U.S. Equity Markets closed lower on Tuesday, with big tech leading the losses, exhibited by the equal-weight S&P 500 outperforming the market cap-weighted benchmark. There was not one singular reason for the stock weakness, with desks pointing to both fundamental and technical factors such as ongoing rotation, Barclays’ downgrade of Apple (AAPL), Middle East troubles, and downbeat PMIs, to name a few. Treasuries were sold across the curve, with participants making room for the deluge of corporate debt issuance for the new year, which included over 15 issuers in the Dollar IG market on Tuesday alone. However, the downward revision to S&P’s manufacturing PMI managed to cap the bond selling for the rest of the session but hardly led to a recovery. Oil prices were ultimately sold after strong gains on Tuesday morning – amid Red Sea tensions – were reversed in the US session, likely seeing some pressure from the broader risk aversion and Dollar strength, but there was no clear fundamental reason for the sharp pullback. The Dollar saw a strong bid to start the year, with weakness most pronounced in activity currencies (particularly Kiwi) and also the Euro after the region’s downbeat PMI and money and lending data. This evening we have the FOMC Minutes. The Minutes will be eyed to view the Fed’s appetite on rate cuts in 2024 after the 2024 dot plot in the SEP implied three rate cuts from current levels throughout the year. Powell and Waller have sounded somewhat dovish, which has seen money markets price in c. 150bp of cuts throughout the year, more than the 75bp of cuts implied by the Fed’s median SEP. Fed speakers have attempted to dial back these expectations since the latest Fed meeting, with Williams and Mester both noting the focus is still on determining whether policy is in the right place. Although the median dot looks for the target level for the FFR at 4.6% by the end of 2024 (currently 5.4%), the range of the dot plots was wide with eight participants pencilling a rate above 4.6% and five pencilling a rate beneath that level. The Minutes will be viewed by the market to gather more information on the FOMC’s thinking, but it is worth noting the Minutes will only incorporate the information up to the latest meeting, therefore any development since the December 13th meeting, i.e. even more dovish market pricing, cooler than expected November PCE, cooler than expected Final Q3 GDP and the attempted pushback on market pricing from the FOMC, will not be incorporated. Elsewhere Oil closed 1.47% lower while Gold again closed flat.
To mark my 2925th 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 68 points yesterday on the first trading day of January. December saw a gain of 1890 points after finishing November with a gain of 1734 points. October ended with a gain of 3184 points, 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 0.57% lower at a price of 4742.
The Dow Jones Industrial Average closed 25 points higher for a 0.07% gain at a price of 37,715.
The NASDAQ 100 closed 1.68% lower at a price of 16,543.
The Stoxx Europe 600 Index closed 0.11% lower.
This morning, the MSCI Asia Pacific closed 0.6% higher.
Last Friday, the Nikkei closed 0.22% lower at a price of 33,464.
Currencies
The Bloomberg Dollar Spot Index closed 0.9% higher.
The Euro closed 0.8% lower at $1.0940.
The British Pound closed 0.7% lower at 1.2625.
The Japanese Yen fell 0.6% closing at $141.96.
Bonds
Germany’s 10-year yield closed 6 basis points higher at 2.07.
Britain’s 10-year yield closed 10 basis points higher at 3.64%.
U.S.10 Year Treasury closed 8 basis points higher 3.94%.
Commodities
West Texas Intermediate crude closed 1.47% lower at $70.60 a barrel.
Gold closed 0.2% lower at $2058.10 an ounce.
This morning on the Economic Front we have German Unemployment at 8.55 am. This is followed by U.S. MBA Mortgage Applications at 2.00 pm. Next, we have JOLTS Job Openings and ISM Manufacturing PMI at 3.00 pm. Finally, we have the FOMC Minutes from the December Meeting at 7.00 pm.
Cash S&P 500
The S&P is due a meaningful correction as I have stated over the past two week. Unfortunately, the S&P again missed yesterday’s sell level before selling off 50 Handles. The first week of trading in a new year can be tricky and patience is required. There is no point in chasing moves as these can be quickly reversed. We are still in the seasonally strong period of the year which will last for another couple of days. This is the main reason why I have not chased the market lower. The S&P has resistance from 4770/4790. I will mow lower my sell level to this area with a lower 4805 ‘’Closing Stop’’. The S&P has support from 4695/4710. I will be an aggressive buyer on any dip to this area with a wider 4679 ‘’Closing Stop’’. If this view changes I will be back with a new update for my Platinum Members.
EUR/USD
The Euro got hit hard yesterday, hitting my buy range for a now 1.0970 long position. I will add to this trade at 1.0900 while leaving my 1.0855 ‘’Closing Stop’’ unchanged. I will now lower my T/P level to 1.1030. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
The Dollar never came close to yesterday’s buy range and I am still flat. This morning, the Dollar is trading higher at 102.15. We have resistance from 102.60/103.30 where I will be a seller with a 104.10 ‘’Closing Stop’’. I will now raise my buy level to 100.70/101.30 with a higher 99.75 ‘’Closing Stop’’.
Cash DAX
My DAX plan worked well as the market finally traded lower to my 16660 buy level after falling 300 points from its 16960-morning high. Subsequently, the DAX rallied 150 points, enabling me to cover this long position at my revised 16728 T/P level and I am now flat. The DAX has support below from 16510/16610 where I will again be a buyer with a lower 16435 ‘’Closing Stop’’. Given the seasonality, I still do not want to be short the DAX at this time.
Cash FTSE
No Change. I am still flat the FTSE. Today, I will continue to be a seller on any further rally to 7790/7860 with the same 7935 ‘’Closing Stop’’. I do not like the price action in the FTSE as the market continues to underperform the rest of the major Indexes. For this reason, I do not want to be long the FTSE.
Dow Rolling Contract
With the 14-Day RSI again closing with a 77-print last night, I cannot justify a long position at these elevated levels. Therefore, I will continue to be a seller of rallies. Today, I will now lower my Dow sell level to 37840/38090 with a lower 38305 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 37650.
Cash NASDAQ 100
Frustratingly, the NDX missed yesterday’s sell range by 28 points before falling 300 points off its morning high. Apple’s downgrade by Barclays Bank saw its shares close a sizeable 3.6% lower. This morning the NDX is trading at 16538. We have support from 16300/16440 where I will be a small buyer with a 16195 ‘’Closing Stop’’. With the 14 Day RSI closing at 56 last night, I no longer want to be a seller of the NDX at this time. If I am taken long, I will have a T/P level at 16550.
December BUND
The Bund has now fallen over 200 points from last Thursday’s rebound high and I am still flat. I will not chase the Bund lower, leaving my 137.70/138.50 sell level unchanged with the same 139.35 ‘’Closing Stop’’. I still do not want to be long the Bund at this time.
Gold Rolling Contract
No Change. The stronger Dollar saw Gold hit a low yesterday at 2056 before having a small rebound into the New York close. I am still flat. I will continue to be a buyer on any further dip lower to 2025/2040 with the same 2009 ‘’Closing Stop’’.
Silver Rolling Contract
No Change. Despite Gold trading close to all-time highs, Silver continues to underperform. To put this weakness into context, Silver’s all time high occurred in May 2011 at a price of 51.10. I am still long Silver from two weeks ago at an average price of 24.40 with the same 25.05 T/P level. This morning, Silver is trading lower at 23.75. I will continue to have no stop on this position. In my opinion, Silver is one of the cheapest asset classes in Global Markets at this time.
Recent Comments