U.S. Equity Markets finished yesterday’s volatile trading session lower after finding strong resistance at the 200 Day Moving Average, with the Dow leading the decline, closing lower by 0.38%. The S&P 500 Index opened well higher and tested the 200-day moving average (around 4,433) twice in the late afternoon. Both times, the average acted as resistance and markets bounced lower. Post the FOMC Statement, the S&P 500 rose above the 200-DMA, but the Index once again fell below this key technical level. This battle will be something worth watching in the days and weeks to come. The big story of the day was the Federal Reserve’s policy announcement. The central bank said that it could soon raise interest rates, given the labour market’s strength and that inflation remains well above the Fed’s 2% target. It also said it would end the tapering of asset purchases in early March, setting the stage for a March rate hike. This was better than investors feared, with many worried the Fed would hint at more than three rate hikes. In his post-policy meeting press conference, Fed chair Jerome Powell did what he does best – spooking investors. He said that the Fed’s balance sheet is much bigger than it needs to be, adding that the Fed will wait at least one meeting after initially hiking rates before making a decision on the balance sheet. This means the Fed could begin shrinking the balance sheet as soon as May. He also said that the path forward for Fed policy was “uncertain.” And investors sell on uncertainty. That is why we saw markets tumble after Powell began speaking at 7.30 pm. Within the S&P, most of the stocks were higher. Microsoft (MSFT) boosted the tech sector on its strong quarterly report. Given its large weighting (it is the world’s second-largest company by market cap), Microsoft’s gain boosted the broader market. AT&T (T) dragged other telecom names lower after providing a weak 2022 forecast. Within the S&P 500, nine of the 11 sectors finished lower. European Markets closed higher. French Consumer Confidence data for January declined versus December as individuals grew increasingly pessimistic about costs and their standard of living. The International Monetary Fund said that escalation of the Ukraine-Russia conflict could lead to persistently high inflation, by increasing energy and commodities costs. European Central Bank Chief Economist Philip Lane said he expects inflation to fall “quite a bit” this year, stabilising around the central bank’s 2% target. In Asia, Bank of Japan Minutes from its most recent policy meeting showed members feel the Omicron variant has heightened economic uncertainty, requiring ongoing policy support. The People’s Bank of China added roughly $15.8 billion worth of funds to the financial system to ensure stable liquidity ahead of the Spring Festival holiday. The Bank of Korea’s Consumer Confidence figures for January increased versus December as sentiment regarding the outlook rose. Chinese state-run media outlet Shanghai Securities News said investors should not overreact to stock market weakness, instead look forward to the post-Lunar New Year performance. Elsewhere, Oil continued to rise closing 1% higher on concerns that the Russia-Ukraine conflict would disrupt energy supply in Europe, while Gold fell 2% as the Federal Reserve indicated a rate hike could soon be appropriate.
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For anyone following my Platinum Service it made 550 points yesterday and is now ahead by 3663 points for January, after ending December with a loss of 932 points, having made 2466 points in November, 1028 points in October, 2866 points in September, 1543 points in August, and 996 points in July. 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, and 2077 points last January. 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 0.15% lower at a price of 4349.
The Dow Jones Industrial Average closed 130 points lower for a 0.38% loss at a price of 34,168.
The NASDAQ 100 closed 0.17% higher at a price of 14,172.
The Stoxx Europe 600 Index closed 1.1% higher.
Yesterday, the MSCI Asia Pacific Index fell 0.2%.
Yesterday, the Nikkei closed 0.44% lower at a price of 27,011.
Currencies
The Bloomberg Dollar Spot Index closed 0.5% higher.
The Euro closed 0.5% lower at $1.1240.
The British Pound closed 0.4% lower at 1.3460.
The Japanese Yen fell 0.6%, closing at $114.62.
Bonds
Germany’s 10-year yield closed one basis points higher at -0.07%.
Britain’s 10-year yield closed three basis points higher at 1.20%.
US 10 Year Treasury closed nine basis points higher at 1.88%.
Commodities
West Texas Intermediate crude closed 1% higher at $87.09 a barrel.
Gold closed 2% lower at $1,817.10 an ounce.
This morning on the Economic Front we have German GFK Consumer Confidence at 7.00 am Next, we have U.S. GDP, Durable Goods Orders and Weekly Jobless Claims at 1.30 pm. Finally, at 3.00 pm we have Pending Home Sales followed by the Kansas Fed Manufacturing Activity Index at 3.30 pm.
Cash S&P 500
Following, Tuesday’s 120 Handle range, yesterday the S&P traded in a wider a 150 Handle range as the market is still trying to consolidate Monday’s extraordinary rebound. The positive news is the S&P has now made three higher lows in a row on a day when Fed Chairman Powell did his best to slam the market. However, the S&P did rebound 50 Handles in the last 30 minutes to close basically unchanged from Tuesday’s Chicago close. Powell tried to talk tough but the reality, despite 7% Headline Inflation they are still printing with $80bn added to the Fed’s Balance Sheet last week alone. With technical levels so oversold including the RSI still trading at 25 while the McClellan Oscillator continues to give a buy signal. Closing at – 273 last night. Next week we will see buybacks return and this will certainly help the Dow. Yesterday my S&P plan worked really well with the market hitting my 4441 sell level before trading lower to my 4423 T/P level. Post FOMC, the S&P traded lower to my 4319 buy level before rallying to my 4335 revised T/P level and I am now flat. With technical levels so weak I have no interest in selling the S&P preferring to buy dips with no stop. As I go to press we are seeing renewed selling of the S&P which is now trading at 4300, 75 Handles below the overnight high. The S&P has support from 4240/4270 where I will again be a buyer no stop. If I am taken long I will have a T/P level at 4299. I no longer want to be short the S&P at this time.
EUR/USD
Just as I go to press the Euro has hit my second buy level at 1.1230 for a now 1.1255 average long position. I will now lower my T/P level to 1.1280 while leaving my 1.1185 stop unchanged.
March Dollar Index
The Dollar closed higher by 0.5% as the market never came close to my buy level. The Dollar is trading at 96.45. I will now raise my buy level to 95.50/96.10 with a tight 94.95 stop. If I am taken long I will have a T/P level at 96.75.
Cash DAX
The DAX soared over 400 points yesterday and I am still flat as thankfully we had no sell level in the market. I will not chase the DAX higher leaving my 14950/15030 buy level unchanged with a higher 14825 stop. I still do not want to be short the DAX at this time.
Cash FTSE
I am still flat the FTSE. With U.S Markets selling off I will now lower my buy level to 7250/7310 with a wider 7195 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
Another incredible session for the Dow as the market again traded in a 1000 point range. My Dow plan worked well with the market hitting my 34780 sell level (34815 high) before falling to a late evening low at 33865. This move lower saw my 34610 T/P level filled as frustratingly the Dow missed my by level by 15 points before rallying 350 points into the close and I am still flat. I will repeat what I said yesterday as it is important: Despite the fact that the U.S. Indices are very oversold and there is plenty of bounce motivation to be had in the days and weeks to come, but be absolutely clear: There is not only tremendous carnage that has taken place, there is massive technical damage inflicted on charts with lots of trapped supply above all of which will be resistance on the way up and as long as Indices cannot get above their broken moving averages risk remains lower. The Fed have over did QE by buying trillions of assets while fiscal stimulus was flowing through the system already. This excessive inflow of liquidity caused asset prices to melt up into a historic bubble and now investors and traders who chased the liquidity party have paid the price. Just as I go to press the Dow has sold off to my 33790 buy level with a low so far at 33740. I will add to this trade at 33500 with no stop for now. I will have a T/P level on this position at 33930 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
After hitting a high overnight at 14275 the NASDAQ has sold off aggressively in the last couple of hours. This move lower sees my 13920 buy level executed. I will add to this trade at 13700 with a 13495 stop. I will now lower my T/P level to 14030 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
March BUND
The Bund traded in a narrow range before selling off into the New York close and I am still flat. Today, I will again lower my buy level to 168.50/169.10 with a tight 167.95 stop.
Gold Rolling Contract
Gold traded in a narrow range yesterday before falling over 2% into the New York Close. After Gold hit my 1829 buy level I emailed my Platinum Members to exit any long position at 1831 as I wanted to be flat ahead of the Fed. Gold has support from 1778/1793 where I will be a small buyer with a lower 1767 stop. If I am taken long I will have a T/P level at 1801.
Silver Rolling Contract
Silver hit my 23.60 buy level before rallying to my 23.80 revised T/P level and I am now flat. Long-Term I am bullish Silver. We have support from 22.30/22.90 where I will again be a buyer with no stop for now.
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