U.S. Equity Futures saw pressure in the US morning while T-notes caught a bid after South Korean President Yoon implemented martial law to clear out pro-North Korean elements. The move in stocks had started to pare and once it was clear the law would likely be reversed, with both stocks and bonds paring the initial move as the President and Cabinet ultimately reversed the decision. T-notes went on to settle at lows with the curve steepening as markets still digest the dovish Waller comments from Monday while the initial SK-induced upside was capped by a hotter-than-expected JOLTS print for October. Stocks ultimately finished mixed with the NASDAQ 100 outperforming while the Russell 2000 lagged. Sectors were predominantly lower with only Communication Services, Tech and Consumer Discretionary closing green. The Dollar finished flat and traded in a narrow range vs recent sessions with FX price action relatively mundane on Tuesday, except for the Korean Wan. Crude prices were bid with several bullish factors, including concerns around the Israel/Hezbollah truce, expectations of OPEC+ extending supply cuts, refinery outages and fresh Iranian sanctions. Aside from the South Korea updates and JOLTS, the focus was on Fed speak, which saw Kugler, Daly and Goolsbee stick to the script. Meanwhile, China’s MOFCOM announced a ban on exports of “dual use items” relating to gallium, germanium, antimony and super-hard materials to the US. Elsewhere, France is to hold a no-confidence vote on Wednesday at 3.00 pm. Headline JOLTS rose to 7.744 million, up from the prior 7.372 million, which was revised down from 7.443 million, above the expected 7.475 million but within the forecast range of 7.2-7.9 million. The vacancy rate ticked up to 4.6% from 4.4% (revised down from 4.5%), while the quits rate rose to 2.1% from 1.9%. Although the data is for October, analysts at Oxford Economics highlight that the difference between hires and separations lends downside risk to their forecast for a sizable rebound in the November nonfarm employment – noting the data points to a still strong, albeit cooling, labour market. FOMC Vice Chair Williams largely towed a neutral line, stressing optionality based on the data but he does expect more rate cuts to happen over time while monetary policy remains in a restrictive stance. Williams said the economy is in a good place, and the labour market is solid and in balance. He expects inflation to continue to gradually ebb to 2%, adding that the job market is unlikely to be a source of higher inflation. Williams also provided some forecasts (note, the prev. will be referring to his prior forecasts on 21st November), he sees US GDP at 2.5% this year (prev. 2.5% or a little bit higher for 2024). Unemployment between 4-4.25% over the coming months (prev. unemployment will get to 4.25%). Sees US inflation around 2.25% for 2024 (prev. 2.25% for 2024). Governor Kugler stated that current Fed policy is well-positioned to deal with uncertainties and she will vigilantly monitor for risks and negative supply shocks that may undo progress in reducing inflation. She stressed that policy is not on a pre-set course and she will make decisions meeting-by-meeting. She stated the US economy is in a good position, the labour market is solid, and inflation appears on a path to 2%. Higher productivity growth and immigration increases have driven surprising, largely desirable economic outcomes. October PCE inflation readings are consistent as of now with a return to the 2% goal, but also show the job is not yet done. She noted the trade policy under the incoming administration and Congress may affect productivity and prices, but it is too soon to judge. Kugler said a continuation of disinflation and a modest job market cooling show the Fed goals are roughly in balance. She stated that rate cuts so far were steps in removing policy restraint as the Fed is in the process of moving policy toward a more neutral setting. The San Francisco Fed President (Daly) said the US economy is in a really good place, adding that a December rate cut is absolutely not off the table. Daly said the timing of the rate cut is up for debate, and that they need to keep moving the policy rate down and need to keep an open mind. She knew inflation would be a bumpy ride, but it is moving down gradually, but there is still more work to do. Even if the Fed does another rate cut, policy will remain restrictive. Daly acknowledged the neutral rate is closer to 3% (Fed median is 2.9%), noting they can take their time getting too neutral. Daly added the Fed will continue to have restrictive policy until inflation gets to 2% and she does not see any reason for a rate hike, and the trajectory of change is down. On Trump policies, said that trade issues do not usually derail growth, the economy adjusts. She is prepared to assess things but needs to see policies before the Fed reacts.
To mark my 3100th issue of TraderNoble Daily Commentary I am offering a special 2-Year rate of Euro 2750 for my Platinum Service which includes 1 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 was made 229 points yesterday and is now ahead by 94 points for December after closing November with a gain of 3049 points having finished October with a gain of 2179 points. September saw a gain of 4402 points following a 301-point loss for August after closing July with a gain of 1918 points while June closed with a gain of 2074 points, having made 1843 points in May. The Platinum Service made 4010 points in April after ending March with a gain of 2113 points. February closed with a gain of 1606 points, after closing January with a gain of 3675 points. December saw a gain of 1890 points after finishing November with a gain of 1734 points. October ended with a gain of 3184 after closing September with a small gain of 228 points, after finishing August with a gain of 1485 points, 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 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
Equities
The S&P 500 closed 0.05% higher at a price of 6049.
The Dow Jones Industrial Average closed 76 points lower for a 0.17% loss at a price of 44,705.
The NASDAQ 100 closed 0.31% higher at a price of 21,229.
The Stoxx Europe 600 Index closed 0.37% higher.
This morning, the MSCI Asia Pacific closed 0.4% higher.
This morning, the Nikkei closed 1.91% higher at a price of 39,248.
Currencies
The Bloomberg Dollar Spot Index closed 0.19% lower.
The Euro closed 0.1% higher at $1.0512.
The British Pound closed 0.1% higher at 1.2678.
The Japanese Yen rose 0.13% closing at $149.37.
Bonds
Germany’s 10-year yield closed 2 basis points higher 2.06%.
Britain’s 10-year yield closed 4 basis points higher at 4.25%.
U.S.10 Year Treasury closed 3 basis points higher at 4.21%.
Commodities
West Texas Intermediate crude closed 2.92% higher at $70.09 a barrel.
Gold closed 0.1% higher at $2642 an ounce.
This morning on the Economic Front we have German, Euro-Zone and U.K. Composite PMI at 8.55 am, 9.00 am and 9.30 am respectively. Next, we have Euro-Zone PPI at 10.00 am, followed by U.S. MBA Mortgage Applications at 12.00 pm. This is followed by ADP Employment Change at 1.15 pm and Composite PMI at 2.45 pm. At 3.00 pm we have Factory Orders and ISM Non-Manufacturing PMI. Finally, we have a speech from Fed Chair Powell at 6.45 pm and the Fed’s Beige Book at 7.00 pm.
Cash S&P 500
Thankfully we saw a small sell-off in the S&P to my 6035 T/P level on my latest 6047 short position and I am now flat. The constant ping pong between days when tech is leading and when it is not, and on days when it does the Index keeps driving higher no matter what the internals as we have a few stocks so dominating in market cap. Both Apple and NIVIDA have a combined market cap of $7 trillion and all you need for a sustained move higher on any given day is for these two stocks to rally. This is what has happened over the past week driving both the NDX and S&P to new all-time highs. As a result, we are seeing a 75-year high in U.S. Stocks versus the Rest of the World. This is quiet something and no doubt the global footprint of the Mega Cap Techs has been an overall contributor to this. With share buybacks at record levels and not due to end until December 20, performance anxiety by many fund managers lagging the Indices continues to drive the S&P higher. Tax considerations will keep many people from wanting to lock in gains this year and rather wait until 2025 with the prospect of lower taxes coming with the new Trump Administration. The continuous rise in debt levels is adding to this rally despite a number of negative divergences. We all know that this bubble will end in tears the only problem is the ‘’When and from where’’. I will continue with my strategy of buying dips and been a small seller of strong rallies with tight stops. The S&P has further resistance from 6068/6088 where I will again be a seller with a higher 6103 ‘’Closing Stop’’. The S&P has short-term support from 5990/6006 where I will be a small buyer with a 5977 tight ‘’Closing Stop’’.
EUR/USD
The Euro has been stuck in a 130-pont range between 1.0470 and 1.0600 for the past 10 days. This morning, the Euro is trading slightly higher at 1.0515. I am still long the Euro at an average rate of 1.0665. Given how oversold the Euro I will continue to hold this position with no stop for now. I will leave my T/P level unchanged at 1.0690. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
The Dollar traded in a narrow range yesterday and I am still flat. I will not chase the market higher as I continue to look to buy the Dollar on any dip lower to 105.00/105.80 with the same 104.35 ‘’Closing Stop’’. I still do not want to be short the Dollar at this time. If this view changes, I will be back with a new update for my Platinum Members.
Cash DAX
This morning the DAX finally hit my initial 202050 sell level. As I am back short the NDX I emailed my Platinum Members to exit any short position at my revised 20021 T/P level and I am now flat. Frankly this mega rally in the DAX is getting ridiculous in my opinion given both the political and economic backdrop. However, for a more meaningful correction we may have to wait for the ECB Meeting this month or more likely in January for this sell-off to commence. The DAX has further resistance from 20140/20240 where I will be a small seller with a higher 20325 tight ‘’Closing Stop’’. I still do not want to be long the DAX at this time. If this view changes I will be back with a new update for my Platinum Members.
Cash FTSE
The bullish set-up in the FTSE from the 8050-buy level last month continues to gather pace with the market trading at a price of 8350 this morning. The FTSE is now short-term overbought. I am still looking to buy the FTSE on dips, but I will not chase the market higher as I look for a small correction to correct its overbought condition. Therefore, I will continue to be a strong buyer on any dip lower to 8190/8260 with the same higher 8115 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 8310.
Dow Rolling Contract
Although the Dow continues to underperform the other main American Indexes, I do not want to be short. The Dow has left an ‘’Open Gap’’ from November 22 at 44300 which may be filled before we move higher. As a result, I will now raise my buy level to 44150/44400 with a higher 43945 ‘’Closing Stop’’. As I am now short the NDX I do not want to be short the Dow especially as Fed Chair Powell is speaking at 6.45 pm this evening. If I am taken long, I will have a T/P level at 44580.
Cash NASDAQ 100
It so hard to be short any of the Global Equity Markets at this time. Yesterday I was lucky that the NDX fell to an intra-day low at 20083 before rallying over 200 points into the close. This initial move lower saw my 21120 T/P level triggered on my latest 21200 short position. Subsequently, I emailed my Platinum Members to sell the NDX again and I am now short at 21290. I will add to this trade at 21450 with a now higher 21605 ‘’Closing Stop’’. I will have a T/P level on this position at 21210. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
December BUND
The December Bund will roll to March in the next few days. As I am still short the December Contract from last week at 134.90, I will now raise my T/P level to 134.80 while lowering my ‘’Closing Stop’’ to a price of 135.30. I will not add to this position preferring to wait until I start trading the March Contract. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
Gold continues to trade in a narrow range following its 3% fall last week. I am still flat. As I am still long Silver, I have no interest in chasing the price of Gold higher. Therefore, I will continue to be a buyer from 2575/2592 with the same 2559 ‘’Closing Stop’’. If triggered, I will have a T/P level at 2608.
Silver Rolling Contract
Silver traded in a narrow range yesterday and I am still flat. This morning Silver is trading unchanged at a price of 30.98. I am still long at an average price of 32.20 with the same 32.60 T/P level. Meanwhile, I will also leave my 29.45 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
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