US Stocks edged higher, with the S&P 500 extending its longest rally since 2017 to eight days, as investors awaited signs of progress in the trade war with China ahead of the latest corporate earnings season. Treasuries dropped, while West Texas crude hit a five-month high. The S&P 500 eked out a gain in thin volumes, rising to about 1.3 percent from its all-time high. However, catalysts remained scant Monday after trade talks ended last week in Washington without any timetable for an agreement. Apple lifted the Nasdaq 100, while energy producers rose along with oil prices. General Electric tumbled after JPMorgan cut its rating on the stock and Boeing dropping amid the ongoing fallout surrounding the 737 Max airplane. Elsewhere, the Pound edged higher as British Prime Minister Theresa May appealed to both the public and politicians in search of support for a compromise Brexit plan. In Turkey, President Recep Tayyip Erdogan cited “widespread irregularities” in local elections in Istanbul, sending the lira lower. Crude extended its advance as an escalation of fighting in OPEC producer Libya overshadowed the biggest increase in U.S. active rigs since May. The US Dollar fell for the first time in three sessions.
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The White House announced the departure of the Head of the Secret Service, Randolph ‘’Tex’’ Alles, 24 hours after the departure of Homeland Security Secretary Lirstjen Nielsen. Alles will depart amid a probe into a security breach at Mar-a-Lago but was asked to leave before it. New details on the incident emerged in court yesterday. The woman arrested allegedly had a stash of USB devices, SIM cards and a signal detector in her hotel room. This adds to more political pressure on Trump who has not had a full confirmed Cabinet in more than a year, and it has existed for only four and a half months since he took office in January 2017.
The S&P 500 Index rose 0.1 percent to close at a new high for the year at 2895. The S&P is now less than 45 Handles from its all-time high recorded last October. The Nasdaq 100 gained 0.3 percent, while the Down Jones Industrial Average fell 0.3 percent. The EU is zeroing in on a Brexit delay offer which did not help the Stoxx Europe 600 Index which closed 0.2 percent lower. Meanwhile the MSCI Emerging Market Index rose 0.4 percent, hitting its highest level in more than eight months.
After days of trying to break higher the Bloomberg Dollar Spot Index fell 0.2 percent while the Euro rallied 0.4 percent to $1.1261, the strongest in almost two weeks.The British pound climbed 0.2 percent to $1.3062 and is opening higher this morning at 1.3090.
The yield on 10-year Treasuries gained two basis points to 2.51 percent as the political worries increased in Washington. A better U.S. jobs report last Friday didn’t stop President Trump from suggesting the Fed should cut interest rates. In Europe, Germany’s 10-year yield fell less than one basis point to 0.004 percent, while Britain’s 10-year yield also decreased one basis point to 1.107 percent.
Crude extended its advance as an escalation of fighting in OPEC producer Libya overshadowed the biggest increase in U.S. active rigs since May. West Texas Intermediate crude rose 2 percent to $64.36 a barrel, the highest in five months. Gold advanced 0.5 percent to $1,301.90 an ounce, the highest in more than a week.
This morning on the Economic Front we have the NFIB Business Optimism Index at 11.00 am. This is followed at 3.00 pm by the JOLTS Job Openings. We have no Euro-Zone or UK data of note today while finally at 6.00 pm we have a U.S 3-Year Bond Auction.
June S&P 500
This frustrating month continues with the S&P missing my 2880 buy level with a 2884 low print before rallying 15 Handles into the close and I am still flat. With optimism at a 15-month high and the Daily Sentiment Index rising to 91% bulls I am on alert for a well overdue correction in the S&P. Today I will leave my 2868/2880 buy range unchanged with the same 2859 wider stop. Given how severely overbought the S&P is currently I will now lower my sell level slightly to 2904/2914 with a 2923 stop. If I am taken short and subsequently stopped out of this position I will be a more aggressive seller on any further rally to 2930/2940 with a 2949 stop which is just above its all-time high.
Unfortunately the Euro missed my buy level over the past three sessions before rallying as expected as yet again the DSI proves itself to be an invaluable trading signal. Today I will raise my buy level to 1.1190/1.1230 with a 1.1155 stop.
June Dollar Index
The boring sideways action continues in the US Dollar and I am still flat. Today I will lower my sell range to 96.95/97.35 with a lower 97.65 stop.
Last Friday the DAX closed above its 40 week Moving Average for the first time since last Summer. An upturn in the DAX will go a long way to restoring confidence in the Euro-Zone which is badly needed with Bund Yields in negative territory. If the DAX can take out key trendline resistance from 12200/12350 over the coming weeks we could well see a rally to the all-time highs at 13400 over the coming months. However this morning the DAX is taking a breather from its test of last May’s high of 12048 made last Thursday. The DAX has strong support from 11760/11840 and today I will be a strong buyer on any dip to this area with a 11695 stop.
The FTSE twice yesterday missed my 7405 sell level with a 7398 high print before having a small sell-off and I am still flat. Today I will lower my sell level to 7398/7438 with a 7475 tight stop. Given how severely overbought the FTSE is trading I still do not want to be long the market at this time.
Dow Rolling Contract
With Boeing Shares accounting for over 12.50% of the Dow it is no surprise that the Dow is underperforming the other main US Indices. Today I will leave my 26030/26180 buy range unchanged with the same 25955 tight stop.
Overnight the NASDAQ traded to a new high for the year at 7634 just missing my 7635 sell level before trading lower and I am still flat. The increased optimism towards a market that has risen nearly 17% since the lows of December 26 is becoming manic. The NASDAQ has resistance from 7650/7700 and today I will move my sell level higher to this new range with a 7745 wider stop.
For the fourth consecutive trading session the BUND has traded with a 165 Handle. I am still flat and as we wait for the ECB Meeting and Dragi press conference tomorrow I am reluctant to chase the Bund lower. Therefore I will leave my 166.00/166.40 sell level unchanged with a 166.75 stop.
Gold Rolling Contract
I am still flat Gold which closed over $1300 in New York last night. Gold has resistance from 1314/1324 and today I will be a small seller in this range with a tight 1331 stop.
Silver Rolling Contract
Shortly after I posted yesterday morning Silver rallied to my 15.25 T/P level on my latest 15.20 long position and I am now flat. Today I will again look to buy Silver from 14.80/15.10 with the same 14.60 stop and 15.25 T/P level if executed.