U.S. Indexes closed higher on Tuesday, with the Russell 2000 outperforming as it rebounded from Monday’s losses, while the S&P 500 and NASDAQ also posted modest gains. Sector performance was broadly positive, with Utilities and Energy leading the advance. Communication Services was the clear laggard, weighed down by Alphabet (GOOGL, -4%) after it announced plans to raise USD 80 billion for AI infrastructure. Elsewhere, Marvell (MRVL) surged after Nvidia CEO Huang suggested it could become the next trillion-dollar company, while Hewlett Packard Enterprise (HPE) rallied following a strong earnings report. Crude prices moved higher amid mixed geopolitical reporting. The headline that appeared to drive the session came from Fars News, which reported that communications between Iran and the US aimed at reaching an initial memorandum of understanding had been suspended for several days. However, later reporting was more constructive, with a senior Iranian political source telling Amwaj Media that communications via intermediaries had not ceased. President Trump later echoed that view, dismissing reports of a breakdown in talks as “fake news”. Treasuries flattened as higher oil prices weighed on the front-end, while stronger-than-expected JOLTS data only briefly supported higher yields before the move faded. The Dollar was mixed against G10 peers. The Australian Dollar outperformed, supported by higher metals prices, while the Japanese Yen lagged as USD/JPY reached 159.99, edging ever closer to levels markets associate with potential intervention. ING analysts note the intervention threshold may now be higher than the 160.60 area seen in April, potentially closer to 162-163, although they still view intervention risks as underpriced. On the data front, JOLTS job openings surged to 7.618 million from 6.866 million, well above the 6.82 million forecast. Fed’s Hammack also reinforced a hawkish tone, saying it remains reasonable to keep rates steady given uncertainty, but warning the Fed may need to act “soon” if inflation does not continue to cool. Looking ahead, the main focus for markets remains Friday’s US nonfarm payrolls report. Hammack, the Cleveland Fed president, one of the dissenters who voted to remove the easing bias from the Fed’s statement, said that it is reasonable to keep rates steady for now, given uncertainties. Hammack added that the Fed may need to act soon if inflation trends do not cool. She warned that there are risks to waiting for signs that high inflation is becoming embedded in the economy, and her main concern is a growing risk of persistent inflation pressures. We are not yet seeing signs that inflation expectations are rising. She is also worried that monetary policy may not be tight enough to lower inflation. Hammack continues to put her focus on the inflation side of the mandate, noting she is firmly committed to getting inflation back to the 2% target. She added that the economy is facing a broadening array of factors that are driving up inflation, noting how sharp energy shocks are hard for monetary policy to deal with. On the labour market, she said data points to stability and that the unemployment rate is around full employment levels. Job openings surged to 7.618 million in April from 6.866 million, well above the 6.82 million forecast and the highest level in two years. The vacancy rate rose to 4.6% from 4.2%, while the quits rate eased to 1.9% from 2.0%. Despite the strong headline, Oxford Economics cautions that the report likely overstates labour market strength as the increase in openings did not translate into a higher hiring rate. The consultancy notes that much of the increase was concentrated in a single sector, professional and business services. Oxford writes that “for now, the labour market remains mostly stable”, noting that with both the quits rate and layoff rate edging lower, neither employees nor employers appear in a hurry to make major moves. The desk notes that overall, the report points to a labour market that remains stable rather than one that is reaccelerating sharply. Elsewhere, Oil closed higher by 1.75% while Gold was flat.
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 made 105 points yesterday and is now ahead by 410 points for June after ending May with a loss of 1104 points, 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 0.13% higher at a price of 7609.
The Dow Jones Industrial Average closed 228 points higher for a 0.45% gain at a price of 51,307.
The NASDAQ 100 closed 0.48% higher at a price of 30,660.
The Stoxx Europe 600 Index closed 0.62% higher.
This Morning, the MSCI Asia Pacific closed 0.4% higher.
This Morning, the Nikkei closed 2.61% higher at a price of 68,468.
Currencies
The Bloomberg Dollar Spot Index closed 0.09% lower.
The Euro closed 0.05% higher at $1.1636.
The British Pound closed 0.14% higher at $1.3473.
The Japanese Yen fell 0.15% closing at $159.89.
Bonds
U.K.’s 10-Year Gilt closed 4 basis points lower at 4.86%.
Germany’s 10-Year Bund Yield closed 3 basis points lower at 2.97%
U.S.10 Year Treasury closed 4 basis points lower at 4.46%.
Commodities
West Texas Intermediate crude closed 1.74% higher at $93.76 a barrel.
Gold closed 0.02% higher at $4491.10 an ounce.
This morning on the Economic front we have German, Euro-Zone and U.K. Composite PMI at 8.55 am, 9.00 am and 9.30 am respectively. This is followed by Euro-Zone PPI at 10.00 am and U.S. MBA Mortgage Applications at 12.00 pm. Next, we have ADP Employment Change at 1.15 pm and Composite PMI at 2.45 pm. At 3.00 pm we have ISM Non-Manufacturing PMI and Factory Orders. Finally, at 7.00 pm we have the Beige Book.
Cash S&P 500
I believe the insanity in the US stock markets is now reaching a euphoric high. Over the past few days, the US major Indices soared to new record highs, although many of the component stocks did NOT. We have also been seeing many stocks recently being manipulated to 20%-40% gains in a single day. These stocks include OKTA, SNOW, DELL, NTAP, MU, FLNC, TWIL, MDB, and SPCE among others. Take a look at their charts on your charting program. These huge one-day moves are typical at market tops. The key to NOT becoming a victim is to avoid the emotions trying to get you into those stocks that are manipulated to such huge one-day gains. Going through the charts of many such stocks, we find that most, not all, retrace such gains rapidly. Those who buy late after such a big daily gain are then trapped with big losses. We are also seeing signs of “euphoria” by investment managers. Just last week (May 27), the NAAIM Exposure Index (of active investment managers) reached a new year-to-date high of 98.39% exposure to U.S. equities. That is the highest exposure since last December. History shows that such high stock allocations are rare and are usually seen near market tops. With such a high allocation to stocks, there is very little cash leftover to do any incremental buying by these managers. Therefore, this is yet another reason why upside in the near-term is likely limited. Last week, the April PCE (Personal Consumption Expenditures) data was released by the BEA, which showed a 0.4% rise last month, or annualised 4.8% without compounding. However, the media uses the annual PCE rate, which includes last year’s lower numbers. It showed a rise of only 3.8%, although that is the highest level since May 2023. Remember, the PCE is the Fed’s preferred inflation gauge. The personal savings rate fell to 2.6% in April, down from 3.2% in March and 3.6% in February. This is the lowest reading in nearly four years. Yes, it costs more money to pay for higher prices. Consumer spending rose just 0.1% when adjusted for inflation. This shows the consumer is being squeezed by inflation and is taking out of their savings in order to maintain their standard of living. When savings are depleted, the spending for many people will slow. But that may not adversely affect the government’s economic statistics if they do not adjust for inflation. This “squeeze” of the consumer will be bearish for a number of stocks in the consumer discretionary and consumer staples sectors. My view is that we are now going into a longer term (several years) inflation driven environment. The Fed will NOT create “tight” money to fight it. Instead, they will just hike interest rates. That requires astute analysis. The S&P 500 finished slightly higher yesterday, rising by around 0.13%. The Index continues to churn beneath the surface, with semiconductors leading the charge. Over the last 30 trading days, the XLK ETF has outperformed the S&P 500 by 21.2%, while every other sector has lagged the Index. Of course, this is nothing new, as it has been the case since the March lows. However, I think it once again highlights the disparity within the Index. That is probably why the S&P 500 Dispersion Index is trading at levels not seen since the COVID crash and the tariff tantrum. However, the dispersion index declined slightly on Monday. Given how elevated it has become, it seems well overdue for a rollover. Monday was a settlement day, and to no one’s surprise, Bitcoin fell 6.5%. It is likely to have further downside for now, with more liquidity set to leave the market on Thursday. A break below support at $65,000 would likely push it beneath the February lows near $62,000. Monday’s rally to new all-time highs saw the S&P hit my sell range for a now 7612 short position. I will add to this trade at 7632 with a now higher 7653 ‘Closing Stop’. I will now raise my T/P level to 7582. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
EUR/USD
I am still flat as the boring sideways price action continues. Today, I will again be a buyer from 1.1500/1.1580 with the same 1.1425 ‘Closing Stop’. If I am taken long, I will have a T/P level at 1.1650.
Dollar Index
Overnight, the Dollar rallied to my 99.30 T/P level on my latest 98.80 long position and I am now flat. Today, I will again be a buyer from 98.20/98.90 with the same 97.55 ‘Closing Stop’. If I am taken long, I will have a T/P level at 99.40.
Russell 2000
No Change: I am still short the Russell at an average rate of 2890. I will leave my 2975 ‘Closing Stop’ unchanged. I will also leave my T/P level unchanged at 2855. 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 continued to trade heavy. Today, I will raise my buy level to 10150/10230 with a higher 10075 ‘Closing Stop’. If I am taken long, I will have a T/P level at 10300.
Dow Rolling Contract
I am still flat as the Dow never came close to Monday’s buy range. Today, I will raise my buy level to 50300/50600 with a higher 50095 ‘Closing Stop’. If I am taken long, I will have a T/P level at 50880. I still do not want to be short the Dow at this time.
Cash NASDAQ 100
I am still short the NDX at an average rate of 30430 with the same 30705 ‘Closing Stop’. With the 14-Day RSI closing at 80 last night I am surprised that there has been no sell-off in the NDX of any consequence over the past few weeks. We are seeing zero two-way price action making for a continuing unhealthy market environment. Meanwhile, Oil has tagged on a further 2% overnight as any sign of a peace deal with Iran is kicked down the road. I will now raise my T/P level on this position to 30250. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
December BUND
My Bund call worked well as the market traded higher to my 126.40 sell level before trading lower this morning to my 125.85 T/P level and I am now flat. Yields are under pressure due to oil prices trading a further 2% higher overnight. Today, I will again be a seller from 126.40/127.10 with the same 127.85 ‘Closing Stop’. If triggered, I will have a T/P level at 125.90. I still do not want to be long the Bund at this time.
Gold Rolling Contract
Gold traded in a narrow range on Tuesday and I am still flat. Today, I will continue to be a buyer on any dip lower to 4250/4350 with the same 4155 ‘Closing Stop’. If I am taken long, I will have a T/P level at 4470. If this view changes, I will be back with a new update for my Platinum Members.
Silver Rolling Contract
I am still flat. Today, I will continue to be a buyer on any dip lower to 70.00/73.00 with the same 68.95 ‘Closing Stop’. If I am taken long, I will have a T/P level at 75.10.
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