U.S. Equity Markets closed flat following a quiet start to week. Investors are closely monitoring the Federal Reserve’s latest policy-setting meeting, where all indications are pointing towards another pause in rate hikes. The Fed had previously paused rate hikes in June before raising rates again by 25 basis points in July. Despite the anticipated pause, a resurgence in inflation, fuelled by energy costs, have led analysts to expect one more rate hike before the end of the year. The key question is whether Fed Chair Jerome Powell will give any hints at the future of rate policy. The Fed’s data-dependent approach suggests that their policy will likely maintain a restrictive stance for the foreseeable future. This stance is supported by the modest decline observed in the strength of the labour market and core inflation, indicating that the Fed remains cautious and committed to a prudent approach. Touching on core inflation, its gradual decrease is primarily linked to the limited easing in housing costs. This week, we are anticipating important updates on the housing market, including key indicators like building permits, housing starts, and existing home sales for the month of August. Additionally, we are awaiting the release of the closely monitored NAHB Housing Market Index for September. Despite higher interest rates significantly reducing mortgage demand, the persistent scarcity of existing homes in the market has acted as a cushion, preventing prices from experiencing a steep decline. A consistent and sustained downward trend in the housing market would instil confidence in the Federal Reserve, bolstering the belief that core inflation will continue its gradual descent. European Markets closed lower. The U.K. is set for a big week as key updates on inflation as well as the latest policy-setting meeting for the Bank of England are set to take place. The U.K. will release August inflation data tomorrow with expectations that there will be a minor uptick to 7.1% following three straight months of flat or declining annual growth. On Thursday, the Bank of England will meet and are anticipated to raise interest rates by 25 basis points to 5.5% – the highest level since 2008. This would result in the 15th consecutive rate hike since the central began its tightening policy in December 2021. In Asia, the Bank of Japan are meeting on Thursday to decide their next move in Yield Curve Control and formulating a plan to combat the weakness in the Japanese Yen. Elsewhere, Oil closed 0.21% while Gold continued its recent rally ending Monday’s session with a 0.50% gain.
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For anyone following my Platinum Service it made 100 points yesterday and is now ahead by 376 points for September, after finishing August with 1485 points gain 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 3164 points in February, 4687 points in January 2054 points in December, 4789 points in November and 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
The S&P 500 closed 0.07% higher at a price of 4454.
The Dow Jones Industrial Average closed 6 points higher for a 0.02% gain at a price of 34,624.
The NASDAQ 100 closed 0.15% higher at a price of 15,225.
The Stoxx Europe 600 Index closed 1.13% lower.
This morning, the MSCI Asia Pacific closed 0.3% lower.
This morning, the Nikkei closed 0.76% lower at a price of 33,279.
The Bloomberg Dollar Spot Index closed 0.2% lower.
The Euro closed 0.2% higher at $1.0686.
The British Pound closed 0.1% higher at 123.91.
The Japanese Yen rose 0.2% closing at $147.60.
Germany’s 10-year yield closed 3 basis points higher at 2.70%.
Britain’s 10-year yield closed 3 basis points higher at 4.40%.
U.S.10 Year Treasury closed 1 basis points lower at 4.32%.
West Texas Intermediate crude closed 0.21% higher at $91.10 a barrel.
Gold closed 0.5% higher at $1932.10 an ounce.
This morning on the Economic Front we have Euro-Zone Current Account and CPI at 9.00 am and 10.00 am respectively. Next, we have U.S. Housing Starts and Building Permits at 1.30 pm. Finally, we have a 20-Year Treasury Auction at 6.00 pm.
Cash S&P 500
While the S&P may continue to fall for the next two to four weeks given the seasonality, I have zero interest in pressing the downside. While I am not telling you to be short, personally I do not like the risk/reward here in being short. I can make a case for a very counterintuitive bullish resolution suggesting that any weakness could be aggressively bought. Last night the $BPSPX RSI closed at even more oversold 24 while it will be interesting to see where the $NYSI reading is when it is released later today. Both of these signals are oversold against a positive divergence. As I mentioned on Friday, although the S&P closed below its 5 EMA, 50 MA, 20 MA and Weekly 5 EMA we have really strong support from 4390/4430. Yes, in a bearish Fed tomorrow this ley support level may be tested and broken. If this does happen my signal charts will be even more oversold. The Bank Index is holding both its March and June lows and looks like we could have a nice breakout to the upside. Yesterday my S&P plan worked well with the market trading lower to my 4441-buy level before having a nice 23 Handle rally. This move higher saw my 4451 revised T/P level triggered and I am now flat. Today, I will again be a buyer on any dip lower to 4425/4440 with a 4409 ‘’Closing Stop’’.
No Change. I am still long from last Thursday at an average rate of 106.70 with the same 107.20 T/P level. So far, the May low at 1.0635 is holding. I will leave my 1.0585 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
September Dollar Index
No Change. I am still short at an average rate of 105.00. This morning, the Dollar is trading lower at 105.15. I will leave my 105.85 ‘’Closing Stop’’ unchanged while raising my T/P level to 104.75. If any of the above levels are hit, I will be back with a new update for my Platinum Members
The DAX came under severe selling pressure, trading 200 points lower from where I marked prices 24 hours ago. This move lower has me long at 15730. I will add to this position at 15650 while leaving my 15595 ‘’Closing Stop’’ unchanged. I will now lower my T/P level to 15780. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
This week is all about the Bank of England Policy Meeting on Thursday. The BOE is under massive pressure aware that they may well make a mistake and raise rates for the 15th consecutive meeting. However, given the sticky inflation data they may have no choice. Housing is now a disaster in the U.K. while the economy went into negative GDP growth in July. Yet the action of the FTSE has been positive over the past month. We all know that the rate hiking cycle is coming to an end which historically is bullish for equity markets. Last week the FTSE had a bullish breakout before having a small 70-point sell-off to my 7640-buy level late yesterday. I am still long, and I will add to this position at 7580 with the same 7525 ‘’Closing Stop’’. I will now lower my T/P level to 7690. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
No Change. I am still long from Friday at a price of 34680. Yesterday we hit a high at 34725 before selling off 100 points into the close. I will continue to look to add to this position at 34440 with the same 34295 ‘’Closing Stop’’. I will now lower my T/P level to 34800. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
Seasonality wise this is traditionally one of the weakest weeks for U.S. Equity Markets of the year. Adding to the potential volatility are the Central Bank Meetings of the Fed tomorrow and both the Bank of Japan and Bank of England on Thursday. The BOJ may talk about finally raising interest rates some more which may impact the Dollar. The Dollar Index has just had nine Weekly Green Candles in a row and is now hovering with indecision. There is no doubt that the Japanese Yen is severely oversold and due a major bounce. Any sustained weakness in the Dollar will see Treasury Yields fall which in turn will be good for Tech stocks. Given how oversold my signal charts are as mentioned at length above in my S&P commentary I have no interest in being short the NDX. I am stubborn here is sticking to my 15398 average long position with no stop. The NDX has support below at 15110 where I will add to my existing position. I will leave my T/P level unchanged at 15450. I will have no stop on this position. If this view changes I will be back with a new update form my Platinum Members.
No Change. I am still long from Friday at a rate of 130.40. I will continue to look to add to this position at 129.70 while leaving my 129.25 ‘’Closing Stop’’ unchanged. I will now lower my T/P level to 130.85. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
I am still flat Gold as the market again traded in a narrow range yesterday. This morning, Gold is trading at 1931 as I go to press. I will now raise my buy level to 1900/1915 with a higher 1889 ‘’Closing Stop’’.
Silver Rolling Contract
Despite the Dollar strength Silver continues to hold the now key 22.50/23.00 support level. I am still long at an average rate of 24.05. Silver is trading slightly higher at 23.25 this morning. Buying the dip has worked almost every time in Silver over the past two years. However, just like Gold finding strong resistance from 1960/2000, Silver is seeing a lot of selling between 24.00 and 25.00. I will leave my ‘’Closing Stop’’ unchanged at 21.95. If Silver drops from here, I will come back with a new level to add to my existing long position. I will leave my T/P level unchanged at 24.25. If any of the above levels are hit, I will be back with a new update for my Platinum Members.