A combination of a Lower Dollar and Lower Treasury Yields saw U.S. Equity Markets surge on Tuesday, as the Indexes continue to rebound from last week’s oversold conditions. The NASDAQ 100 led yesterday’s gains, closing higher by 2.15%. This move higher saw the VIX close lower by 4% at a price of 14.46. Federal Reserve Chair Jerome Powell and European Central Bank (“ECB”) President Christine Lagarde said they have no plans to change their 2% inflation goal. At last week’s Jackson Hole Economic Symposium, Powell confirmed the Fed’s commitment to monetary policy that will bring inflation down to the target level over time. Lagarde echoed this sentiment and also emphasised the importance of maintaining consistency. While both the Fed and ECB have implemented aggressive interest-rate hikes to curb price pressures, inflation has not yet reached the 2% target in either the U.S. or Europe. Best Buy (BBY) narrowly beat revenue expectations for the quarter as incentives such as discounts for major electronics spurred demand among price-conscious consumers. However, the electronics retailer still recorded a 6.2% decline in comparable sales and cut its revenue and sales forecast for the year. Best Buy CEO, Matt Bilunas said that the company is lowering the high-end of its revenue outlook and narrowing profitability ranges for the fiscal year but expects a slight uptick in demand for the upcoming quarter. Bitcoin mining revenue fell to $0.06 (for a unit of computing power per day) on Sunday, nearing the record low set in late 2022. Competition in the mining industry has taken off while the price of bitcoin has held steady, severely reducing profitability in mining the world’s largest crypto. While major publicly-traded mining companies were able to raise capital during this year’s price rebounds, they could still face challenges with increased competition and price volatility. Despite the looming headwinds, miners have continued to scale up their operations in preparation for next year’s bitcoin “halving” – which will make the crypto landscape even more competitive. European Markets closed higher. European Central Bank President Christine Lagarde warned that recent turbulence in the global economy could lead to lasting changes in monetary policy. In her speech at the economic symposium, she explained that wage growth, global competition, and energy and geopolitical shocks could lead to companies consistently passing cost increases onto customers. Lagarde said central bankers must ensure volatile prices do not end up weighing on medium-term inflation. The ECB will continue to take a data-driven approach in addressing price pressures, and Lagarde expects the numbers to look much better by year-end. Her comments leave the door open for a rate-hike pause at the ECB’s September meeting, though she reiterated the need to keep rates at “restrictive levels for as long as necessary.” Britain’s food inflation recorded its slowest increase in nearly a year in August, providing some relief and optimism for an economy struggling to bring high inflation down. The British Retail Consortium said that shop price inflation only rose 6.9%, compared to the 7.6% increase in July with food prices leading the way lower. Inflation in the U.K. has struggled to come down as quick as its Western peers, forcing the Bank of England to take a very hawkish stance. However, if inflation continues its downward trend, that will alleviate the need for several more rate hikes from the central bank. In Asia, Governor Kazuo Ueda confirmed the Bank of Japan (“BOJ”) will maintain its current monetary easing as inflation came in slightly above the 2% target. Annual inflation in Japan, which excludes fresh food prices, came in at 3.1% in July and is expected to fall further by year end. Governor Ueda said domestic demand is “still on a healthy trend” and acknowledged that the relative strength of the U.S. economy has helped offset Japan’s challenges. The BOJ is now expected to take time to monitor inflation, the Japanese Yen, and the bond markets. Elsewhere, Oil rose 1.44% while a weak Dollar helped Gold to rise 0.8%.
To mark my 2850th 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 90 points yesterday and is now ahead by 1445 points for August 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 3164 points in February, 4687 points in January 2054 points in December, 4789 points in November and 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 1.45% higher at a price of 4497.
The Dow Jones Industrial Average closed 292 points higher for a 0.85% gain at a price of 34,852.
The NASDAQ 100 closed 2.15% higher at a price of 15,376.
The Stoxx Europe 600 Index closed 1.02% higher.
This morning, the MSCI Asia Pacific closed 0.2% lower.
This morning, the Nikkei closed 0.33% higher at a price of 32,333.
Currencies
The Bloomberg Dollar Spot Index closed 0.6% lower.
The Euro closed 0.7% higher at $1.0883.
The British Pound closed 0.3% higher at 126.47.
The Japanese Yen rose 0.6% closing at $145.78.
Bonds
Germany’s 10-year yield closed 3 basis points lower at 2.51%.
Britain’s 10-year yield closed 2 basis points lower at 4.42%.
U.S.10 Year Treasury closed 10 basis points lower at 4.12%
Commodities
West Texas Intermediate crude closed 1.44% higher at $81.25 a barrel.
Gold closed 0.8% lower at $1938.10 an ounce.
This morning on the Economic Front we already had the release of German Import Price Index which fell 0.6% versus 0.0% expected. Next, we have U.K. Consumer Credit and Mortgage Approvals at 9.30 am. This is followed by Euro-Zone Economic Sentiment Indicator at 10.00 am and German CPI at 1.00 pm. Next, we have U.S. ADP Employment Change at 1.15 pm, followed by GDP, Trade Balance and Wholesale Inventories at 1.30 pm. Finally, we have Pending Home Sales at 3.00 pm.
Cash S&P 500
The S&P rallied hard yesterday, closing higher by 1.45%. This move higher saw both the 20 and 50 Day Moving Averages broken, helping the S&P to break and close over last week’s high. Yet again we have seen a strong Downside Key Day Reversal giving a buy signal as no matter what happens the Fed with their continued liquidity injections, doing everything in their power to prevent any meaningful sell-off. The 2.5% rally in the S&P since Monday morning sees Asset Managers again caught cold as mentioned in yesterday’s Daily Commentary. The $NYSI Tuesday reading came in at maximum oversold adding fuel to the fire of this strong rally. Frustratingly, the S&P missed my 4420-buy level with a 4425 low print before rallying almost 80 Handles and I am still flat. The S&P is now short-term overbought but given my experience of trying to short the market in July I have no interest in pressing the downside, preferring to be a buyer of dips. Today, I will be a strong buyer from 4452/4467 with a higher 4439 fixed stop.
EUR/USD
Not much luck yesterday as the Euro also missed my 1.0770 buy level with a 1.0782 low print before rallying 100 points into the New York close. Four times we have seen the 200 Day Moving Average at 1.0780 tested over the past week. The Euro has support from 1.0770/1.0840. I will now raise my buy level to this area with a higher 1.0695 ‘’Closing Stop’’.
June Dollar Index
My latest 103.90 short Dollar position finally paid off yesterday as the Dollar sold off to my revised 103.55 T/P level and I am now flat. The Dollar has short-term resistance from 103.80/104.50 where I will again be a seller with a lower 105.05 ‘’Closing Stop’’.
Cash DAX
Remember a market that cannot fall on bad news has to be respected. Yet again this old adage tells us when not to be short. Despite continued awful economic data the DAX is now trading over 400 points higher from last week’s low. The DAX has major trendline support at 15500. This level has held multiple attacks over the past few weeks, encountering strong buying on any test. I am still flat the DAX and will now raise my buy level to 15730/15820 with a higher 15665 ‘’Closing Stop’’.
Cash FTSE
The FTSE surged yesterday, closing higher by a hefty 1.72%. I am still flat as yesterday’s buy level was never troubled. Given the fact that Gilt Yields are close to 4.5%, I would prefer to own these bonds that the stock market given how overvalued the FTSE is in relation to the Bond Market. This morning the FTSE is trading at 7490. We have resistance from 7550/7630 where I will be a strong seller with a 7705 ‘’Closing Stop’’. I no longer want to be long the FTSE at this time.
Dow Rolling Contract
I am still flat the Dow as the market never came close to yesterday’s buy range. Just like the NDX and S&P, the Dow also closed above its 50-Day Moving Average (34,677) as yet again anyone trying to short the American Indexes gets slammed. I will now raise my Dow buy level to 34500/34650 with a higher and tight 33395 ‘’Closing Stop’’.
Cash NASDAQ 100
Frustrating. I have had the correct view in being a buyer on dips of the NDX. Unfortunately, getting stopped on Thursday was even more annoying especially as the NDX is now trading over 650 points higher from where we were post- Powell’s Jackson Hole speech last Friday afternoon. Yesterday’s aggressive rally sees the NDX finally close over its 50 Day Moving Average (15,215) and this level will now act as strong support on any test. I will now raise my buy level to 15130/15280 with a tight 15045 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 15415.
September BUND
For the second consecutive session the Bund missed yesterday’s buy level by a few points before having a nice 80-point rally into the close. This morning the Bund is selling off as I go to press, trading at 132.00. The Bund has short-term support from 131.00/131.70 where I will continue to be a buyer with the same 130.25 ‘’Closing Stop’’.
Gold Rolling Contract
Gold continues to build value above 1900 which is no surprise given how oversold Gold had got over the previous three weeks in August. I am still flat. I will now raise my buy level to 1902/1917 with a higher 1889 ‘’Closing Stop’’.
Silver Rolling Contract
Finally, a weaker Dollar saw Silver rally. As I wanted to bank some points for yesterday, I emailed my Platinum Members to exit any long position at 24.75 and I am now flat. Today, I will again be a buyer on any dip lower to 23.70/24.40 with the same 22.95 ‘’Closing Stop’’. If triggered, I will have a T/P level at 25.10.
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