Equity Markets were largely firmer on Friday although there was particular outperformance in the Russell 2000 with regional banks and cyclicals finding a particular bid. That was a result of the yield backdrop with the Treasury curve seeing massive bull-steepening (2s -16bps vs 10s -13bps) in wake of the soft ISM manufacturing survey and Fed Chair Powell’s remarks that were deemed not hawkish enough to offset the genie unleashed by Fed Member Waller last Tuesday. Tech generally underperformed with the Nasdaq marking mild gains. The U.S. Dollar was sold amid the dovish Fed repricing, with now over 130bps of cuts priced through 2024 vs 115bps before Powell; a March cut is now implied as a 75% probability and even a 10% chance for January. But the Euro was also sold after ECB’s Villeroy declared that rate hikes are over, absent any shocks. The Japanese Yen took the narrowing policy outlooks in its stride. Oil prices had been rangebound in tight ranges for most of the session until breaking out to the downside on the back of the rise in oil rigs reported in the weekly Baker Hughes US rig count. Metals took fondly to the dip in the Dollar and the cyclical appetite, with spot gold testing YTD peaks above USD 2,070/oz. Overnight Gold spiked to a high at $2151, before falling $80 to sit at 2068 as I go to press. Elsewhere, Oil fell 2.49% after another volatile trading session.
To mark my 2900th issue of TraderNoble Daily 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 lost 590 points on the first trading session for December after ending November with a gain of 1734 points. October ended with a gain of 3184 points, after closing September with a small gain of 228 points, after finishing August with 1485 points, following a small gain of 285 points gain in July, after closing June with a gain of 2683 points. May closed with a gain of 3205 points. April saw a gain of 3354 points while March closed with a gain of 6168 points. The Platinum Service made a record 9619 points last October. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1900 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 0.59% higher at a price of 4594.
The Dow Jones Industrial Average closed 294 points higher for a 0.82% gain at a price of 36,245.
The NASDAQ 100 closed 0.31% higher at a price of 15,997.
The Stoxx Europe 600 Index closed 0.99% higher.
This morning, the MSCI Asia Pacific closed 0.3% lower.
This morning, the Nikkei closed 0.60% lower at a price of 33,231.
Currencies
The Bloomberg Dollar Spot Index closed 0.22% lower.
The Euro closed 0.6% lower at $1.0881.
The British Pound closed 0.1% lower at 1.2685.
The Japanese Yen rose 0.2% closing at $146.90.
Bonds
Germany’s 10-year yield closed 6 basis points lower at 2.36%.
Britain’s 10-year yield closed 4 basis points higher at 4.14%.
U.S.10 Year Treasury closed 6 basis points lower at 4.21%.
Commodities
West Texas Intermediate crude closed 2.49% lower at $74.07 a barrel.
Gold closed 1.2% higher at $2072.10 an ounce.
This morning on the Economic Front we have Euro-Zone Sentix Investor Confidence at 9.30 am. ECB Members, De Guindos, Elderson and President Lagarde are all speaking at 8.45 am, 11.10 am and 2.00 pm respectively. Finally, we have U.S. Factory Orders at 3.00 pm.
Cash S&P 500
My S&P plan worked well on Friday as the market rallied to my 4575 initial sell level before selling off 18 Handles. However, as I was back short the Dow, I emailed my Platinum Members to raise their S&P sell range. Subsequently, the S&P rallied off its 4556 low print to hit a late high at 4599. This move higher has me short at a price of 4588. The rally over the past five weeks sees the S&P as extended to the upside as it was to the downside in late October. The across the board 14 Day RSI readings are near all-time highs while the $BPSPX RSI closed at 85.13 on Friday night. 10 -Year Treasury Yields closing at 4.21% on Friday is a whopping 80 basis point fall in the last few weeks. Global Bond and Equity Capitalisation increased by $11 trillion in November. This is the second highest monthly increase ever following the $12.5 Trillion addition in November 2020. Fed Chair Powell tried to sound hawkish in his fireside chat on Friday afternoon, but markets are openly ignoring him now as rate cuts are now getting priced in for as early as March 2024. According to Goldman Sachs Financial Conditions have had their largest Monthly easing in 40 years. This is the equivalent to four rate cuts. The continued collapse in Bond Yields and Oil prices will no longer be viewed as relief but signs of perhaps as recession is coming sooner than expected. The Atlanta Fed published on Friday evening that their Q4 GDP is at 1.2% down from 5.4% in Q3. This is some collapse. With the VIX falling a further 2.5% on Friday, closing at a price of 12.63 you just cannot be long equity markets against this backdrop. I am still short the S&P at 4588. I will add to this position at 4605 with a wider 4621 ‘’Closing Stop’’. I will have a T/P level at 4570. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
EUR/USD
The Euro hit a Friday low at 1.0830 which was 200 points below last week’s high. While the extended RSI readings has so far not worked in Equity Markets, it has certainly worked for both the Euro and Dollar Index. I am still flat the Euro. The Euro has support below from 1.0850/1.0920 where I will be a buyer with a 1.0785 ‘’Closing Stop’’.
September Dollar Index
My latest 103.10 average long Dollar position worked well as the Dollar rallied to my 103.45 T/P level and I am now flat. The Dollar has further support below from 102.30/103.00 where I will again be a strong buyer with a lower 102.45 ‘’Closing Stop’’.
Cash DAX
Wrong! Frustratingly, the DAX just missed my 16135 T/P level on my 16160 short position before stopping me out of this position at 16335 and I am now flat. This morning, the DAX is trading higher at 16440 with a 14 Day RSI at 78. Given the backdrop I cannot be a buyer of the DAX at these levels while trying to be short as we saw last week is a difficult process. The DAX has resistance from 16500/16600 where I will be a small seller with a 16705 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 16360.
Cash FTSE
The FTSE just missed my initial 7360 buy level by 20 points before rallying to sit at 7520 this morning. The FTSE has resistance from 7580/7650 where I will be a seller with a 7715 tight ‘’Closing Stop’’. I no longer want to be long the FTSE at this time.
Dow Rolling Contract
Wrong! Despite the 14-Day RSI closing at 80.35 last night, the Dow still managed to make a new recovery high at 36,265. There are times when trading can be extremely frustrating especially if you have the right view but short the wrong contract. Since Thursday’s Daily Commentary, the NDX closed 10 points higher while the Dow has surged almost 900 points. This move higher in the Dow saw my 35850 stop triggered on my latest 35400 average short position. On Friday morning I went short the Dow again at a price of 36025. I am still short with a 35860 T/P level. I will add to this position at 36275 with a 36505 ‘’Closing Stop’’. History tells you that extended overbought RSIs do not last. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
I am still flat as the NDX plan never came close to my sell range. The NDX has totally underperformed both the S&P and Dow over the past week. The NDX has short-term support from 15730/15880 where I will be a buyer with a 14595 ‘’Closing Stop’’. I no longer want to be short the NDX at this time.
December BUND
Global Bond markets have had their best month since December 2008 while the U.S. Bond Market has had its best month since May 1985. This is some statement given the fact we had a bond bull market for 40 years which ended in early 2021. Suddenly 5% yields in 10-year Treasuries have become a distant memory. I am still flat the Bund. The Bund has short-term resistance from 134.40/135.10 where I will be a small seller with a 135.75 ‘’Closing Stop’’ I certainly do not want to be long Bunds at these prices.
Gold Rolling Contract
Wow! Gold hit an overnight high at 2151 before falling over $80 and I am still flat. I will now raise my Gold buy level to 2020/2035 with a higher 2003 ‘’Closing Stop’’.
Silver Rolling Contract
I am still flat Silver. This morning Silver is trading at 25.15 having hit an overnight high at 25.95. Silver has support from 24.30/25.00. I will now raise my buy level to this area while leaving my wider 22.95 ‘’Closing Stop’’ unchanged.
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