U.S. Equity Markets finished yesterday’s volatile trading session mixed as the NASDAQ 100 closed lower by 0.23%, while the Dow ended the day with again of 0.71%. Markets were spooked by Housing Starts recording their lowest reading in 17 months. Building Permits were down 1.3% month over month, the slowest pace since September 2021. Retail giants Walmart (WMT) and Home Depot (HD) posted better-than-expected figures but still warned that high inflation is severely impacting consumer buying behaviour and inventory levels – which are affecting profit margins. The latest Bank of America Global Fund Manager Survey reported that sentiment remains bearish but is slightly easing. Profit expectations sank to a new low this month, and recession expectations increased to a net 58% chance within the next 12 months. Short term, the economic adjustments are not going to feel great. After all, no one wants to give up their coffee runs or going out for dinner. But the long-term effects could prove to be a positive catalyst for a quicker economic recovery. And as crazy as this may sound, it’s true. Consumers are choosing to buy less. This is destroying demand. The Fed has consistently said that its primary goal is to lower inflation and bring economic supply and demand back into balance. While the Fed does not have any tools to increase supply, it can crush demand by raising interest rates. This is exactly what is playing out. But the problem is that if inflation doesn’t start to retreat, the Fed will continue with aggressive rate hikes. This just increases risk exposure for Americans who are already borrowing at record rates. And it would decrease the chances we avoid a sizable and prolonged recession. But the other side of the coin paints a rosier picture. Inflation is starting to fall. If this trend proves sustainable, prices of goods will follow suit, lessening the burden on family balance sheets. As that happens, the Fed could indicate that it is considering slowing rate hikes, stopping altogether, or even cutting rates once more. Right now, households are uncertain about the path of rate hikes, so they are pessimistic about the economy. A shift in guidance would signal there’s an end in sight, potentially changing consumers’ outlooks. That would unlock economic potential. The dynamic would boost investor optimism as well. A more confident consumer will buy more… and support rising corporate earnings as companies start to sell more goods. That would make money managers more inclined to invest in risk assets like stocks. Within the S&P 500, six of 11 sectors finished higher. European Markets closed higher. The latest German ZEW economic sentiment survey showed further deterioration in consumers’ belief that a recession is avoidable. Inflation expectations continue to rise, spurred by increased electrical and heating costs. Real income fell at its sharpest rate on record for the second quarter in the U.K. Subsequently, job vacancies fell amid signs that the tight labour market may be weakening. In Asia, Investors continue to weigh the growth outlook in the region versus the potential for slowing U.S. interest-rate-hike increases. Energy shares slid as oil prices fell on declining U.S. manufacturing numbers Monday. The Yuan fell to a three-month low against the Dollar. Consumer pessimism continues to grow as Retail Sales contracted in the first half of the year compared with the 10.7% growth a year earlier. Australian and New Zealand central banks are expected to continue interest rate hikes in upcoming meetings. Elsewhere, Oil fell a further 3.14% while Gold traded in a narrow range, closing lower by 0.25%

To mark my 2600th issue of TraderNoble Daiy Commentary I am offering a special 2-Year Rate of Euro 2750 for my Platinum Service which includes 1 to 4 updated emails throughout the trading day to demonstrate this value, a 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 240 points yesterday and is now ahead by 1788 points for August, having made 2660 points in July, following a gain of 3371 points in June. The Service made 3651 points in May, after making 762 points in April, following a gain of 5883 points in March. The Platinum Service made an impressive 5324 points in February, after ending January with a gain of 3878 points, more than making up for December’s 932 points loss. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 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 0.19% higher at a price of 4305.

The Dow Jones Industrial Average closed 239 points higher for a 0.71% gain at a price of 34,152.

The NASDAQ 100 closed 0.23% lower at a price of 13,635.

The Stoxx Europe 600 Index closed 1.1% higher.

Yesterday, the MSCI Asia Pacific Index rose 0.2%.

Yesterday, the Nikkei closed 0.001% lower at a price of 28,868.

Currencies 

The Bloomberg Dollar Spot Index closed 0.1% lower.

The Euro closed 0.1% higher at $1.0176.

The British Pound closed 0.3% higher at 1.2095.

The Japanese Yen fell 0.7% closing at $134.15.

Bonds

Germany’s 10-year yield closed 6 basis points higher at 0.97%.

Britain’s 10-year yield closed 9 basis points lower at 2.11%.

US 10 Year Treasury closed 2 basis points higher at 2.81%.

Commodities

West Texas Intermediate crude closed 3.14% lower at $86.75 a barrel.

Gold closed 0.25% lower at $1776.10 an ounce.

This morning on the Economic Front we have U.K. CPI, PPI and the Retail Price Index at 7.00 am. Next, we have Euro-Zone GDP and Employment Change at 10.00 am. This is followed by U.S. MBA Mortgage Applications at 12.00 pm and Retail Sales at 1.30 pm. Finally, we have a speech from Fed Member Bowman at 2.30 pm and the Minutes from last month’s FOMC Meeting at 7.00 pm.

Cash S&P 500

The S&P tagged its 200 Day Moving Average (4326) in a session that turned volatile as the market fell over 20 Handles into the close. In my opinion this rally has been based on the fact the Fed have done nothing to shrink its Balance Sheet despite saying QT has started when in fact it has not. The Fed is still running a loose policy despite 40- year high inflation. Given this background there is no chance of inflation falling back to a neutral 2%. Every indicator that I follow is screaming ‘’overbought’’ with the 14 Day RSI closing at 73 last night. If we had said back in late June that if the S&P rallied above 4300 we would look to put on a Macro short position, most traders would have said you would have no chance in seeing this level reclaimed. I am seeing negative divergences at these highs and it may take the FOMC Minutes this evening for reality to return. Back in 2000 we had a similar ‘’Bear Market Rally’’ that topped on September 6 before rolling over big time. I just cannot be a buyer at these levels and I will continue to be a seller on rallies. Yesterday the S&P hit my 4317 sell level before selling off to my revised 4305 T/P level and I am now flat. Today I will again be an aggressive seller from 4318/4338 with a higher 4354 ‘’Closing Stop’’.

EUR/USD

The Euro got hit hard again yesterday, trading lower to my 1.0130 second buy level for a now 1.0165 average long position. The Euro rallied into the close to sit at 1.0170 as I go to press. I will leave my 1.0085 stop on this position while lowering my T/P level to 1.0210.

March Dollar Index

No Change. The Dollar has resistance from 107.00/107.60 where I will be an aggressive seller with a 108.05 tight stop. I will leave my buy level unchanged at 105.00/105.60 with the same 104.45 stop.

Cash DAX

The DAX never came close to yesterday’s buy level and I am still flat. I will now raise my buy level to 13730/13810 with a tight 13655 stop. I still do not want to be short the DAX at this time..

Cash FTSE

No Change. The FTSE has resistance from 7870/7630 where I will again be a seller with a tight 7685 stop. I still do not want to be long the FTSE at this time.

Dow Rolling Contract

I am really curious to see from the Fed Minutes this evening whether Powell’s ‘’Neutral’’ rate comment is mentioned. If is not then the risk is for a well overdue correction. While if it is, the recent rally is now priced into the market in my opinion. The $BPSPX is at its most overbought level since before the Covid crash. I am still looking for one more larger correction into September/October timeframe before a year-end rally. Yesterday’s move higher saw my second sell level at 13180 triggered for a now 34020 average short position. I will leave my 34305 ‘’Closing Stop’’ unchanged while raising my T/P level to 33960. If any of the above levels are hit I will be back with a new update for my Platinum Members.

Cash NASDAQ 100

My NDX plan worked well as the market rallied to my 13710 sell level before a late sell-off saw the market trade lower to my 13645 T/P level and I am now flat. Today, I will again be a seller on any further rally to 13750/13950 with the same 14055 ‘’Closing Stop’’.

September BUND

My Bund plan worked well with the market trading lower to my 155.30 buy level before rallying to my 155.85 T/P level and I am now flat. Today, I will again be a buyer on any dip lower to 154.40/155.10 with a wider 153.75 ‘’Closing Stop’’.

Gold Rolling Contract

No Change. I am still a buyer on any dip lower to 1745/1760 where I will be an aggressive buyer with a tight 1733 stop.

Silver Rolling Contract

I am still long from Monday at 20.20. I will leave my 20.65 T/P level unchanged while continuing to add to this position at 19.60. I will now lower my stop to 19.10. If any of the above levels are hit I will be back with a new update for my Platinum Members.