U.S. Equity Markets eased off Wednesday’s highs, led by the NASDAQ 100 which closed lower by 0.71%, while the Dow closed higher by 0.15% on what turned out to be a volatile trading session near all-time highs. Federal Reserve Chairman Jerome Powell continued his testimony before Congress, with no material changes from Wednesday. Essentially, he reiterated that the central bank has no plans to withdraw economic support at the moment. Jobs data were the other big story of the day. Jobless Claims hit a new post-pandemic low of 360,000. While the data missed estimates, the downward trend in Jobless Claims is still intact. And that is a good sign for the labour market’s recovery. Earnings season will remain a catalyst for markets for the next few weeks, with many of the reports so far coming in above expectations. European Markets closed lower. European Central Bank Governing Council member Isabel Schnabel said that despite rising inflation, the central bank will take its time before tightening policy once more. But Bank of England Governor Dave Ramsden said he expects inflation to peak at double the central bank’s 2% target. He added that the conditions for tightening may be met sooner than expected. In Asia, China’s Second-Quarter Gross Domestic Poduct data were weaker than expected, falling versus the first quarter, as the comparisons versus last year grow more difficult. The Japanese Yen’s rally from the low made in early July and rising coronavirus infections in Tokyo weighed on growth sentiment. The Bank of Korea left interest rates unchanged as Governor Lee Ju-yeol said it still expects 4% growth this year and stands ready to adjust policy based on COVID-19 developments. The Australia Bureau of Statistics’ employment data for June beat estimates as the number of full-time hires continued to rise, and as the unemployment rate fell back below 5%. Elsewhere, Oil closed 2.17% lower, continuing its decline on uncertainty surrounding a production agreement between OPEC and the United Arab Emirates, while Bitcoin sold off 4.25% on little news.
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The S&P 500 closed 0.33% lower at a price of 4360.
The Dow Jones Industrial Average closed 54 points higher for a 0.15% gain at a price of 34,987.
The NASDAQ 100 closed 0.71% lower at a price of 14,794.
The Stoxx Europe 600 Index closed 0.6% lower.
This morning, the MSCI Asia Pacific Index fell 0.5%.
This morning, the Nikkei closed 0.98% lower at a price of 28,003.
The Bloomberg Dollar Spot Index closed 0.2% higher.
The Euro closed 0.2% lower at $1.1801.
The British Pound closed 0.2% lower at 1.3830.
The Japanese Yen fell 0.2%, closing at $109.97.
Germany’s 10-year yield closed two basis points lower at -0.34%.
Britain’s 10-year yield closed four basis points higher at 0.67%.
US 10 Year Treasury closed two basis points lower at 1.31%.
West Texas Intermediate crude closed 2.17% lower at $73.00 a barrel.
Gold closed 0.25% higher at $1,831.10 an ounce.
This morning on the Economic Front we have Euro-Zone Trade Balance and CPI at 10.00 am. This is followed at 1.30 pm by U.S. Retail Sales and a speech from Fed Member Williams at 2.00 pm. Finally, at 3.00 pm we have Wholesale Inventories and the University of Michigan Consumer Sentiment Index.
September S&P 500
Wednesday’s 4383 latest all-time high looks more and more like a Double Top for the S&P as the NASDAQ finally saw two consecutive lower closes for the first time in nine weeks. Internally the market is extremely weak with the McClellan Oscillator closing at -154 last night. Just a handful of stocks is holding both the S&P and NASDAQ at this time. In my opinion when the NASDAQ finally breaks it will be carnage for the markets. Interestingly, despite the stronger than expected earnings from the Big Banks this week, Financial Shares are lower. This is the first time we have seen some stocks sell-off on good news. Yesterday the S&P traded lower to my 4338 buy level with a 4331 low print before rallying into the close, to sit at 4351 this morning. If you did buy the S&P on this dip then I would take your gain now. I did not buy the S&P myself believing we would sell-off further into the close, but the rebound in the Dow ruined that view and I am still flat. The S&P has support from 4302/4317 where I will be a strong buyer with a 4289 ‘’Closing Stop’’. I will now lower my sell level to 4373/4388 with a lower 4401 ‘’Closing Stop’’.
After the Euro traded lower to my 1.1810 buy level we had a small bounce allowing me to cover this position at my revised 1.1818 T/P level and I am now flat. The 1.1720/1.1770 level is key support for the Euro as a break and close below here opens up the strong possibility of a move lower to 1.1650, 1.1550 and possibly 1.1440. Today, I will be a small buyer in this range with a 1.1685 tight stop. If I am taken long I will have a T/P level at 1.1802.
September Dollar Index
I am still flat and ahead of the weekend I will now raise my sell level to 93.00/93.40 with a higher 93.75 stop.
I am still flat the DAX as the market just missed yesterday’s buy range. I will now lower my buy level to 15400/15480 with a wider 15295 stop. Remember a break and close below 15300 is bearish.
The FTSE continues to trade heavy, making lower highs each day. After the FTSE hit my 6948 buy level I covered this position for a small loss at 6941 and I am still flat This morning the FTSE is trading slightly higher at 6960. We have short-term support from 6860/6910 where I will again be a buyer with a 6815 stop.
Dow Rolling Contract
The Dow made a low at 34705 yesterday morning, missing my initial 34650 buy level before rallying to sit at 35000 as I write this commentary and I am still flat. Ahead of the weekend I will now raise my sell level to 35180/35330 with a tight 35425 ‘’Closing Stop’’. The Dow has short-term support from 34570/34720 and I will move my buy level to this range with a higher 34465 ‘’Closing Stop’’.
The NASDAQ fell 200 points at one stage before having a small rally into the close. Yesterday’s move lower saw my 14845 T/P level hit on my 14860 average short position and I am still flat. The NASDAQ has resistance from 14870/14950 and I will be a seller in this range with a 15025 ‘’Closing Stop’’. Meanwhile, I will leave my 14500/14580 buy level unchanged with the same 14395 ‘’Closing Stop’’.
I am still flat and today I will raise my sell level to 175.10/175.60 with a higher 176.05 stop.
Gold Rolling Contract
No Change. I am still a small buyer from 1780/1795 with the same 1769 stop.
Silver Rolling Contract
Silver traded in a narrow range and I am still flat. Silver has strong support from 25.10/25.70 and I will now lower my buy level to this area with a lower 24.75 stop.