U.S. Equities edged lower as tech heavyweights weighed on benchmarks, while Treasuries gained ahead of the Federal Reserve’s meeting tomorrow. The pound tumbled more than 1%. The S&P 500 Index fell for the second time in three sessions after reaching a record Friday as Amazon Inc., Facebook Inc., Alphabet Inc. and Netflix Inc. all slid. Apple Inc. gained ahead of its earnings announcement this evening, helping to lift the Dow Jones Industrial Average. Drug companies got a boost from surging Mylan NV after the generic drug maker and Pfizer Inc. announced merger plans The 10-year Treasury yield declined for a second day to 2.06% before the Fed’s anticipated rate cut on Wednesday. The US Dollar climbed to the highest in almost two months before a new round of trade talks between the U.S. and China this week. The Pound slid to its lowest level in more than two years as U.K. Prime Minister Boris Johnson stepped up preparations for a no-deal Brexit.
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For anyone following my Platinum Service it made 70 points yesterday and is now ahead by 1130 points for July, having made 1346 points in June,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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Investors will be picking through any developments on trade as Chinese and American negotiators gather this afternoon for two days of talks, three months after negotiations broke down. Neither side is signalling much hope for a breakthrough. Meanwhile, Fed Chairman Jerome Powell’s post-meeting press conference on Wednesday will provide an opportunity to gauge the trajectory of U.S. Interest Rates after the Central Bank is tipped to ease policy. On a related theme, traders will eagerly await Monthly Employment data from the world’s largest economy at the tail end of the week. Corporate earnings will remain a focal point as investors stay vigilant for any signs that a global economic slowdown is being reflected in companies’ bottom lines. Among major earnings this week are Apple, Rio Tinto and carmakers Toyota and BMW.
The S&P 500 Index fell 0.2% to close just below all-time highs at 3021, while the Dow Jones Industrial Average rose 0.1%. In Europe, the Stoxx Europe 600 Index was little changed. Meanwhile on the back of the weaker Pound the U.K.’s FTSE 100 Index increased 1.8% to the highest level in almost a year.
Here is a summary of the main changes in F.X. Markets:
The Bloomberg Dollar Spot Index rose 0.1% to the highest in almost two months.
The Euro advanced 0.2% to $1.1145.
The Japanese Yen fell 0.1% to 108.79 per dollar, the weakest in almost three weeks.
The British Pound fell 1.3% to $1.2224, the biggest drop in more than eight months. This is it’s lowest close since March, 2017.
Nothing much happening in the Bond market which is on hold ahead of tomorrow’s pending rate cut. The yield on 10-year Treasuries dipped one basis point to 2.06%. In Europe, Britain’s 10-year yield fell three basis points to 0.654%, the lowest in about three years and Germany’s 10-year yield declined two basis points to -0.39%, the lowest in more than three weeks.
Gold rose 0.5% to $1,426.13 an ounce.
West Texas Intermediate crude gained 1.5% to $57.02 a barrel.
This morning on the Economic Front we have German GFK Consumer Confidence at 7.00 a.m. Next we have Euro-Zone Consumer Confidence and Business Climate at 10.00 a.m. This is followed at 1.00 pm by German CPI and US Personal Income/Spending at 1.30 pm. Finally, we have consumer Confidence and Pending Home Sales at 3.00 pm.
September S&P 500
My S&P plan worked well with the market trading to my 3015 buy level (low of the day) before rallying to my 3022 T/P level and I am now flat. The market is now on hold ahead of tomorrow’s FOMC Statement and Powell Press Conference. Today I will again look to buy the S&P on any dip lower to 3003/3013 with a 2995 stop. I still do not want to be short the market at this time.
Frustratingly the Euro just missed my 1.1110 buy level by tow points before rallying to a rebound high at 1.1150. Today I will move my buy level higher to 1.1085/1.1115 with a 1.1045 stop.
September Dollar Index
The Dollar also just missed my initial 97.95 sell level and I am still flat. Today I will raise my sell level slightly to 98.10/98.50 with a 98.85 stop.
No Change as my only interest in buying the DAX is on a dip lower to 12230/12290 with the same 12165 stop.
Thankfully we have had no sell level in the FTSE fearing that any sell-off in the Pound would see a surge in UK Equities which is exactly what happened yesterday. As you will see below the Pound is severely oversold and due a bounce. The FTSE is now trading well above its Daily Bollinger Band and at the top of it’s Williams Index. As a result I will now look to sell the market on any further move higher to 7660/7700 with a 7735 tight stop. If I am taken short I will have a T/P level at 7625.
Dow Rolling Contract
The Dow was the strongest of the US Indices yesterday and I am still flat. However the Dow needs to break and close over the July 16 all-time high of 27398 to confirm a further extension of this move higher. Given the negative divergence with the S&P I am not going to chase this market higher and I will leave my 26900/27050 buy level unchanged with the same 26825 stop.
I am still flat the Bund as we wait for the German CPI data at 1.00 pm. I will now raise my sell level to 174.80/175.20 with a higher 175.55 stop.
Gold Rolling Contract
The big worry that I have with Gold is the fact that small traders and retail investors have all jumped aboard the recent Gold rally. They are now net-long 38,589 Futures Contracts, which is the largest position in 61/2 years. I am still flat Gold and as I am not prepared to chase this market higher I will again leave my 1397/1405 buy level unchanged with the same 1391 stop.
Silver Rolling Contract
Similar to Gold above, sentiment remains at extreme levels towards Silver. I am still flat and today my only interest in buying the market is on a dip lower to 15.70/16.10 with a lower 15.35 stop.
Yesterday’s 1.3% fall in Sterling presents a similar situation that prevailed earlier in the month when we bought Cable at 1.2460 before the market rallied 150 points. After yesterday’s fall Cable is again trading well below its Daily Bollinger Band and Williams Index and as a result I have bought the market as emailed to my Platinum Members at 1.2222 with a 1.2160 stop. My T/P level for now will be at 1.2280.