Higher Bond Yields and a further 2.7% rise in Oil prices saw U.S. Equity Markets close lower yesterday. The Dow led yesterday’s declines while the VIX surged, closing higher by over 7%. Last week, oil prices reached a new seven-month high, following recent weakness in the preceding weeks. WTI and Brent Crude both rose by over 6%, marking the largest weekly gains in nearly six months. This latest rally was largely attributed to concerns regarding a further tightening in the supply outlook. Investors anticipate that Saudi Arabia will extend its voluntary 1 million barrel per day oil production cut into October, supporting the ongoing supply restrictions implemented by OPEC and its allies. Additionally, demand stateside is surging, with crude oil inventories declining in five out of the past six weeks. While analysts may be bullish on the outlook for the oil market, economists worry that this could become a major headwind for the continued disinflationary trend. As we enter September, investors are greeted by a holiday-shortened week of economic news, following last week’s barrage of economic data. The major event to monitor this week includes a key update on the services sector from the Institute for Supply Management. The services sector has fuelled a majority of economic growth over the last year but appears to be weakening in recent months. Simultaneously, the Fed’s Beige Book will provide insights into economic activity across all 12 of the central bank’s districts. Investors should keep a watchful eye on these developments as they could have a significant impact on the upcoming monetary policy decision by the Federal Reserve later this month. European Markets closed lower. This morning ECB Member Villeroy has been on the wires saying there is a slowdown in the Euro-Zone but no recession. He may need to revisit these comments following the 11% fall in German Factory Orders. In Asia, China is expected to release a new set of economic data points this week that point towards further weakness, highlighting the extreme difficulties it faces in its economic recovery. Early in the week, service sector data and trade levels are expected to show further slowdowns as weakening demand in export markets persists. Late in the week, the big news will be the release of August’s Consumer and Producer Price Indexes . Despite recent efforts by Chinese authorities to stimulate the economy, concerns over rising debt risks are likely to limit the potential for more aggressive stimulus measures, leaving the economic outlook uncertain. Elsewhere, Oi rose a further 2.7% while Gold ended Tuesday with a loss of 0.5%.
To mark my 2875th 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 85 points yesterday and is now ahead by 95 points for September, after finishing August with 1485 points gain 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 0.42% lower at a price of 4496.
The Dow Jones Industrial Average closed 195 points lower for a 0.56% loss at a price of 34,641.
The NASDAQ 100 closed 0.11% higher at a price of 15,508.
The Stoxx Europe 600 Index closed 0.20% lower.
This morning, the MSCI Asia Pacific closed 0.5% higher.
This morning, the Nikkei closed 0.62% higher at a price of 33,241.
Currencies
The Bloomberg Dollar Spot Index closed 0.45% higher.
The Euro closed 0.7% lower at $1.0718.
The British Pound closed 0.4% lower at 125.68.
The Japanese Yen fell 0.5% closing at $147.20.
Bonds
Germany’s 10-year yield closed 6 basis points higher at 2.61%.
Britain’s 10-year yield closed 6 basis points higher at 4.52%.
U.S.10 Year Treasury closed 8 basis points higher at 4.26%.
Commodities
West Texas Intermediate crude closed 2.7% higher at $87.88 a barrel.
Gold closed 0.5% lower at $1925.10 an ounce.
This morning on the Economic Front we already had the release of German Factory Orders which fell a huge 11.7% versus -4.0% expected. Next, we have U.K. Global Construction PMI at 9.30 and Euro-Zone Retail Sales at 10.00 am. This is followed by U.S. MBA Mortgage Applications at 12.00 pm and the Trade Balance at 1.30 pm. At 2.45 pm we have Global Composite PMI at 2.45 pm. Finally at 3.00 pm we have ISM PMI and the Bank of Canada Rate Decision.
Cash S&P 500
If it was not for Apple shares continuing to build on last week’s gains all three American Indexes would be in trouble. Apple has now risen 12% since the recent $172 low and is now comfortably back above its 50-Day Moving Average (186.60), closing at 190 last night. It is difficult to see markets rise when we see how much Oi has rallied over the past six week. Adding to the S&P pressure is the rise in Treasury Yields, trading at 4.26% this morning. Overnight the S&P hit my 4488-buy level. I am still long and I will add to this position at 4470 with a now lower 4459 ‘’Closing Stop’’. I will now lower my T/P level to 4502. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
EUR/USD
Wrong! Shortly after I posted yesterday morning, we saw further Euro selling, stopping me out of last week’s 1.0830 average long position at 1.0745 and I am now flat. As I go to press the Euro is trading lower at 1.0735. I am surprised how weak the Euro is given the strength of the American Equity Markets. The Euro has further support from 1.0600/1.0670 where I will be an aggressive buyer with a 1.0535 ‘’Closing Stop’’. The Euro has resistance at its 200 Day Moving Average (1.0780) I will be a small seller from 1.0770/1.0840 with a tight 1.0875 ‘’Closing Stop’’.
September Dollar Index
The rally in the Dollar saw my sell range triggered. I am now short at 104.70 with a higher 104.20 T/P level. I will add to this position at 105.30 with a now higher 105.85 ‘’Closing Stop’’. If any of the above levels are hit, I will be back with a new update for my Platinum Members
Cash DAX
Very frustrating. The DAX missed my 15680-buy level with a 15690 low print. Subsequently, the DAX rallied over 150 points before having a small sell-off into the European close. This morning, the DAX is trading at 15750. I will be a small buyer on any further dip lower to 15550/15630 with a now lower 15475 ‘’Closing Stop’’. I still do not want to be short the DAX at this time.
Cash FTSE
The FTSE got hit again yesterday, closing below the important 7400 support level. As I have said countless time the risk reward in hold the FTSE is gone in favour of the 4.5% yield that you get on U.K. Gilts. The FTSE has resistance from 7440/7500. I will now lower my sell level to this area with a lower 7555 ‘’Closing Stop’’.
Dow Rolling Contract
No Change. I am still a buyer on any dip lower to 34250/34500 with the same 34195 ‘’Closing Stop’’. Given the seasonality, I do not want to be short the Dow.
Cash NASDAQ 100
Apple shares have continued to rally which is no surprise as I have flagged how oversold these shares were over the past two weeks. The rally in Apple has now closed one large open gap. Apple should stay firm until next week’s iPhone launch. Yesterday the NDX made a low at 15394 before bouncing 150 points and I am still flat. Today, I will continue to be a buyer on any dip lower to 15220/15370 with the same 15095 ‘’Closing Stop’’. The NDX has strong resistance from 15700/15850 where I will continue to be a seller with a 15955 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 15515. If I am taken short, I will have a T/P level at 15590.
September BUND
No Change. The Bund got hit hard on Monday, following U.S. Treasury Yields higher. This sell-off has me long at an average rate of 132.25. With the September Contract expiring in a few days, I will now lower my exit level on this position to 132.20. Meanwhile my 131.35 ‘’Closing Stop’’ remains 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 was weak yesterday on the back of the stronger Dollar. As I now have a large Silver position, I will now lower my Gold buy level to 1895/1910 with a now lower 1883 ‘’Closing Stop’’.
Silver Rolling Contract
Silver hit my second buy level at 23.70 for a now 24.05 average long position. I will now lower my T/P level to 24.60 while leaving my 22.95 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members
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