U.S. Equity Markets finished yesterday’s session mixed, following a quiet trading session in which the Dow fell 0.26% while the NASDAQ 100 closed with a 0.44% gain. Markets were mostly lower Thursday, as markets stagnated following Wednesday’s big rally. Weekly Initial Jobless Claims came in at 260,000, matching consensus expectations and marking another weekly increase. And 30-year mortgage rates continue to fall back from their recent highs, dipping below 5%. Investors look ahead to this afternoon’s July Non-Farm Payroll numbers and next week’s Consumer Price Index reading for July. Within the S&P 500, 7 of 11 sectors finished higher. European Markets closed higher. The Bank of England hiked rates by the expected 0.50% while also calling for an extended economic downturn. They also revised upward the peak inflation projection for the fourth quarter to 13%. The European Central Bank (“ECB”) Consumer Expectations Survey showed consumers expect inflation to be worse in 12 months and economic growth will be negative. This follows the ECB Economic Bulletin which warns of sustained inflation due to high energy prices. In Asia, Encouraging U.S. data and earnings helped to ease markets as geopolitical tensions remain high. Beijing continued military exercises surrounding Taiwan as economic sanctions continue. China injected $47 billion in public funds into small and midsize banks as the country’s lenders struggle from a decline in economic activity. India’s central bank is expected to raise rates 0.50% Friday, returning the country’s borrowing rate to pre-pandemic levels. Elsewhere, Oil fell 2.57% while Gold rose 1.55% on a weaker Dollar.
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The S&P 500 closed 0.08% lower at a price of 4151.
The Dow Jones Industrial Average closed 85 points lower for a 0.26% loss at a price of 32,726.
The NASDAQ 100 closed 0.44% higher at a price of 13,311.
The Stoxx Europe 600 Index closed 0.9% higher.
This morning, the MSCI Asia Pacific Index rose 0.6%.
This morning, the Nikkei closed 0.87% higher at a price of 28.175.
The Bloomberg Dollar Spot Index closed 0.6% lower.
The Euro closed 0.6% higher at $1.0245.
The British Pound closed 0.1% higher at 1.2155.
The Japanese Yen rose 0.8% closing at $132.95.
Germany’s 10-year yield closed 6 basis points lower at 0.81%.
Britain’s 10-year yield closed 2 basis points lower at 1.89%.
US 10 Year Treasury closed 1 basis points lower at 2.69%.
West Texas Intermediate crude closed 2.57% lower at $87.85 a barrel.
Gold closed 0.29% higher at $1791.10 an ounce.
This morning on the Economic Front we already had the release of German Industrial Production which rose 0.4% versus – 0.3% expected. The only other data of note is U.S. Non-Farm Payrolls, including the Unemployment Rate and Average Earnings at 1.30 pm.
Cash S&P 500
The S&P traded in a narrow range yesterday which is no surprise given the fact that we are close to the end of what has been the largest rally of 2022 so far. Short positions have been obliterated over the past five weeks. However, although the Fed flipflopped last month on the basis that we will see lower inflation numbers coming through the system over the next two months, the reality is we are now in recession and that P/E ratios are still too high. This looks very like 2000 when we saw massive rally in the summer of that year that almost hit new highs before rolling over aggressively in Sept/Oct. So, we have to be mindful of that. This week’s rebound highs comes against a backdrop of large negative divergences, meaning we should see a pullback that in all likelihood will get bought. Remember QT has not even started yet. It is fantasy from Bullard to expect rates to hit 4% given the slowdown in the U.S Economy over the past few months. I am still short the S&P at 4140 with the same 4130 T/P level. I will leave my 4165 ‘’Closing Stop’’ unchanged and if any of the above levels are hit I will be back with a new update for my Platinum Members.
The Euro rallied had a nice rally off yesterday morning’s 1.0155 low print. I am still flat and reluctant to chase the Euro higher. Therefore, my only interest in buying the market is still on a dip lower to 1.0060/1.0120 with the same 1.0015 ‘’Closing Stop’’. I still do not want to be short the Euro at this time.
March Dollar Index
No Change. I am still flat the Dollar as the market traded in a narrow range over the past 24 hours. I will continue to be a buyer on any further dip lower to 104.70/105.30 with the same 104.35 stop. The Dollar has short-term resistance from 106.80/107.50 where I will be a strong seller with a tight 107.95 stop.
Every dip in the DAX continues to be bought. Given how far the DAX has fallen this year it has plenty of room to run the short positions in some more. My idea of trying to sell the rally this week has not worked as I was stopped out of my 13615 short position at 13705 yesterday morning and I am now flat. The DAX has support from 13500/13580 where I will be a strong buyer with a wider 13395 stop. I no longer want to be short the DAX at this time.
My FTSE plan worked well with the market trading higher to my 7470 sell level before selling off to my 7430 T/P level and I am now flat. Unlike the DAX, the FTSE is struggling to move higher. I will continue to be a seller on rallies. Today, my sell range will be from 7490/7560 with a 7615 stop. If I am taken short I will have a T/P level at 7430. I still do not want to be long the FTSE at this time.
Dow Rolling Contract
I am still flat the Dow and wary. Although the ‘’Fear and Greed Index’’ closed in neutral territory for the first time in many weeks, internally the Dow was weak yesterday as shown by the McClellan Oscillator which closed 50 points lower at +184 last night. I will continue to be a small buyer on any dip lower to 32300/32550 with the same 32195 ‘’Closing Stop’’. If I am taken long I will have a T/P level at 32770. Ahead of the weekend I do not want to be short the Dow.
Cash NASDAQ 100
The NDX is severely overbought after rallying an incredible 21% in just a few weeks. I am seeing huge negative divergences this week despite the NDX trading higher every day. I am still flat the market and I will continue to be an aggressive seller on any further rally to 13450/13650 with the same tight 13825 stop. The NDX has short-term support from 12800/12950 where I will be a small buyer with a 12695 stop.
No Change. I am still a small seller from 158.80/159.60 with the same 160.05 ‘’Closing Stop’’.
Gold Rolling Contract
The rally in Gold has never given me a chance to get long and I am still flat. With Silver struggling to match the rally in Gold I am reluctant to chase the market higher, leaving my 1727/1742 buy level unchanged with the same 1715 stop. If I am taken long I will have a T/P level at 1753.
Silver Rolling Contract
No Change. I am still long from Friday at 20.08 with the same 20.55 T/P level. I will leave my 19.55 stop unchanged and if any of the above levels are hit I will be back with a new update for my Platinum Members.