Stocks surged on Wednesday while the Dollar rallied and bonds plummeted, with bonds and the Dollar posting the largest intraday moves since the COVID-era in response to Trump’s victory in the US Presidential Election. The Trump proposals of tax cuts supported stocks while the inflationary impacts of tariffs and increased spending (and increased issuance) weighed on T-notes and supported the Dollar. The majority of FX was lower vs the Dollar with notable weakness in the Euro, Yen and Yuan with yield differentials weighing on the Japanese Yen, and proposed tariff policies weighing on the Euro and Yuan. MXN initially tumbled, but by the end of day, it staged a remarkable recovery and appreciated vs the Dollar. There was little data to digest on Wednesday with all focus on the election, as things stand the chances of a Red Sweep are high with Republicans already taking the majority in the Senate (currently with 52 seats, majority 51) while the House is still a close race but Decision Desk put the probability of a Republican House majority at 92%, projecting a final result of 222-213. Elsewhere, commodity prices were hit with oil initially slumping but settling well off the lows, while gold and silver tumbled in response to the Trump victory. Attention on Thursday turns to the FOMC rate decision, as well as the Bank of England, Riksbank and Norges Bank. Overall, Trump and Republicans performed very well, better than polls had suggested. Trump secured well over the 270 electoral vote majority with it currently standing at 292, via NYT. The Republicans also took hold of the Senate, holding 52 seats as it stands, above the 51 majority. The House is yet to be called, but as the vote count progressed it looked more and more like a Red Sweep was due, with Decision Desk assigning a 92% probability of a Republican House win. A Red Sweep was seen as the most inflationary of all outcomes as it means that Trump’s policies (tax cuts, tariffs, increased spending) will have little pushback when pushing them through the Congress, as the Republicans look set to hold both majorities. However, any moderate-leaning congressmen may be one to keep an eye on, given the Republicans have only just secured the Senate, and a tight race for the House lingers with Decision Desk currently projecting 222-213, via Decision Desk. The Fed is widely expected to cut rates by 25bps on Thursday, taking the target for the Fed Funds Rate to 4.50-4.75%, in line with money market pricing and analyst forecasts. Attention will be on any updates on the statement to see how the Fed describes the economy after mixed recent data, and of course for any future guidance – but they will likely keep options open. The rate decision takes place two days after the election which saw a Trump victory, with Republicans taking control of the Senate. However, the House is still yet to be determined with it currently too close to call. Nonetheless, the election is not expected to have much impact on the upcoming meeting but it will shape expectations for easing through 2025. The Trump victory is seen as inflationary due to increased spending, tax cuts and the imposition of tariffs, which could see a slower return to the neutral rate. Chair Powell is likely to keep his options open by maintaining a meeting-by-meeting approach with decisions to be directed by economic data. This will likely entail language that the Fed can either slow, accelerate or even pause the easing process depending on how the economy evolves, but a more explicit signal to one of these options would be key. The Bank of England is widely expected to cut its Base Rate this afternoon by 25bps to 4.75% via a 7-2 vote. Headline inflation has dropped below target, while weaker PMI data in October supports easing policy. Attention will be on what/if any signalling the BoE provides on future easing given the market reaction to last week’s budget which saw a trimming of dovish bets for the December meeting. Elsewhere, Oil closed 0.42% lower, while a stronger Dollar saw Gold hit hard, closing lower by 2.6%.
To mark my 3075th issue of TraderNoble Daily Commentary I am offering a special 2-Year rate of Euro 2750 for my Platinum Service which includes 1 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 made 190 points yesterday and is now ahead by 1156 points for November having finished October with a gain of 2179 points. September saw a gain of 4402 points following a 301-point loss for August after closing July with a gain of 1918 points while June closed with a gain of 2074 points, having made 1843 points in May. The Platinum Service made 4010 points in April after ending March with a gain of 2113 points. February closed with a gain of 1606 points, after closing January with a gain of 3675 points. December saw a gain of 1890 points after finishing November with a gain of 1734 points. October ended with a gain of 3184 after closing September with a small gain of 228 points, after finishing August with a gain of 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 2.53% higher at a price of 5929.
The Dow Jones Industrial Average closed 1508 points higher for a 3.57%gain at a price of 43,729.
The NASDAQ 100 closed 2.74% higher at a price of 20,781.
The Stoxx Europe 600 Index closed 0.54% lower.
Yesterday, the MSCI Asia Pacific closed 1.2% higher.
Yesterday, the Nikkei closed 2.61% higher at a price of 39,480.
Currencies
The Bloomberg Dollar Spot Index closed 1.67% higher.
The Euro closed 2.1% lower at $1.0727.
The British Pound closed 1.4% lower at 1.2874.
The Japanese Yen fell 2% closing at $154.50.
Bonds
Germany’s 10-year yield closed 2 basis points lower 2.41%.
Britain’s 10-year yield closed 3 basis points higher at 4.56%.
U.S.10 Year Treasury closed 15 basis points higher at 4.43%.
Commodities
West Texas Intermediate crude closed 0.42% lower at $71.69 a barrel.
Gold closed 2.6% lower at $2657 an ounce.
This morning on the Economic Front we have German Trade Balance at 7.00 am, followed by Euro-Zone Retail Sales at 10.00 am. Next, we have the Bank of England Rate Announcement at 12.00 pm and a press conference with Governor Bailey at 12.30 pm. This is followed by U.S. Weekly Jobless Claims and Unit Labour Costs at 1.30 pm. At 3.00 pm we have Wholesale Inventories. Finally, we have FOMC Statement at 7.00 pm followed by Fed Chair Powell Press Conference at 7.30 pm.
Cash S&P 500
The S&P gapped higher at Wednesday’s Open on more negative divergences, hitting a new all-time high at 5936. What was striking about yesterday’s higher open gap was the muted level of the NYSE Advance/Decline Ratio. The S&P closed a massive 146 Handles higher while A/D ratio ended at a very tame 1.59:1. Yesterday’s surge has left a large ‘’Open Gap’’ to Tuesday’s 5782 Chicago close as the low for yesterday was at a price of 5875. As you know all open gaps are filled and this gap is one of the largest on record. My S&P plan worked well as the market traded the whole of my sell range for a 5908 short position before selling off to my revised 5889 T/P level and I am now flat. The Fed is expected to cut Interest Rates by 25 Basis points this evening which makes no sense with markets flying and the economy expanding at the rate of knots on the heels of the insane fiscal stimulus and a strong labour market. The bond market and the prospect of tariffs is screaming a coming resurgence in inflation. In my opinion the surge in inflation has already started making this evening’s rate cut another mistake by the Fed. The S&P has further resistance from 5952/5970 where I will again be a seller with a higher 5985 ‘’Closing Stop’’. If triggered, I will have a T/P level at 5928. If the S&P decides to fill Tuesday’s gap, I will be an aggressive buyer from 5785/5805 with a tight 5769 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 5833.
EUR/USD
It is rare that you see the Euro fall over 2% in one trading session which is what happened yesterday. This move lower saw my second buy level at 1.0690 triggered for a now 1.0725 average long position. The Euro is oversold having fallen over 500 points since the September 25 high at 1.1216. I will leave my 1.0645 ‘’Closing Stop’’ unchanged while lowering my T/P level to 1.0790. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
I am still short the Dollar from early Wednesday morning at 104.75. I will continue to look to add to this position at 105.45 while leaving my 106.15 ‘’Closing Stop’’ unchanged. I will now raise my T/P level to 104.25. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash DAX
No Change: I am still flat the market as the DAX never came close to Monday’s sell range. Given the fact the DAX only trades from 7.00 am to 9.00 pm I am going to stay flat for the next two trading sessions until we get the election noise out of the way. We have had a nice start to November so there is no need to take undue risk. If this view changes, I will be back with a new update for my Platinum Members.
Cash FTSE
I am still flat the FTSE Market. The FTSE continues to trade heavy ignoring the ramp higher in the American Indexes. Today, I will continue to be a buyer on any dip lower to 8040/8110 with the same 7965 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 8170.
Dow Rolling Contract
Wow! The Dow surged 1500 points yesterday, generating one of the largest one-day up-moves in history. With the Dow generating an extremely overbought condition against massive negative divergences. . This morning, the Dow is trading at 43775 leaving one of the largest ’’Open Gaps ’’ ever to Tuesday’s 42221 New York close. This move higher saw the whole of my sell range triggered for a now 43300 average short position. The VIX fell 20%, closing at its lowest level since September 26. This huge move indicates strong consumer complacency in a market that has one of the highest valuations in history. One worry for any short position is the fact that McClellan Oscillator is not overbought closing at a +11 print last night. Given the side of Wednesday’s ‘’Open Gap’’ I will look to add to my short position on any further move higher to 43900 with no stop for now. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
A late surge saw the NDX also close at a new all-time high. I am still flat as these latest highs generating a number of new negative divergences. The NDX has resistance from 20900/21050 where I will be a small seller with a 21305 wider ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 20700
December BUND
Despite the rise in Treasury Yields the Bund traded in a narrow range over the past 24 hours. I am still long at an average rate of 132.10 with the same higher 132.70 T/P level. I will leave my 130.95 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
Thankfully we have stayed patient in waiting for a correction in Gold. Yesterday’s 2.6% fall means the market is not far off my 2610/2630 buy range where I will still be an aggressive buyer with the same 2595 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2658.
Silver Rolling Contract
Silver traded lower to my second buy level at 31.80 for a now 32.30 average long position. I will now lower my ‘’Closing Stop’’ to a price of 29.95 while lowering my T/P level to 33.05. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Please Note: There will be no Daily Commentary tomorrow. Any of my calls that are not hit today and are subsequently triggered on Friday will see me return with updated emails for my Platinum Members.
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