U.S. Equity Markets closed mixed on Tuesday following a trading session that witnessed of two-way price action. Both the S&P and NDX closed higher while the RUSSELL 2000 was the underperformer, closing lower by 0.7%, in a day of thin headline newsflow as participants await tech behemoth NVIDIA earnings on Wednesday after-hours. Sectors were mixed, as Energy lagged and weighed on by weakness in the crude complex, as WTI and Brent wiped out almost all of Monday’s gains, amid a lack of geopolitical escalation, and participants’ profit-taking. Technology and Financials sit atop of the pile, with the former supported by Nvidia (+1.5%) ahead of the aforementioned earnings. The Dollar was lower on Tuesday and retraced its gains seen on Monday, albeit in a week, so far, typical of summer trading conditions ahead of the Labour Day holiday next week, which was to the benefit of its G10 peers. For the record, there was no Fed speak, and on the data docket Richmond Fed composite fell further into contractionary territory, while Consumer confidence beat expectations, although the outlook for the labour market was less optimistic. T-Notes were lower and curve steepening in an extension of a slew of dovish Fed speak echoing Powell last Friday. The Conference Board’s Consumer Confidence data in August rose to 103.3 from 101.9 (revised up from 100.3), above the 100.7 forecast. The upside was due to a tick up in both the Present Situation Index, to 134.4 from 133.1, and the Expectations Index, to 82.5 from 81.1, marking the 2nd straight month of a print above 80; a reading below 80 usually signals a recession ahead. Further into the report, it notes that consumers, compared to July, were more positive about business conditions, both current and future, but also more concerned about the labour market. It also adds that the assessments of the current labour situation, while still positive, continued to weaken, and assessments of the labour market going forward were more pessimistic. “This likely reflects the recent increase in unemployment. Consumers were also a bit less positive about future income.” Note, 32.8% of consumers said jobs were plentiful (prev. 33.4%), while 16.4% of consumers said jobs were “hard to get” (prev. 16.3%). Seeing the differential narrow to 16.4 from 17.1%. Looking ahead, on a 6 Month basis, the consumer assessment of the labour market was slightly less optimistic, with 16.1% of consumers expecting more jobs to be available, vs 15.2% in July, but 17.5% anticipated fewer jobs, up from 16.4%. On inflation, the average 12 Month inflation expectations dipped to 4.9% in August, the lowest level since March 2020, and CB writes that it is consistent with slower overall inflation and declines in some goods prices. Richmond Fed composite manufacturing index fell to -19 (prev. -17) in July. Of its three components, shipments lifted to -15 (prev. -21), while new orders and employment decreased to -26 (prev. -23) and -15 (prev. -5), respectively. On the inflationary footing, prices paid declined to 2.45 from 3.00, but prices received rose to 1.87 from 1.31, with the forward-looking expectations also showing the same theme. Within the release, firms grew less optimistic about local business conditions, as the index fell to -24 from -21. In addition, the Index for future local business conditions fell notably, with fewer than 10% of respondents expecting conditions to improve in the next six months. However, the report adds, the future indices for shipments and new orders remained solidly in positive territory, suggesting that firms continued to expect improvements in these areas over the next six months. The vendor lead time index decreased slightly into negative territory. On balance, firms continued to report declining backlogs in August as that index remained negative. Elsewhere, Oil fell 2% while Gold again closed higher by 0.2%.
To mark my 3075th issue of TraderNoble Daily Commentary I am offering a special 2-Year rate of Euro 2750 for my Platinum Service which includes 1 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 20 points yesterday and is now down by 546 points for August after closing July with a gain of 1918 points while June closed with a gain of 2074 points, having made 1843 points in May. The Platinum Service made 4010 points in April after ending March with a gain of 2113 points. February closed with a gain of 1606 points, after closing January with a gain of 3675 points. December saw a gain of 1890 points after finishing November with a gain of 1734 points. October ended with a gain of 3184 after closing September with a small gain of 228 points, after finishing August with a gain of 1485 points, following a small gain of 285 points gain in July, after closing June with a gain of 2683 points. May closed with a gain of 3205 points. April saw a gain of 3354 points while March closed with a gain of 6168 points. The Platinum Service made a record 9619 points last October. 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 0.16% higher at a price of 5625.
The Dow Jones Industrial Average closed 10 points higher for a 0.02% gain at a price of 41,250.
The NASDAQ 100 closed 0.33% higher at a price of 19,581.
The Stoxx Europe 600 Index closed 0.16% higher.
This morning, the MSCI Asia Pacific closed 0.3% higher.
This morning, the Nikkei closed 0.22% higher at a price of 38,371.
Currencies
The Bloomberg Dollar Spot Index closed 0.10% higher.
The Euro closed 0.15% higher at $1.1181.
The British Pound closed 0.4% higher at 1.3255.
The Japanese Yen rose 0.3% closing at $143.98.
Bonds
Germany’s 10-year yield closed 4 basis points higher 2.29%.
Britain’s 10-year yield closed 6 basis points higher at 3.98%.
U.S.10 Year Treasury closed 2 basis points higher at 3.83%.
Commodities
West Texas Intermediate crude closed 2% lower at $75.88 a barrel.
Gold closed 0.2% higher at $2524 an ounce.
This morning on the Economic Front we have Euro-Zone Money Supply at 9.00 am. This is followed by U.S. MBA Mortgage Applications at 12.00 pm. Finally we have a 5-Year Treasury Auction at 6.00 pm and earnings from Tech giant NVIDIA after the 9.00 pm close.
Cash S&P 500
Reflecting more on Fed Policy over the last few days it is striking how quickly Fed Chair Powell has again pivoted. There is no doubt that the Fed should have cut rates in July instead of waiting until next month. What is striking is the communication shift from Powell. First it was all about a singular focus, that of beating inflation, then in June it shifted to ‘’Balanced Risks’’ and then following the massive NFP adjustment last week, inflation was abandoned altogether. The singular focus now is to prevent a further deterioration in the labour market. Even though inflation is nowhere near their 2% target inflation is out the door. Only a recession will get inflation to the Fed’s 2% target level. Now a recession has also been entirely removed from the public narrative. Yet the market is pricing in coming rate cuts with ferocity with 200 basis point cuts priced in by next July. One could argue that this speed of rate cuts is rather compatible with a soft landing. However, soft landings coming out of rate hike cycles have happened only twice, in 1960 and 1995 with everything else ending in a recession. How can we have a soft landing with the fastest rate hike cycle ever into the highest debt construct ever makes little sense to me. However, it is so hard to be short the markets. The last time the S&P fell below the Weekly 200 Moving Average was in 2008. Ever since it crossed back above in 2011 it has been saved every single time. Even during the COVID Crash and the October 2022 lows famously marked the end of the ‘’Bear Market’’ then. No, true bear markets did not even occur in the 1980s or 1990s as the infamous 1987 Crash stopped right at the Weekly 200 MA and that was the buy of a lifetime for the price has never been below there since. If the market does have an aggressive sell-off from mid-September to the Presidential Elections in November, the S&P will probably bottom at its Weekly 200MA which comes in at a price of 4372 today. No one is predicting a move of this magnitude but if it occurs then this will be a great price to go ‘’all-in’’ as there are a lot of support levels between 4350/4450. Meanwhile, yesterday, was a frustrating session as the S&P missed my initial 5593 buy level by just One Handles before rallying over 30 Handles and I am still flat. Today, I will continue to be a buyer on any dip lower to 5575/5593 with the same 5559 tight ‘’Closing Stop’’. My only interest in selling the S&P is on a further rally to 5662/5680 with a higher and wider 5701 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 5612. If I am taken short, I will have a T/P level at 5645.
EUR/USD
No Change: I am still short the Euro at an average rate of 1.1120. With the DSI closing a multi-year high we should see the Euro weaken before a renewed rally attempt to new highs for the year. This morning the Euro is trading at 1.1148. I will now raise my T/P level to 1.1110 while leaving my 1.1205 ‘’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
Overnight the Dollar sold off to my 100.70 buy level. As I want to bank some points for yesterday, I have now exited this long position here at 100.90 and I am now flat. The Dollar has support from 99.90/100.60 where I will again be a buyer with the same 99.25 ‘’Closing Stop’’.
Cash DAX
No Change: I am going to stay flat the DAX as I have no edge in this market at the moment. August has been the toughest month for my Platinum Service since I started writing my Daily Commentary over 11 years ago in February 2013. I will stay flat the DAX until I feel my edge has returned. If this view changes, I will be back with a new update for my Platinum Members.
Cash FTSE
The Prime Minister’s announcement that a tougher than expected U.K. Budget saw the FTSE underperform the rest of the market as Starmer indicated there will be upcoming tax hikes. The Seasonal Chart has the FTSE running into trouble over the coming weeks. The FTSE has resistance from 8430/8500 where I will be a seller with a 8565 tight ‘’Closing Stop’’. The FTSE has support from 8220/8290 where I will be a small buyer with a lower 8165 ‘’Closing Stop’’.
Dow Rolling Contract
Bulls this week will be eagerly watching the NVIDIA earnings report after the close this evening. A Nvidia beat and a benign PCE number on Friday could see the S&P make a new high helped by a Friday VIX crush into the Long-Weekend. It is not only a possible scenario, but one could also argue it is probably the most likely scenario. Next, we have the Apple iPhone event in early September ahead of the September Fed Meeting. All of these could keep the bullish momentum going I suppose, and the pain trade would be higher. However, I am seeing a number of red flags as I mentioned in my S&P Commentary above. The $NYSI is very much overbought while the oversold Dollar lurking outside the bottom of its Weekly Bollinger Band is another worry. I still maintain that the August 5 meltdown is not a one-off. I am still flat the Dow. Ahead of NVIDIA, I will now raise my Dow sell level to 41750/42000 with a higher 42205 ‘’Closing Stop’’. Given how extended the Dow is trading I no longer 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. If I am taken short, I will have a T/P level at 41425.
Cash NASDAQ 100
The NDX managed to close over its 50 Day Moving Average (19499) following a session that saw plenty of two-way price action. With NVIDIA reporting after the close I will now raise my NDX sell level to 19780/19940 with a higher 20055 ‘’Closing Stop’’. The NDX has support from 19260/19420 where I will be a small buyer with a 19155 tight ‘’Closing Stop’’.
September BUND
The Bund finally broke out of its 10-day trading range by hitting my 133.75 buy level. I am still long with a now lower 134.20 T/P level. I will continue to look to add to this position at 133.05 while leaving my 132.35 ‘’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
No Change: Gold continues to hold the 2500 support level. Seasonally September can be a difficult month for both Gold and Silver, hence my reluctance to chase the Gold market higher. Today I will continue to be a buyer on any dip lower to 2450/2465 with the same 2437 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2484.
Silver Rolling Contract
I am still flat. Silver has traded in a narrow range over the past 24 hours and I am still flat. Today, I will continue to be a buyer from 28.10/28.90 with the same 26.29 wider ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 29.60.
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