U.S. stocks ended a lackluster session lower as trade headlines and a spate of corporate earnings weighed on shares ahead of tomorrow’s expected Interest Rate Cut by the Federal Reserve. Treasuries edged higher. The S&P 500 turned negative in the final half hour of trading after earlier hitting a fresh record. Health-care shares rose on strong results from Merck and Pfizer. A report that China and the U.S. might not sign a partial deal next month, a day after President Donald Trump’s assertion that negotiations were ahead of schedule, dented stocks exposed to the battle. Lenders got a lift after Treasury Secretary Steven Mnuchin said he would be open to looser bank rules. Alphabet and Akami earnings dropped the Nasdaq Indexes. Elsewhere Yields on Japanese 10-year Bonds hit the highest since June and their Australian counterparts jumped almost nine basis points, yet the sell-off cooled during European hours, with yields on German and U.S. peers halting their recent surge. The Pound reversed a drop after the U.K.’s Labour Party said it will back an early election which was later announced will now take place on December 12.
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Investors are struggling for fresh impetus to extend the record-breaking rally in U.S. stocks. Optimism on the China trade front from President Donald Trump is aiding the bull case, and an anticipated Fed rate cut on Wednesday may add further fuel. Still, recent economic data has come in mixed and while earnings are topping estimates on average, the bar was low.
The S&P 500 Index slipped 0.1%, closing at a price of 3036.
The Nasdaq 100 fell 0.8% and the Dow Jones Industrial Average was little changed.
The Stoxx Europe 600 lost 0.2%.
Japan’s Topix index climbed 0.9%.
India’s Sensex Index surged 1.5%.
Here is a summary of the main Changes in F.X. Markets:
The Bloomberg Dollar Spot Index was little changed.
The Japanese Yen rose 0.1% to 108.83 per dollar.
Britain’s Pound was little changed at $1.2862.
The Euro added 0.1% to $1.1112.
The yield on 10-year Treasuries declined two basis points to 1.83%.
The two-year rate fell one basis points to 1.64%.
Germany’s 10-year yield decreased two basis points to -0.35%.
The Bloomberg Commodity Index advanced 0.2%.
U.S. Natural Gas Futures surged 6.2%.
Gold Futures fell 0.3% to $1,492.10 an ounce.
West Texas Intermediate crude decreased 0.5% to $55.54 a barrel.
This morning on the Economic Front we have German Unemployment at 8.55 am and this is followed at 10.00 am by Euro-Zone Economic Sentiment Indicator and Business Confidence. At 11.00 am we have U.S. MBA Mortgage Applications with the ADP Employment Change at 12.15 pm. Next, we have U.S. GDP and the PCE Deflator at 12.30 pm, followed by German CPI at 1.00 pm. Finally, we have the FOMC Rate decision at 6.00 pm where the Fed is expected to lower the main interest rate, followed by Fed Chair Powell’s press conference at 6.30 pm.
December S&P 500
I am still flat the S&P as the market again missed my buy level before trading to another new all-time high. Meanwhile the Dow continues to trade nearly 300 points below its equivalent 27398 all-time high from July 16 as the negative divergence between the main Indexes continues. I would expect the market to trade sideways ahead of the FOMC Statement and therefore I will leave my 3015/3025 buy level unchanged with the same 3005 stop. I will continue to be a seller on any further rally to 3055/3065 with a 3073 stop. If the market spikes to either my buy or sell level after the FOMC release I would expect the market to trade back to where it was pre the FOMC Statement as we wait for Powell’s press conference.
Frustratingly the Euro missed my 1.1070 buy level with a 1.1073 low print before rallying back above 1.11 and I am still flat. Today I will continue to be a buyer on any dip lower to 1.1030/1.1070 with the same 1.0995 stop.
December Dollar Index
The Dollar again traded in a narrow range and I am still flat. Ahead of the FOMC I will leave my 97.85/98.25 sell level unchanged with the same 98.55 stop.
I am still flat the DAX and today I will now raise my buy level to 12760/1280 with a higher 12715 stop. I still do not want to be short the DAX at this time.
My FTSE plan worked well with the market trading lower to my 7245 buy level before rallying to my revised 7256 T/P level with a 7290 high print. Today I will again look to buy the market on any dip lower to 7205/7245 with the same 7160 stop.
Dow Rolling Contract
As mentioned in my S&P commentary above the Dow continues to underperform both the S&P and NASDAQ. If the Dow does not break its July 16 high soon then we could see an acceleration to the downside. Ahead of the FOMC Statement I am reluctant to chase the Dow higher and today I will leave my 26790/26940 buy level unchanged with a higher 26705 stop.
I am still flat the NASDAQ which never came close to my sell level after weaker than expected earnings from Google. The market has strong support from 7960/8020 and I will be a buyer on any dip to this area with a 7925 stop.
I am still flat the Bund which fell shy of my 170.40 initial buy level with a 170.69 low print. I will now raise my buy level to 170.25/170.65 with a 169.80 stop.
Gold Rolling Contract
I am still flat Gold and today I will again lower my sell level to 1464/1473 with a 1456 stop which is just below the key September low of 1459.
Silver Rolling Contract
No Change as I am still a buyer on any dip lower to 17.10/17.50 with the same 16.70 stop.