U.S. Equity Markets extended weekly losses amid mounting tension in the Persian Gulf and as investors speculated the Federal Reserve will limit a rate cut to a Quarter-Point. Treasury yields spiked and the US Dollar rose. The S&P 500 Index erased gains after reports that Iran’s Revolutionary Guard Corps seized a British oil tanker in the Strait of Hormuz amid soaring tensions in one of the world’s critical energy choke points. President Donald Trump said he’ll be “working with the U.K. Clearly the market values certainty and any conflict in the Middle East — especially one which could restrict the flow of oil and goods throughout the world — would be a negative for the global economy and stocks. Traders on Friday rushed away from bets that the Fed will slash rates by a half-point this month, a day after clamoring for them. James Bullard, one of the most dovish members of the U.S. Fed, favors a cut by a quarter point in July. The Fed “must stop with the crazy quantitative tightening,” Trump said on Twitter. Trade tensions also remained in focus, with Trump saying the U.S. has had conversations with Chinese representatives.
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In company news, American Express Co. slid as spending on cardholder rewards soared, while Boeing Co. rallied after a $4.9 billion charge on the grounding of the 737 Max jets met some expectations. The S&P 500 fell 0.6% to close at 2,976.61, while the Dow Jones Industrial Average lost 0.3% and the Nasdaq-100 Index slid 0.9%. In Europe stocks rose as the capture of the British tanker did happen before the markets closed. The Stoxx Europe 600 Index rose 0.1%.
Here is a summary of the main changes in F.X. Markets:
The Bloomberg Dollar Spot Index rose 0.4%.
The Euro decreased 0.5% to $1.1219.
The Japanese Yen slid 0.4% to 107.72 per dollar.
Finally. The Pound fell 0.4% to close at $1.2505.
Bond markets are on hold ahead of the FOMC Meeting next week with the yield on 10-year Treasuries closing two basis points higher at 2.05%. Meanwhile in Europe, Germany’s 10-year yield fell one basis point to -0.32% and Britain’s 10-year yield dipped three basis points to 0.734%.
The Bloomberg Commodity Index rose 0.6%. West Texas Intermediate crude climbed to $55.63 a barrel.However on the back of increasing tensions in the Gulf it is trading higher at $56.30 as I go to press.
This morning on the Economic Front we have the German Bundesbank Monthly Report and CBI Industrial Trends Survey at 11.00 am. Finally, we have the Chicago Fed National Activity Index at 1.30 pm.
September S&P 500
My S&P plan of emailing my Platinum Members to raise their buy level to 2996 worked well as after the market hit this level, we subsequently rallied to my 3003 T/P level and I am now flat. The capture if the British Tanker late on Friday evening saw the S&P fall 30 Handles from its afternoon high as traders wanted to be flat ahead of any potential military action. As I mentioned on Friday the S&P has strong support from 2952/2965 and I will be an aggressive buyer to this area with a 2943 wider stop. Despite Friday’s late sell-off I still do not want to be short the S&P at this time.
Late Friday the Euro traded lower to my 1.1220 buy level. I am still long and I will now raise my stop on this position to 1.1175 with a now lower 1.1245 T/P level. If any of the above levels are hit I will be back with a new update for my Platinum Members.
September Dollar Index
I am still flat the Dollar and today I will now raise my buy level to 95.90/96.30 with a higher 95.55 stop.
I am still flat the DAX. Today I will lower my buy level slightly to 12090/12150 with a lower 12045 stop. I still do not want to be short the market at this time.
My FTSE plan worked well with the market rallying to my 7465 T/P level on my latest 7445 long position, Subsequently I emailed my Platinum Members to buy the FTSE again at 7425 with a revised 7442 T/P level. Both of these trades were filled and I am now flat. Today I will again look to buy the FTSE from 7360/7400 with a 7315 stop.
Dow Rolling Contract
I am still flat the Dow which just missed my initial 27090 buy level after the late sell-off on Friday and on the re-open of the Futures Market last night. Today I will lower my buy level slightly to 26880/27040 with a lower 26795 stop.
Frustratingly the market just missed my 7985 sell level with a 7981 high print before falling 140 points into the close. The NASDAQ has strong support from 7760/7810 and I will be a buyer on any dip to this area with a 7715 tight stop.
No Change as I am still short the market from late Thursday at 173.40 with the same 173.20 T/P level. I will continue to look to add to this position at 173.90. For now I will leave my stop unchanged at 174.20 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
Gold Rolling Contract
Both Gold and Silver traded lower to my buy ranges on Friday. After I bought Gold at 1427 I again emailed my Platinum Members to exit any long position at 1429.20 and I am now flat. Gold had earlier hit a high of 1452 before rolling over which was no surprise given the Daily Sentiment Index had risen above 90%. Despite the high DSI I am reluctant to go short the market and today I will again look to buy Gold on any dip lower to 1403/1413 with a 1395 stop.
Silver Rolling Contract
Silver traded lower to my 16.20 buy level. I am still long with a now higher 15.85 stop. I will also lower my T/P level on this position to 16.35 and if any of the above levels are hit I will be back with a new update for my Platinum Members.