U.S. Equity Markets rose as strong jobs data overshadowed a spike in inflation, ending the day higher, led by the NASDAQ 100 which closed yesterday’s session with a gain of 1.05%. Yesterday, jobs and inflation data were the key focus. Jobless Claims fell, hitting the sixth straight post pandemic low. They now sit at the lowest level since March 14, 2020. Continuing Claims, which represent those that have filed for unemployment for at least two weeks, also hit the lowest level since March 14, 2020, the Labour Department said. This overshadowed the Consumer Price Index data that came out at the same time. CPI data for May were stronger than anticipated. On a year-over-year basis, the core data moved well above the Federal Reserve’s 2% target. The reading saw a 3.8% gain versus the expectation for 3.5% and the prior month’s 3% increase. This could have sparked fears of increased inflation, but these were overshadowed by the strong jobs data. European Markets again closed mixed. The European Central Bank released its latest monetary policy statement, with investors awaiting President Christine Lagarde’s press conference for an update on the stimulus outlook. France’s Industrial Production data for April were weaker than expected, declining versus March, and indicating the regional recovery remains uneven. German Finance Minister Olaf Scholz said the current rise in inflation is a “temporary phenomenon,” in line with other central bank commentary. In Asia, The White House ordered the Commerce Department to keep track of app downloads like WeChat and TikTok that could pose potential national security concerns. Japan’s producer price index (“PPI”) data for May were stronger than expected, increasing versus April, as the numbers lapped the easiest comparison period from a year ago. The Bank of Korea’s household lending value for May held steady versus April, implying ample liquidity in the country’s financial system. The Melbourne Institute of Applied Economics’ consumer inflation expectations index reading for May gained versus April, as consumers anticipate price gains over the coming year. Elsewhere, Bitcoin continued to rise, closing higher by 1.05% as El Salvador officially made the cryptocurrency legal tender, while Oil rose 0.28% as OPEC said that it expects crude demand to accelerate in the second half of the year.
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The S&P 500 closed 0.47% higher at a price of 4239.
The Dow Jones Industrial Average closed 19 points higher for a 0.06% gain at a price of 34,466.
The NASDAQ 100 closed 1.05% higher at a price of 13,960.
The Stoxx Europe 600 Index closed 0.2% higher.
Yesterday, the MSCI Asia Pacific Index rose 0.1%.
Yesterday, the Nikkei closed 0.34% higher at a price of 28,958.
The Bloomberg Dollar Spot Index closed 0.1% higher.
The Euro closed 0.1% lower at $1.2173.
The British Pound closed 0.5% higher at 1.4175.
The Japanese Yen rose 0.3%, closing at $109.29.
Germany’s 10-year yield closed two basis points lower at -0.26%.
Britain’s 10-year yield closed one basis points higher at 0.74%.
US 10 Year Treasury closed five basis points lower at 1.44%.
West Texas Intermediate crude closed 0.38% higher at $70.18 a barrel.
Gold closed 0.28% higher at $1,897.20 an ounce.
This morning on the Economic Front we have German Wholesale Price Index and UK GDP, Industrial Production and Trade Balance at 7.00 am. The only U.S. release is the University of Michigan Consumer Sentiment Index at 3.00 pm.
June S&P 500
My S&P plan worked well with the market trading higher to my 4241 sell level (high 4248) before selling off to an afternoon low of 4220, enabling me to cover this position too early at my revised 4235 T/P level and I am still flat. Incredibly the S&P closed at a new all-time high despite the 5% print in CPI as yet again anyone trying to short this market gets slammed. The VIX closed a hard to fathom 10% lower yesterday, sitting at new lows for the year at 16.11. I am staggered by this fall in the VIX as the S&P continues to live off excessive liquidity and extreme complacency. The S&P has short-term support from 4203/4218 where I will be a small buyer with a 4189 ‘’Closing Stop’’. We have resistance from 4257/4272 where I will again be a seller with a 4281 ‘’Closing Stop’’. If I am taken long I will have a T/P level at 4228. If I am taken short I will have a T/P level at 4248.
The Euro fell shy of my 1.2125 buy level before rallying into the New York close and I am still flat. I will now raise my buy level to 1.2090/1.2140 with a 1.2055 stop. I still do not want to be short the S&P at this time.
September Dollar Index.
The Dollar again traded in a narrow range and I am still flat. Today, I will continue to be a buyer from 89.20/89.70 with the same 88.75 stop.
Just like the US Indexes, the DAX refuses to break any support levels and I am still flat. Under no circumstances do I want to be short this market despite the fact that we are trading severely overbought and overvalued. This will be my view until the key 15300 support level is broken. Ahead of the weekend I will raise my buy level to 15310/15390 with a higher 15245 stop.
I am still flat as the FTSE continues to trade in a narrow range with no real direction. The FTSE has short-term support from 6960/7020 where I will be a small buyer with a 6925 stop.
Dow Rolling Contract
The good news yesterday was managing to sell the top of the Dow at 34740. The bad news is that I covered this position too early at 34680, before the Dow fell a further 200 points and I am still flat. While the S&P made a new all -time closing high yesterday the Dow continues to lag well behind as this fractured market shows no sign of resolving which I still believe will be to the downside. Today, I will again be a small seller from 34800/34980 with a 35105 ‘’Closing Stop’’. I will continue to be a buyer on any dip lower to 34130/34300 with a now lower 33995 ‘’Closing Stop’’.
My NASDAQ plan also worked well with the market trading higher to my 13950 sell level before trading lower to my 13890 T/P level and I am still flat. The NASDAQ has further resistance from 14050/14130 where I will again be a small seller with a 14205 ‘’Closing Stop’’. The NASDAQ has short-term support from 13680/13780 where I will be an aggressive buyer with a 13595 ‘’Closing Stop’’.
No Change. I am still a seller from 173.05/173.45 with the same 173.81 wider stop.
Gold Rolling Contract
Gold continues to find strong resistance at the 1900/1910 pivot area and I am still flat. I will not chase the price of Gold higher, leaving my 1845/1860 buy range unchanged with the same 1833 stop.
Silver Rolling Contract
Silver fell shy of my 27.20 buy level and I am still flat. I will now raise my buy level to 26.90/27.50 with a higher 26.45 stop. If I am taken long I will have a T/P level at 27.80.