying overnight. To reduce my NDX losses I have now exited this position here at 50580 and I am now flat. Today, I will again be a buyer on any further dip lower to 50000/50300 with a lower 49695 ‘Closing Stop’. If I am taken long, I will have a T/P level at 50630. I still do not want to be short the Dow at this time.
Cash NASDAQ 100
Wrong! I was stopped out of my latest 29400 average short position at 29905 and I am now flat. I will stay flat the NDX until I get a better edge in this market. This morning the NDX is trading over 30,000 having risen 7000 points in the past seven weeks. If this view changes, I will be back with a new update for my Platinum Members.
December BUND
I am still short the Bund at 126.50 with a now higher 126.10 T/P level. I will continue to look to add to this position at 127.20 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
I am still flat. I will not chase the price of Gold higher as I continue to be a buyer on any dip lower to 4320/4420 with the same 4195 ‘Closing Stop’. If I am taken long, I will have a T/P level at 4590 If this view changes, I will be back with a new update for my Platinum Members.
Silver Rolling Contract
No Change: Silver continues to trade heavy and I am still flat. Silver has short-term support below from 70.50/73.50 where I will be an aggressive buyer with the same 67.95 ‘Closing Stop’. If I am taken long, I will have a T/P level at 76.10.
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