U.S. Equity Markets closed higher for the fourth consecutive week, led by the 2.02% gain in the NASDAQ 100. The VIX got crushed again on Friday, closing at a four-month low at a price of 19.53. Markets closed higher on Friday as near-term inflation expectations pulled back according to the latest Michigan Consumer Sentiment Survey. However, long-run inflation expectations inched slightly higher than June’s 2.9% to 3.0% in July. Home price affordability hit another low in June according to the National Association of Realtors. This week, many retailers and consumer discretionary companies begin to report quarterly earnings. Investors will be keenly watching as it should provide a tangible baseline of the state of the consumer. The U.S. Bureau of Labour Statistics reported last week that overall inflation slowed in July on a year-over-year (“YOY”) basis compared with June. But if you has recently been to the grocery store, you probably wouldn’t believe it. And you would be right… While a decline in energy costs brought the headline inflation number down for July, food prices have continued to rise at historic levels. The overall food index increased 10.9% YOY in July, the largest 12-month increase since May 1979. But when broken down further, some items are even higher than that. The food at home index rose 13.1% over the last 12 months. Again, the largest 12-month increase since March 1979. So even as consumers pull back from dining out at restaurants, there is little relief at home to be found. In June, Federal Reserve Chair Jerome Powell said that raising interest rates to fight inflation would not lower food prices. You see, food inflation is highly sensitive to global supply chains and commodity prices. This means that the Federal Reserve raising interest rates cannot ease food inflation like it can in other areas such as the housing market. Unfortunately, several factors have all contributed to a perfect storm of food inflation across the globe. A severe bird-flu across the U.S. has resulted in fewer eggs and poultry. A serious drought over the last year has slashed coffee crops in Brazil. And of course, the war in Ukraine has spiked grain and wheat prices. Unlike eating out or taking that yearly vacation, the consumer cannot simply choose not to spend on groceries. So, they are opting for less expensive options. Earlier last week, Tyson Foods (TSN), the world’s second-largest producer of meat products, said that demand for beef products is falling in favour of lower priced poultry products. And while it may feel like food prices are rising so fast that the price at the checkout is suddenly higher than the price labelled in the aisle, the news is not all that bad… Commodity prices are falling. It just takes time for the lower cost of food inputs to be felt at the end of the supply chain: the consumer. Once these savings get passed down to consumers, discretionary spending should pick back up. This should trigger more economic consumption moving forward, which will entice money managers looking for returns to invest more in risk assets like stocks. That should support a steady rally in the S&P 500 Index. Within the S&P 500 Index, all 11 sectors finished higher. European Markets surged on Friday. Euro-Zone June Industrial Production surprised to the upside with output up 0.7% month over month compared with the consensus estimate of 0.2%. The U.K. economy contracted during June, down 0.6%. However, this was slightly better than the expected 1.3% drop. Germany’s Federal Ministry of Economic Affairs now sees weak economic prospects for the economy the rest of the year as uncertainty around energy supply and supply-chain issues dampen expectations. In Asia, Japanese Prime Minister Fumio Kishida called for a meeting Monday to discuss additional measures aimed at easing rising inflation. A Kyodo News survey found that about 42% of major Japanese companies now expect the economy to slow down over the next year. This is a dramatic rise from last year’s 5% figure. The People’s Bank of China is expected to withdraw liquidity from markets next week as it tries to control financial risks. Elsewhere, Oil fell 2.49% while Gold rose a further 0.62% despite the stronger Dollar.

To mark my 2600th issue of TraderNoble Daiy 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 486 points last week and is now ahead by 1303 points for August, having made 2660 points in July, following a gain of 3371 points in June. The Service made 3651 points in May, after making 762 points in April, following a gain of 5883 points in March. The Platinum Service made an impressive 5324 points in February, after ending January with a gain of 3878 points, more than making up for December’s 932 points loss. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 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 1.73% higher at a price of 4280.

The Dow Jones Industrial Average closed 424 points higher for a 1.27% gain at a price of 33,761.

The NASDAQ 100 closed 2.06% higher at a price of 13,565.

The Stoxx Europe 600 Index closed 1.4% higher.

Last Friday, the MSCI Asia Pacific Index rose 1.2%.

Last Friday, the Nikkei closed 2.62% higher at a price of 28,546.

Currencies 

The Bloomberg Dollar Spot Index closed 0.6% higher.

The Euro closed 0.6% lower at $1.0256.

The British Pound closed 0.7% lower at 1.2135.

The Japanese Yen fell 0.6% closing at $133.48.

Bonds

Germany’s 10-year yield closed 11 basis points higher at 0.99%.

Britain’s 10-year yield closed 15 basis points higher at 2.11%.

US 10 Year Treasury closed 9 basis points higher at 2.84%.

Commodities

West Texas Intermediate crude closed 2.49% lower at $91.18 a barrel.

Gold closed 0.62% higher at $1802.10 an ounce.

This morning on the Economic Front we have German Wholesale Price Index and the U.K. Trade Balance at 7.00 am. Next, we have the New York Empire State Manufacturing Index at 1.30 pm. Finally, at 3.00 pm we have the NAHB Housing Market Index.

Cash S&P 500

The rally over the past four weeks has seen both the S&P and Dow recover over 50% of their respective 2022 losses. However, the major trend is still down until the S&P can regain its 200 Day Moving Average (4328) while the 14-Day RSI closed at 72 on Friday which is another warning as to how overbought the S&P is at this time. When the S&P carpet bombed in June, we all wanted a vicious Bear Market rally which has now been achieved with zero two-way price discovery. This is the largest rally of the year and is setting itself up for a macro short position as short positions are getting squeezed while at the same time, markets are getting disconnected from reality again. With the VIX getting crushed we have zero fear as complacency again rules the day. This rally has been brutally hard to fade as shown by me getting stopped on my 4246-Friday morning short near the close at 4271 and I am now flat. I did a number of trades this week per the seven updated emails that I did for my Platinum Members. Apart from the late loss on the S&P on Friday it was a very good week’s trading. The S&P has now left seven sizeable ‘’Open Gaps’’ over the past few weeks and as you all know all gaps eventually get filled. The McClellan Oscillator closed at an overbought +236 print on Friday which is another warning not to be chasing this rally from here. The S&P will have strong resistance from 4305/4325 where I will be an aggressive seller with a 4341 tight ‘’Closing Stop’’. The S&P has short-term support from 4215/4235 where I will be a small buyer with a 4199 ‘’Closing Stop’’.

EUR/USD

The Euro never came close to my by range and I am still flat. The weaker than expected CPI print saw the Euro rally to a high at 1.0370 last Wednesday before selling off over 100 points to sit at 1.0260 as I go to press. The Euro has support from 1.0140/1.0210. I will now raise my buy level to this area with a higher 1.0085 stop. I still do not want to be short the Euro at this time.

March Dollar Index

Finally, the Dollar sold off to trade the whole of my buy range for a 105.00 average long position. The Dollar got a small bid on Friday and I used this move higher to exit this position at 105.35 and I am now flat. This morning, the Dollar is trading higher at 105.60. We have support from 104.60/105.20 where I will again be a buyer with a wider 103.95 stop. If I am taken long I will have a T/P level at 105.65.

Cash DAX

This was my opening line from my last Daily Commentary. ‘’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’’. This certainly proved to be the case last week as the DAX surged on Friday, closing on the highs of the week at 13885. Unfortunately, after the DAX hit my initial 13580 buy level I exited this position too early at 13625 and I am still flat. The DAX has short-term support from 13680/13750 where I will be a small buyer with a 13595 wider stop.

Cash FTSE

The surge in Gilt Yields over the past week certainly weighed on the FTSE as the market traded in a narrow range, unable to get any rally going despite the positive Global background. My FTSE plan worked well with the market trading higher to my 7500 sell level before selling off to my 7460 revised T/P level and I am now flat. The FTSE has resistance from 7560/7620 where I will again be a seller with a tight 7685 stop. I still do not want to be long the FTSE at this time.

Dow Rolling Contract

My Dow plan worked well with the market trading lower to my 32520 buy level before ending the week 1200 points higher at 33725, This is a massive move for the Dow helped by Powell royally screwing up in July when he announced that rates were now ‘’Neutral’’ at 2.5%, despite inflation being 6% higher. Economists have been scratching their heads since as the market has so far ignored the rest of the Fed Members calling for rates to hit 3.5/4% by the end of the year. Powell may well have to walk this back and I suspect this will happen at Jacksonhole next week. This move higher saw my revised 32692 T/P level triggered and I am still flat as the Dow never saw any retracement last week. The Dow has resistance from 33880/34080 where I will be an aggressive seller with a 34305 wider ‘’Closing Stop’’.

Cash NASDAQ 100

My NDX plan worked well as both my buy and sell ranges were triggered since my last Daily Commentary. I bought the market at 12950 before covering this position at 13002 while after going short at 13480, the market sold off to my revised 13385 T/P level and I am now flat. The NDX is severely overbought after rallying an incredible 21% in just a few weeks. However, the 14-Day RSI is lower than both the Dow and S&P, closing at a 67 print on Friday. The 200-Day Moving Average comes in at 14009 and this level may be tested before we have a more sustained sell-off. Today, I will be a small seller from 13680/13830 with a wider 14055 ‘’Closing Stop’’. We have support from 13100/13200 where I will be a strong buyer with a 12995 tight stop. If I am taken short I will have a T/P level at 13510. If I am taken long I will have a T/P level at 13380.

September BUND

The Bund is trading 350 points lower from where I last marked prices. I am still flat as the Bund never came close to my sell range. The Bund has support from 154.30/155.10 where I will be an aggressive buyer with a 153.65 ‘’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. Gold has short-term support from 1760/1775 where I will be a small buyer with a 1749 stop.

Silver Rolling Contract

Although Silver has traded in a narrow range over the past week, my Silver plan has worked well as the market rallied to my 20.55 T/P level on my latest 20.08 long position. Subsequently, I bought Silver again at 20.25 before exiting this position on Friday at 20.65 and I am now flat. Today, I will again be an aggressive buyer on any dip lower to 19.70/20.30 with a tight 19.25 stop. If I am taken long I will have a T/P level at 20.75