U.S. Equity Markets finished yesterday mostly lower after a choppy trading session that saw plenty of two-way price action. The Russell 2000 led the declines with a 1.12% fall. Federal Reserve Chairman Jerome Powell said policymakers would not let inflation impact the U.S. economy over the long term. He said the central bank’s job is to “literally prevent that from happening,” and that the Fed will do whatever it can to halt the rise of prices moving forward. The Fed has already implemented a series of rate hikes to control inflation. But Powell noted that it will also remain pivotal to rein in price expectations to avoid anchoring the U.S.’s course based on bad risk management. In turn, the central bank chairman said he is confident it can quell souring sentiment while also slowing growth enough to reduce prices and avoid a severe downturn – even with continued risks surrounding economic stability. Within the S&P 500, six of the 11 sectors finished higher. European Markets closed lower. Spain’s consumer price index (“CPI”) growth for June exceeded expectations, rising back above 10%, highlighting the need for a more aggressive monetary policy. The European Commission’s economic confidence figures for June declined, compared with May, as households have grown increasingly concerned about their finances. OPEC and its allies said they are over 500 million barrels of oil behind on their pledge to supply global markets with more oil, as members deal with operational issues. European Central Bank President Christine Lagarde said it will begin using asset purchase proceeds to defend bond yields on July 1. In Asia, The People’s Bank of China added roughly $13.4 billion worth of funds to the financial system to support liquidity ahead of the quarter’s end. Japanese Retail Sales figures for May were weaker than anticipated as motor vehicle and machinery sales contracted. China’s National Health Commission halved the quarantine time for travellers from foreign nations, signalling confidence in fewer COVID-19 restrictions. Australian Retail Sales data for May was stronger than anticipated as prices rose, supporting central bank interest-rate hikes to combat inflation. Elsewhere, Oil fell 2.25% on reports the U.S. may release more crude from its strategic reserves while Gold closed flat.
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For anyone following my Platinum Service it made 440 points yesterday and is now ahead by 3176 points for June after making 3651 points in May, having made 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
The S&P 500 closed 0.07% lower at a price of 3818.
The Dow Jones Industrial Average closed 82 points higher for a 0.27% gain at a price of 31,029.
The NASDAQ 100 closed 0.18% higher at a price of 11,658.
The Stoxx Europe 600 Index closed 0.9% lower.
This morning, the MSCI Asia Pacific Index fell 0.9%.
This morning, the Nikkei closed 1.65% lower at a price of 26,363
The Bloomberg Dollar Spot Index closed 0.5% higher.
The Euro closed 0.7% lower at $1.0443.
The British Pound closed 0.4% lower at 1.2156.
The Japanese Yen fell 0.3% closing at $136.34.
Germany’s 10-year yield closed 11 basis points lower at 1.51%.
Britain’s 10-year yield closed eight basis points lower at 2.39%.
US 10 Year Treasury closed five basis points lower at 3.08%.
West Texas Intermediate crude closed 2.25% lower at $109.43 a barrel.
Gold closed 0.01% lower at $1818.10 an ounce.
This morning on the Economic Front we already had the release of German Import Prices which rose 0.9% versus +1.6% and Retail Sales which printed +0.6% versus +0.5% expected. Next, we have German and Euro-Zone Unemployment at 8.55 am and 9.30 am respectively. This is followed by U.S. Weekly Jobless Claims, Personal Income/Spending and the very important PCE data at 1.30 pm. Finally, at 2.45 pm we have the Chicago Purchasing Managers’ Index.
Cash S&P 500
I read an interesting article on the Fed in yesterday’s Financial Times outlining how far behind the curve the Fed are at the moment. ‘’The markets are outlining their minds about U.S. Economic prospects just as the Federal Reserve has been scrambling again to catchup with developments on the ground. This risks another round of undue economic damage, financial volatility and greater inequality. It also increases the probability of a return to the ‘’stop-go’’ policy making of the 1970s and 1980s that exacerbates growth and inflation challenges rather than addressing them.’’ The article goes on to state that good central banks policymaking calls for the Fed to lead markets rather than lag behind them. A well informed Fed with a credible view of the future minimises the risk of disruptive financial market overshoots, strengthens the potency of forward guidance on policy and provides an anchor of stability that facilitates productive physical investment and improves the functioning of the real economy. As we enter Q3, the Fed is already behind the curve with the ever-increasing likelihood that when the going gets tough the Fed will again flip-flop policy and reintroduce QE. This is an excellent article and well worth a read. Yesterday, my S&P plan worked well with the market trading lower to my 3798 buy level before rallying to my 3824 T/P level and I am now flat. Although the S&P held its May lows by a small margin, we are opening lower this morning as the market is nervous ahead of the PCE Inflation that which will be released at 1.30 pm. If it comes in above expectations we may see more selling whereas a benign report will be welcomed by the Bulls and may finally lead to a vicious rally given the strong seasonality. The S&P has support from 3735/3755 where I will be a small buyer with a 3719 stop. If I am taken long I will have a T/P level at 3788.
Frustratingly, the Euro missed my 1.0540 T/P level with a 1.0536 high print before stopping me out of my latest 1.0515 long position near the close at 1.0445 and I am now flat. I have to respect the heaviness of the Euro over the past week. We have resistance from 1.0480/1.0550 where I will be a small seller with a tight 1.0645 stop. I do not want to be long the Euro at this time.
March Dollar Index
The Dollar rallied a further 0.5% yesterday, hitting my second sell level at 104.70 for a now 104.45 average short position. The sustained weakness in the Yen is dragging the Dollar to near 20-year highs. I will now raise my T/P level on this position to 104.20 while leaving my 105.05 tight stop unchanged.
My DAX plan worked well with the market trading lower to my 12990 buy level before rallying tom my 13070 T/P level and I am now flat. This morning the DAX is following the S&P lower, trading at 12750 as I go to press. The DAX is now close to its March 12500 spike low print and any test of this level should be met with strong buying given how oversold the DAX is trading at this time. Today, I will be an aggressive buyer from 12540/12640 with a 12395 wider stop.
The FTSE has just hit yesterday’s buy range and I am now long in small size at 7185. I will add to this position at 7125 with a now lower 6985 stop. I will lower my T/P level to 7230 and if any of the above levels are hit I will be back with an updated email for my Platinum Members.
Dow Rolling Contract
No Change. I am still long from Tuesday at 31110 with the same 30795 ‘’Closing Stop’’ which is been tested this morning. I will now lower my exit level to 30980 and if any of the above levels are hit I will be back with a new update for my Platinum Members. Internally the market is holding in despite Bed Bath & Beyond shares tanking 25% yesterday on weaker earnings. The McClellan Oscillator still closed positive at +6. I would have expected the MO to have closed with a negative reading last night given the sell-off in Small Caps, while the Fear and Greed Index only fell one point closing with a reading of ‘’ Extreme Fear’’ with a 25 print.
Cash NASDAQ 100
My NDX plan did worked well with the market trading lower to my 11550 buy level before rallying to my 11665 revised T/P level. Lower bond yields are helping tech stocks to outperform over the last week. The NDX has further support from 11280/11430 where I will again be a buyer with a 11075 stop. Meanwhile, I am still long at 14327, as I look for a further rally to 12900 to exit this position that I have now owned since April.
The Bund traded in a wild range yesterday with the market selling off to my 145.20 buy level shortly after I posted before surging to sit at 148.00 this morning. This move higher saw my 145.75 too tight T/P level triggered and I am now flat. Equity Markets need lower Bond Yields to have any chance of a sustained rally. Today, I will be a small buyer of the Bund on any dip lower to 146.50/147.10 with a 145.85 tight stop.
Gold Rolling Contract
No Change. I am still a buyer on any dip lower to 1788/1800 with the same tight 1779 ‘’Closing Stop’’.
Silver Rolling Contract
No Change. I am still long at 21.10 with the same 21.40 T/P level. I will add to this position at 20.40 while leaving my 19.95 stop unchanged. If any of the above levels are hit I will be back with a new update for my Platinum Members.