Stocks climbed on optimism Mexican tariffs will be avoided, while Treasury yields fell as data bolstered rate-cut wagers. Oil entered a bear market after U.S. supplies jumped the most in almost 30 years. The S&P 500 Index rose a second day as President Donald Trump said Mexico wants to make a deal and White House trade adviser Peter Navarro told CNN the nation still has time to prevent the tariffs from taking effect. Treasuries rose as weak private-jobs data outweighed solid service-industries figures. Trump’s tariff threat has led several analysts to forecast increased risk of a recession in the world’s largest economy, putting pressure on the Federal Reserve to cut rates. The steepening U.S. yield curve shows bond traders betting the case for Fed easing is only strengthening, even as top policy makers signal they’re not yet ready to act.
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For anyone following my Platinum Service it made 30 points yesterday and is now down by 22 points for June, having made 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
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Markets rose for a second day on hopes that the Fed will cut rates and hoping that a resolution to the trade concerns will come to an end sometime soon as the economy slows. The S&P 500 climbed 0.8% to 2,826.15 within touching distance of the key 2830/2840 resistance area. The Stoxx Europe 600 Index gained 0.4%. Overnight the Nikkei closed flat.
The US Dollar had a volatile trading session, weakening on the back of the ADP Employment data before reversing after the ISM came in stronger than expected. The Bloomberg Dollar Spot Index closed 0.4% higher while the Euro which hit a high of 1.1306 reversed to end the session in New York at 1.1224. The Japanese yen dipped 0.3% to 108.43 per dollar, while the Pound closed lower at 1.2680.
Bond Markets were quiet as traders wait for the Non-Farm Payrolls tomorrow with the yield on 10-year Treasuries declining one basis point to 2.12%. In Europe, Germany’s 10-year yield slid two basis points to -0.23% which is a record close while Britain’s 10-year yield fell four basis points to 0.863%.
Oil entered bear market territory after inventories ballooned falling 3.4% to close at $51.68 a barrel. Overall the Bloomberg Commodity Index declined 1.6%. In Precious Metals both Gold and Silver gave up some of their recent impressive gains by closing 1% lower. Arabica-coffee futures plunged the most in almost nine years in New York as a rally in the past two weeks triggered sell signals for chart-watching traders and producers alike. July futures fell as much as 7.3% to 97.90 cents a pound on ICE Futures U.S., the biggest drop for a most-active contract since August 2010.
This morning on the Economic Front we already had the release of German Factory Orders which came in higher than expected with a +0.3% rise. At 10.00 am we have Euro-Zone GDP and Employment Change. At the same time Bank of England Governor Carney is due to speak. Next we have the ECB Rate Decision at 12.45 pm and this is followed by the Dragi press conference at 1.30 pm. Also at 1.30 pm we have the US Weekly Jobless Claims, Unit Labour Costs and Non-Farm Productivity. Finally the Fed’s Kaplan and Williams are speaking at 1.40 pm and 6.00 pm respectively.
June S&P 500
The S&P has now rallied 100 Handles off its 2728.75 low print on Monday as we approach the key 2840 resistance area. Above here the next resistance is from 2850/2860 and a break and close over 2860 for 2/3 days will lead to new all-time highs. On Monday the CBOE Put/Call ratio rose to 1.09, the most extreme level of Put buying relative to Call buying since the December 21-January 16 time period. For now I see a trading range from 2780/2840 and today I will be a small seller from 2835/2845 with a 2853 stop. I will also raise my buy level to 2795/2805 with a 2788 stop.
I mentioned yesterday that the Euro has strong resistance at 1.1300 and in hindsight I should have had a sell level at this key resistance area but frustratingly I did not. Subsequently the Euro dropped down to a low of 1.1220 but as it was late in the day I did not buy the market myself and I am still flat. With the ECB rate decision and Dragi press conference later I will now lower my buy level to 1.1125/1.1175 with a 1.1085 stop. I will be a seller on any further rally to 1.1305/1.1345 with a 1.1380 stop.
June Dollar Index
I am still flat the Dollar and ahead of the ECB I will now raise my sell level to 97.80/98.20 with a higher 98.55 stop.
I am still flat the DAX and today I will now raise my buy level to 11850/11910 with a 11795 stop. I still do not want to be short the DAX at this time.
The FTSE just missed my 7155 buy level before rallying and I am still flat. I will now raise my buy level to 7135/7175 with a higher 7105 stop. Just like the DAX above I still do not want to be short the FTSE at this time.
Dow Rolling Contract
The Dow managed to rally over 200 points yesterday and this move higher ensured we closed over the key 200 Day Moving Average as yet again any break of this area is not sustained. This has been the pattern for most of the last 10 years. It is interesting that everytime we look like we are going to crash the Fed or Trump come in and rescue the market. Today I will now raise my buy level to 25180/25350 with a 25070 stop. If the Dow can build value above 25720 then in my opinion we are going to new all-time highs.
Frustratingly the NASDAQ bottomed at 7149 which was just above my 7135 buy level and I am still flat. This morning the market is trading at 7225 and I will now raise my buy level to 7110/7160 with a 7065 stop. On Monday the Daily Sentiment Index closed at just 9% bulls. If the market can hold last Monday’s low then there is plenty of scope to rally especially if we can break and close over the key resistance level of 7450 over the coming weeks.
My short 171.25 Bund position worked well with the market trading lower to my 170.95 T/P level and I am now flat. The Bund is back trading near its all-time high while the US Bond Market is lower which is no surprise given my extensive commentary on sentiment levels this week. Today I will again look to sell the Bund on any further rally to 171.50/171.90 with a 172.25 stop.
Gold Rolling Contract
No Change as I am still a buyer on any dip lower to 1310/1319 with the same 1302 stop.
Silver Rolling Contract
Overnight Silver traded lower to my 14.75 buy level. I am still long and I will now raise my stop on this position to 14.25. I will now lower my T/P level on this position to 14.90 and if any of the above levels are hit I will be back with a new update for my Platinum Members.