On 07/07/2021 TraderTalent.com is bringing you another guest post from Bryan Noble.
U.S. Equity Markets had a volatile start to the new week, with the Dow leading the decline to close 0.60% lower, 200 points off its intra-day low, while the divergence increased as the NASDAQ 100 closed higher by 0.40%. Markets declined on little news. San Francisco Fed President Mary Daly said the economy is doing well enough to start functioning on its own, so the central bank can consider withdrawing monetary support. This fits in with the recent hawkish turn from the central bank, and could continue to pose concerns for investors. In terms of economic data, ISM Non-Manufacturing data fell and missed estimates in June. While the Index hit the lowest level since February, it was not all bad news. Backlogs of orders continued to rise, signaling strong demand in the coming months. Wall Street is looking ahead to the release of the Federal Reserve’s meeting minutes for clues on future policy decisions this evening. European Markets also declined. European Central Bank Vice President Luis de Guindos said that while the recent inflation rise should prove temporary, it must ensure the change is not permanent. This could lead to the central bank turning more “hawkish” in the future. German Factory Order data for May were weaker than expected, unexpectedly contracting, driven by a decline in auto demand from abroad. The Organisation of the Petroleum Exporting Countries and its allies ended oil production talks without an agreement, implying global supply will remain constrained. In Asia, Japan’s Deputy Prime Minister Taro Aso said the U.S. and Japan would have to defend Taiwan in the event of an invasion by China, potentially stoking regional political tensions. The People’s Bank of China withdrew roughly $3.1 billion worth of liquidity from the Country’s financial system via reverse repurchase operations. Markit/Caixin’s China composite Purchasing Managers’ Index (“PMI”) data for June declined versus May, as a result of coronavirus restrictions and a drop in new orders. South Korean Finance Minister Hong Nam-ki warned individuals not to anticipate continued home-price gains, as the government is resolute in curbing speculation. Elsewhere, Oil fell 1.89% as OPEC could not find a resolution at its production meeting, while Bitcoin rose 3% on little news.
To mark my 2350th issue of TraderNoble Daily 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 [email protected] for details
For anyone following my Platinum Service it made 170 points yesterday and is now ahead by 407 points for July after making 1366 points in June, 1439 points in May, 1244 points in April, having ended March with an impressive gain of 3769 points, 3286 points in February, 2077 points in January, 2273 points in December, 2025 points in November, 2779 points in October, 3042 points in September and 2383 points in August. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
The S&P 500 closed 0.20% lower at a price of 4344.
The Dow Jones Industrial Average closed 209 points lower for a 0.60% loss at a price of 34,577.
The NASDAQ 100 closed 0.40% higher at a price of 14,786.
The Stoxx Europe 600 Index closed 0.5% lower.
This morning, the MSCI Asia Pacific Index fell 0.4%.
This morning, the Nikkei closed 0.96% lower at a price of 28,367.
The Bloomberg Dollar Spot Index closed 0.4% higher.
The Euro closed 0.5% lower at $1.1825.
The British Pound closed 0.7% lower at 1.3805.
The Japanese Yen rose 0.1%, closing at $110.63.
Germany’s 10-year yield closed six basis points lower at -0.26%.
Britain’s 10-year yield nine two basis points lower at 0.63%.
US 10 Year Treasury closed eight basis points lower at 1.37%.
West Texas Intermediate crude closed 1.89% lower at $75.15 a barrel.
Gold closed 0.1% higher at $1,797.10 an ounce.
This morning on the Economic Front we already had the release of German Industrial Production which fell 0.3% versus +0.5% expected. At 10.00 am the European Commission releases its Economic Forecasts and this is followed at 12.00 pm by U.S. MBA Mortgage Applications. Next, we have the JOLTS Job Openings at 3.00 pm. Finally, at 7.00 pm we have the FOMC Minutes from last month’s meeting.
September S&P 500
Once again it may be time to short the U.S Indexes. Since the Fed started its QE programme following the 2008 Global Financial Crisis, Stocks tend to only have a meaningful correction three/four times per year. That is because shorting stocks goes against that trend. Buy every once in a while, conditions become so outrageous, so lopsided and so ridiculously overvalued that the market set up for a significant pullback. Meme stocks are on fire again. For example, AMC Entertainment jumped more than 400% in the final days of May. It is now trading up over 2500% for the year, and at more than twice the price hit during the original Meme stock rally in late January. When, last week Elon Musk tweeted that he would name his new dog Floki, the Cryptocurrency of the same name jumped 3,500%. This is not the stuff that happens at the beginning of a major stock market rally but at the end of one. Yesterday the S&P traded the whole of my buy range for a 4315 average long position before rallying back above 4335. As I was long the Dow and 200 points offside at the time of the S&P hitting my second buy level, I covered my S&P position too early at 4319 and I am still flat. The S&P has strong resistance from 4348/4363 where I will again be a seller with a 4371’’Closing Stop’’. The S&P has short-term support at yesterday’s 4305 low print. A break and close below here is bearish and will see lower prices – maybe even an aggressive sell-off given this overvalued market. Today, I will be a small buyer from 4295/4310 with a 4286 tight ‘’Closing Stop’’. If I am taken short I will have a T/P level at 4338. If I am taken long I will have a T/P level at 4321.
The Euro traded the whole of my buy range and I am now long at an average price of 1.1830. I will now lower my T/P level to 1.1845 while leaving my 1.1775 stop unchanged. If any of the above levels are hit I will be back with a new update for my Platinum Members.
Yesterday’s 0.4% fall in the Dollar saw the market hit my 9250 sell level. I am still short with a now higher 92.30 T/P level. I will not add to this trade, instead lowering my stop to 92.91.
My DAX plan worked well with the market trading lower to my 15450 buy level before rallying to sit higher at 15540 this morning. As I was long so many Indices at the same time, I emailed my Platinum Members to exit any long DAX position at 15485 and I am still flat. Today, I will be a buyer from 15280/15360 with a tight 15235 stop. Remember, a break and close below 15300 is bearish for lower prices. If I am taken long I will have a T/P level at 15410.
The FTSE also traded lower, hitting my 7010 buy level before rallying to my revised 7030 T/P level and I am now flat. The FTSE has short-term support from 6940/6990 where I will again be a buyer with a lower 6895 stop. If I am taken long I will have a T/P level at 7035.
Dow Rolling Contract
The Dow got hit hard yesterday, falling over 475 points from its morning high, to hit a low of 34350 before rallying over 225 points into the close. This move lower saw the whole of my buy range filled for a 34560 average long position. As I wanted to be flat overnight, I covered this trade for a small loss at 34555 and I am still flat. It is now almost two months (May 10) since the Dow made a new all-time high while it seems like everyday both the S&P and NASDAQ are making new all-time highs. This divergence is getting wider by the day and is not the sign of a healthy market. Today, the Dow has support from 34200/34360 where I will be a small buyer with a 34095 ‘’Closing Stop’’. I will now lower my sell level to 34820/34980 with a 35105 ‘’Closing Stop’’. If I am taken long I will have a T/P level at 34480. If I am taken short I will have a T/P level at 34720.
My NASDAQ plan worked well with the market trading higher to my 14760 sell level before selling off to my 14710 T/P level and I am now flat. Incredibly, the NASDAQ rallied to a new all-time high into the close, pushing the 14-Day RSI to a severely overbought reading of 77. The NASDAQ has resistance from 14840/14920 where I will again be a seller with a 15005 ‘’Closing Stop’’. If I am taken short I will have a T/P level at 14730. I will continue to be a buyer on any dip lower to 14500/14580 with the same 14425 ‘’Closing Stop’’. If I am taken long I will have a T/P level at 14635.
Bond Yields sold off almost 9 basis points across the board as the Central Banks continue with their theme of doing everything in their power to prevent yields from rising given the level of Government Debt across the world. Yesterday, the Bund traded the whole of my sell range for a now 173.18 average short position. I will now raise my T/P level on this position to 173.05 while leaving my 173.65 stop unchanged.
Gold Rolling Contract
No Change. I am still a small buyer from 1757/1772 with the same 1749 tight stop. If I am taken long I will have a T/P level at 1779.
Silver Rolling Contract
Silver traded lower to my 26.20 buy level. I am still long and I will now lower my T/P level to 26.35 on this position.
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