U.S. Equity Markets bounced around as investors digested the latest Federal Reserve policy decision ending yesterday’s session mixed with the NASDAQ 100 closing higher by 0.41% while the Dow finished lower by 0.37%. The Fed was the big story of the day. The central bank left interest rates and asset purchases unchanged, as expected. In his post-policy press conference, Fed Chairman Jerome Powell said we still have some ground to cover on the substantial further progress front. He noted employment has the most gains to make. Powell stated the central bank is nowhere near lift-off in terms of raising interest rates. He said they are still in the consideration phase of tapering bond purchases. Markets also had a tailwind in the form of earnings, with Apple (AAPL) and Google-parent Alphabet (GOOGL) reporting blowout numbers. This catalyst remains in place, while Facebook (FB) earnings disappointed after the close as we wait for Amazon (AMZN) this evening. European Markets closed higher. European Central Bank Governing Council member Pablo Hernandez de Cos said it must maintain bond-buying flexibility in order to help areas of the economy that need it the most. The European Union delayed legal action against the U.K. for violating terms of the Brexit deal, saying it will allow more time to resolve differences. British Prime Minister Boris Johnson said the country may institute vaccine passports for large events and air travel, as it looks to cut down on future outbreaks. In Asia, Chinese state-run media called for calm in domestic equity markets, saying the recent sell-off was due to a “misinterpretation of policy,” and the economy continues to recover. The Bank of Japan Minutes from the most recent policy meeting showed board members worried about tightening monetary policy too soon, in light of rolling coronavirus-infection surges. South Korea’s consumer confidence figures for July fell versus June, declining for the first time this year, as the recent COVID-19 outbreak weighed on sentiment. Australia’s second-quarter consumer price index data was stronger than expected, rising versus the first quarter, as fuel prices rebounded from last year’s drop. Elsewhere, Oil rose 0.81% on a sharp decline in U.S. crude inventories, while Gold gained 0.41% on Dollar weakness.
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The S&P 500 closed 0.02% lower at a price of 4400.
The Dow Jones Industrial Average closed 127 points lower for a 0.37% loss at a price of 34,930.
The NASDAQ 100 closed 0.41% higher at a price of 15,018.
The Stoxx Europe 600 Index closed 0.3% higher.
This morning, the MSCI Asia Pacific Index fell 0.2%.
This morning, the Nikkei closed 0.68% higher at a price of 27,769.
The Bloomberg Dollar Spot Index closed 0.4% lower.
The Euro closed 0.2% higher at $1.1845.
The British Pound closed 0.2% higher at 1.3900.
The Japanese Yen fell 0.1%, closing at $109.92.
Germany’s 10-year yield closed two basis points lower at -0.45%.
Britain’s 10-year yield closed one basis points higher at 0.57%.
US 10 Year Treasury closed two basis points lower at 1.23%.
West Texas Intermediate crude closed 0.81% higher at $72.23 a barrel.
Gold closed 0.41% higher at $1,807.30 an ounce.
This morning on the Economic Front we have German Unemployment at 8.55 am and U.K. Money Supply and Consumer Credit at 9.30 am. Next, we have Euro-Zone Consumer Confidence and the Economic Sentiment Indicator at 10.00 am. At 1.00 pm we have German CPI. This is followed at 1.30 pm by the U.S. Weekly Jobless Claims, GDP and Personal Income/Expenditure. Finally, we have Pending Home Sales at 3.00 pm and Amazon Earnings after the 9.00 pm close.
September S&P 500
There is no uniformity of trend in the major U.S. Indexes. The NASDAQ was sharply lower on Tuesday and then rallied yesterday, while the Dow was lower on both sessions. The S&P is a hybrid of these two Indexes and is moving accordingly. The lack of uniformity includes several other key Indexes, such as the NYSE Composite Index, which includes the shares of over 2000 companies, the Value Line Composite Index of Secondary stocks, with over 1600 companies, the Russell 3000 Index of 3000 stocks and the Dow Jones Transportation Average, made up of 20 economically sensitive stocks. The only one of these Indexes at new highs is the Russell 3000 Index. A Non-confirmation remains intact between the NYSE Composite Index and the S&P, which is relatively rare. The NYSE closing high occurred on June 4 and the intra-day extreme came on June 10. The 35-day divergence is the longest since the January 2018 to September 2018. Not every high is attended by a Non-Confirmation between these two Indexes, but when one does occur, it often signals a coming change in stocks. Seasonally, the August to Mid-October is the weakest for stocks and given how overbought the markets are at this time I am looking for a significant sell-off over the coming weeks. One, where I believe the buy the dip will get slammed. I am still flat the S&P and ahead of month-end I will now raise my buy level to 4363/4378 with a higher 4349 ‘’Closing Stop’’. Meanwhile, I will continue to be a seller from 4417/4432 with the same 4441 ‘’Closing Stop’’.
The Euro again fell shy of my raised buy level before rallying to sit higher at 1.1860 this morning. I will now raise my buy level to 1.1760/1.1800 with a higher 1.1712 stop. I still do not want to be short the Euro at this time.
September Dollar Index
The Dollar is trading lower by 60 points from where I marked prices yesterday at 92.10. We have support from 91.20/91.70 where I will be a small buyer with a 90.75 stop. If I am taken long I will have a T/P level at 92.00.
No Change. I am still a small buyer from 15300/15380 with the same 15229 stop. If I am taken long I will have a T/P level at 15425.
I am still flat as the market again fell shy of my buy range. I will now raise my buy level to 6835/6885 with a higher 6795 stop.
Dow Rolling Contract
No Change. I am still a buyer on any dip lower to 34620/34780 with the same 34495 ‘’Closing Stop’’. The Dow has strong resistance from 35250/35400, where I will continue to be a seller with a 35525 ‘’Closing Stop’’.
My NASDAQ plan worked well with the market trading higher to my 15040 sell level before trading lower to my 14993 T/P level and I am now flat. The NASDAQ has support from 14780/14860 where I will be a small buyer with a tight 14695 ‘’Closing Stop’’.
I am still flat, Today, I will raise my sell level to 176.80/177.30 with a higher 177.61 stop.
Gold Rolling Contract
Gold rallied after the Dollar weakened following yesterday’s FOMC Statement. This morning Gold is trading at 1817 and I will now raise my buy level to 1780/1795 with a 1769 stop.
Silver Rolling Contract
Frustratingly having been stopped at 24.75 on Monday, to see Silver trading higher at 25.25 this morning. Silver has support from 24.70/25.20 where I will again be a buyer with a 24.25 stop. If I am taken long I will have a T/P level at 25.65.