U.S. Equities fell from all-time highs, Treasuries tumbled and the US Dollar rallied after a strong jobs report clouded the Federal Reserve’s Interest Rate plans. Gold retreated. The S&P 500 Index fell in thin post-holiday trading to pare a weekly advance to 1.7%. The measure slumped as much as 0.9% after the jobs data signalled a vibrant labour market, but ground higher in the afternoon. Banks led the recovery after the 10-year Treasury yield retook 2% and two-year rates hit 1.85%. The US Dollar surged versus major peers. Gold fell toward $1,400 an ounce. The latest labour report delivered signs that the economy remains on track, countering some recent data that showed weakness in manufacturing. Stocks had rallied to records and bonds surged on market expectations that the central bank will lower interest rates by at least a quarter percentage point at its July meeting, though Fed Fund Futures showed traders trimming the amount of easing they expect.
To mark my 1875th 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@tradernoblecom for details
For anyone following my Platinum Service it lost 9 points on Friday and is now ahead by 289 points for July, having made 1346 points in June,1722 points in May, 955 points in April, 1027 points in March, 1013 points in February and 1671 points in January. 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
The positive numbers for the labour markets have given investors a bit of a conundrum as continuing strength in employment should support earnings while at the same time they make a FOMC cut less likely. Very thin markets due to the holiday weekend have also contributed to some of the volatility that we saw on Friday.Overnight, Stocks in Asia retreated as geopolitical tensions in the region weighed and investors turned their attention to upcoming testimony from the Federal Reserve chairman. The S&P 500 Index fell 0.2% to close at 2990, having earlier traded to an initial low of 2968 before pairing some of these losses into the Chicago close. The Stoxx Europe 600 Index sank 0.7%, the biggest dip in more than a month. This morning the Nikkei closed 1% lower at 21,535.
Here is a summary of the main changes in F.X. Markets:
The Bloomberg Dollar Spot Index gained 0.4%.
The Euro decreased 0.5% to $1.1225, the weakest in two weeks.
The British pound fell 0.4% to $1.2526.
The Japanese yen dipped 0.7% to 108.507 per dollar.
Meanwhile, Turkish assets were in focus after President Recep Tayyip Erdogan’s shock decision to replace the country’s central bank governor fuelled concern the regulator will lower borrowing costs more than expected. The lira slid, closing 2.5% lower.
The yield on 10-year Treasuries climbed nine basis points to 2.04%. However on the back of the weaker opening in Europe for Equity Markets, the Yield has fallen three basis points to trade at 2.01% The two-year rate jumped 11 basis points to 1.87%. Meanwhile in Europe, Germany’s 10-year yield rose four basis points to -0.363%.
Gold futures fell 1.3% to $1,402.90 an ounce having earlier traded to an intra-day low of 1387. West Texas Intermediate crude fell 0.3% to $57.51 a barrel. Finally, Iron ore sank 5.8% to $107.70 per metric ton, the largest tumble in more than two years.
This morning on the Economic Front we already ha the release of the German Trade Balance which printed 20.6 billion Euro versus 17.0 Billion expected. Germany also released Industrial Production which came in at +0.3% versus +0.4% expected. At 9.30 am we have Euro-Zone Sentix Investor Confidence. Finally, at 8.00 pm we have US Consumer Credit.
September S&P 500
My S&P plan worked well with the market trading the whole of my buy range for an average long position at 2977. Having made low of 2971 the market reversed and rallied over 20 Handles into the close. Unfortunately as I wanted to make up for my Gold and Silver losses I covered this long S&P position at my revised 2981 T/P level and I am now flat. As long as the S&P can hold the key 2962/2972 area the market should hold in ahead of Fed Chair Testimony to Congress on Wednesday and Thursday this week Today, I will be a buyer on any further dip to this area with a 2953 stop. My only interest in selling the S&P is still from 3004/3014 with a 3022 stop.
Late Friday the Euro sold off to my 1.1225 buy level. I am still long and I will now raise my stop on this position to 1.1185. I will also lower my T/P level to 1.1250 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
September Dollar Index
The stronger NFP Report saw the Dollar close 0.4% higher I am still flat and today I will now raise my buy level to 95.90/96.30 with a higher 95.55 stop.
After the DAX traded lower to my 12520 buy level I emailed my Platinum Members to exit any long position at my revised 12545 T/P level and I am now flat. The night mare of Deutsche Bank and Daimler Shares are not helping the DAX at this time but as long as the DAX can hold the key 12400 support area on any sell-off then the market will continue to be a buy on dips. Today my buy level will be from 12380/12440 with a 12325 stop.
Despite the weaker Pound the FTSE got hit hard on Friday as thankfully we had no buy levels in this market and are still flat. Today I will now lower my sell level to 7515/7545 with a tight 7580 stop. Given how overbought the FTSE is trading I still do not want to be long the market at this time.
Dow Rolling Contract
The Dow fell sharply on Friday afternoon, then recovered most of this decline into the close. The initial reaction was to an Employment Number that gave the market the expectation that the Fed will not be lowering Interest Rates a half-percent at its July Meeting. This was initially perceived as a strong number but with the Unemployment Rate creeping up to 3.7% and Average Earnings again coming in weaker than expected the jury is still out on that scenario. Ahead of the Powell Testimony to Congress later in the week I would expect the Market to hold in. Today I will be a small buyer from 26560/26710 with a 26480 stop.
The NASDAQ just missed my sell level on Friday before falling 100 points and I am still flat. In my opinion the NASDAQ is the most vulnerable of the US Indices to a move lower given how overvalued this Index is. Today I will lower my sell level to 7895/7955 with a 7990 tight stop.
My latest 173.98 short Bund position worked well with the market falling nearly 100 points on Friday before recovering most of these losses after the market re-opened this morning. As I wanted to be flat the Bund ahead of the NFP release I covered this short position at my revised 173.73 T/P level and I am now flat. Today I will again look to sell the Bund from 173.95/174.35 with a 174.70 stop.
Gold Rolling Contract
Following the NFP release Gold got hit hard trading lower to my 1395 buy level before stopping me out of this position near the low of the day at 1388 and I am now flat. Frustratingly Gold is now trading at 1405 this morning. Today I will again look to buy the market from 1380/1390 with a 1371 stop.
Silver Rolling Contract
Having been stopped out of my 15.25 long position at 14.98 following the NFP release I emailed my Platinum Members to buy Silver again at 14.95. I am still long with a now higher 14.75 stop. I will have a T/P level on this position at 15.15.