On 18/08/2021 TraderTalent.com is bringing you another guest post from Bryan Noble.
U.S. Equity Markets sold off on weak Retail Sales data, led by the NASDAQ 100 which closed lower by 0.91%. This move lower saw the VIX end yesterday’s session with a gain of over 11%. According to data from the U.S. Census Bureau, Retail Sales fell 1.1% in July, a steeper decline than the estimated 0.3% drop. This sparked concerns over a slowing economic recovery, as consumer spending is the largest component of GDP. The Federal Reserve remained in focus. In an interview with Boston Fed President Eric Rosengren made headlines. Rosengren said a strong economic recovery could see the Federal Reserve completely wind down its asset purchases by the middle of next year. In other economic data, the NAHB’s Housing Market Index showed that homebuilder sentiment was at a 13-month low. However, homebuilders remained extremely optimistic about housing demand. European Markets closed lower. Euro-Zone preliminary second-quarter gross domestic product (“GDP”) data was in line with expectations, as hiring expanded once more. The European Central Bank is expected to discuss slowing the pace of its sovereign bond purchases at the upcoming September meeting, as the regional economy recovers. European companies saw a surge in stock buyback announcements during the second quarter, with Morgan Stanley anticipating the total could surpass 2019’s record level of $100 billion. In Asia, The People’s Bank of China is likely to lower banks’ required reserve ratio once more in the fourth quarter, according to state-run media outlet China Securities Journal. And China’s government unveiled a new set of rules aimed at regulating large tech companies. Japan’s government said it would expand social-distancing restrictions to more prefectures and extend the deadline to September 12 in an attempt to bring the coronavirus spread under control. The Reserve Bank of Australia’s latest Meeting Minutes said it stands ready to provide additional economic support should the resurgence in COVID-19 infections cause a setback. South Korea’s government said almost 45% of the country’s population has received at least one coronavirus vaccine dose, while more than 19% have been fully vaccinated. Elsewhere, Oil fell 0.79% as it continues to decline on demand concerns, while Bitcoin is trading 3% lower at $45,300 this morning.
To mark my 2375th 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 102 points yesterday and is now ahead by 952 points for August, having closed July with a gain of 996 points. The Platinum Service made 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, and 2273 points last December. 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 0.71% lower at a price of 4448.
The Dow Jones Industrial Average closed 282 points lower for a 0.79% loss at a price of 35,343.
The NASDAQ 100 closed 0.91% lower at a price of 15,002.
The Stoxx Europe 600 Index closed 0.5% lower.
This morning, the MSCI Asia Pacific Index rose 0.3%.
This morning, the Nikkei closed 0.71% higher at a price of 27,618.
The Bloomberg Dollar Spot Index closed 0.4% lower.
The Euro closed 0.6% lower at $1.1710.
The British Pound closed 0.8% lower at 1.3740.
The Japanese Yen fell 0.2%, closing at $109.53.
Germany’s 10-year yield closed one basis points higher at -0.47%.
Britain’s 10-year yield closed one basis points lower at 0.56%.
US 10 Year Treasury closed three basis points higher at 1.28%.
West Texas Intermediate crude closed 1.04% lower at $66.59 a barrel.
Gold closed 0.19% lower at $1,785.10 an ounce.
This morning on the Economic Front we already had the release of July CPI which came in with a gain of 2.0%, versus +2.2% expected. At 10.00 am we have Euro-Zone CPI and this is followed by U.S. MBA Mortgage Applications at 12.00 pm. Next, we have Building Permits and Housing Starts at 1.30 pm. Finally, at 7.00 pm we have the Minutes from last month’s FOMC Meeting.
September S&P 500
The buy the dip is relentless, no matter how bad the political or economic situation is. The S&P now trades 12% above its 200-Day Moving Average. This has happened only 10% of the time in the past, back to 1948, and what typically happens a month hence is a sputter at best. Equities, are over extended in the aggregate. Current Multiples can only really be justified if you believe EPS in the coming year soars to $244, even the generous consensus estimate is $216, implying quite a bit of air here. This is validated by the CAPE Multiple, which has expanded from 36.6 in May to 37.1 in June and now 38.0 in July. This is nosebleed territory. It has only been this high in the past during the late-90s dotcom bubble. It has already taken out the February 2020 peak of 307 and the May bubble peak of 27.6. Even in the late-1960s ‘’Nifty Fifty Bubble’’, the highest this valuation metric got was 23.9. Yesterday’s move lower saw the whole of my buy range filled for a 4427 average long position, with a 4412 low print. Subsequently, the S&P rallied into the close and that rally has continued this morning, with the S&P now trading at 4447. Unfortunately, I covered this long position at my 4432 revised T/P level and I am now flat. The S&P has strong support from 4405/4420 where I will again be a buyer with a 4393 ‘’Closing Stop’’ I will now lower my sell level to 4470/4485 with a lower 4501 ‘’Closing Stop’’. If I am taken long I will have a T/P level at 4430. If I am taken short I will have a T/P level at 4460.
The Euro reversed all of Friday’s and Monday’s rally to sit lower at 1.1715 this morning. I bought the Euro at 1.1720 yesterday afternoon. I am still long and I will add to this trade at 1.1670 with a now lower 1.1635 stop. I will lower my T/P level to 1.1740 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
September Dollar Index
Just before the New York close, the Dollar hit my 93.10 sell level. I am still short with a now higher 92.90 T/P level. I will also lower my stop to 93.45.
No Change. I am still flat and I will continue to be a buyer on any further dip lower to 15620/15710 with the same 15555 stop. If I am taken long I will have a T/P level at 15760.
The weakness in Sterling helped the FTSE to rise yesterday. This move higher saw the FTSE hit my 7160 sell level. I am still short with a now lower 7205 stop. I will now raise my T/P level to 7125 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
Dow Rolling Contract
The Dow traded lower to my 35240 buy level with a low of 35120. Unfortunately, I covered this position at my 35255 revised T/P level and I am still flat. This morning the Dow is trading higher at 35350. We have support from 35020/35170 where I will again be a buyer with a tight 34895 ‘’Closing Stop’’. If I am taken long I will have a T/P level at 35270.
After the NASDAQ traded lower to my 14995 buy level, we had a small rally, enabling me to cover this position at my 15032 revised T/P level and I am still flat. The NASDAQ has strong support from 14820/14900 where I will again be a buyer with a 14745 ‘’Closing Stop’’. I still do not want to be short the NASDAQ at this time. If I am taken long I will have a T/P level at 14960.
No Change. I am still a seller on any further rally to 177.35/177.85 with the same 17821 stop. If I am taken short I will have a T/P level at 177.10.
Gold Rolling Contract
No Change. I am still a seller from 1812/1825 with the same 1837 stop. If I am taken short I will have a T/P level at 1805.
Silver Rolling Contract
I am still flat. I will now lower my buy level to 22.60/23.20 with a lower 21.95 stop. If I am taken long I will have a T/P level at 23.50.
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