An ugly trading session as U.S. Equity Markets reversed Monday’s gains before getting slammed in the last hour of trading. The NASDAQ 100 led the declines closing lower by 3.87%. This move lower saw the VIX surge 24%, closing at a price of 33.52. According to research from Wall Street brokerage firm Bank of America, sentiment for higher-income households declined in April from March’s 37.2% to 28.3%. This change is noteworthy as it indicates the wealthiest households are the ones who have invested the most in the stock market. The figure also suggests that income for those households is not gaining as quickly as inflation. As a result, they may be basing their spending decisions on needs rather than wants. If this trend continues, sentiment could further sour and potentially weigh on future spending. Hedge fund investors have been shorting technology stocks. They are concerned about the outlook for economic growth and inflation. Wall Street’s prevailing issue is that all of the Congressional stimulus introduced during the coronavirus pandemic pulled demand for goods forward. But now, the business is slowing. In the fourth quarter of 2021, shipments fell 5% compared with the year prior. And in the first quarter of this year, the industry showed a 6.8% contraction compared with 2021. Gartner cited a drop in educational demand for Google’s Chromebooks. The firm also said 2021 saw the highest growth in decades. The same pull forward in demand created shortages for all types of goods. Over the last two years, we have seen prices for materials like West Texas Intermediate crude oil go up 192%, lumber jump 217%, and steel surge 184%. The dynamic has caused the U.S. Bureau of Labour Statistics March Consumer Price Index (“CPI”) reading to hit the highest level since 1981. In the process, economic activity has more than surpassed pre-pandemic levels of activity. According to the U.S. Bureau of Economic Analysis (“BEA”), economic output averaged about 5.3% growth last year. That is far above the 2.3% average expansion in the 10 years prior to the coronavirus pandemic. That means external support for the economy has remained in place for too long. The lack of fiscal stimulus and easy-money monetary policies will weigh on the economic growth outlook as individuals see credit metrics tighten. Within the S&P 500, 10 of the 11 sectors finished lower. European Markets closed lower. Russia warned the U.S. against sending more military aid to Ukraine, saying it was increasing tensions while making it more difficult to reach a peace agreement. Russian Foreign Minister Sergey Lavrov warned that the threat of nuclear war due to the Ukraine conflict was very serious and should not be underestimated. The German government approved an amendment that would allow it to nationalise energy firms in the event of a supply crisis. Mining and energy stocks rallied with a rebound in oil and metals prices. In Asia, Japan’s unemployment rate for March declined to its lowest level in almost two years, signalling economic activity may be on the verge of rebounding. South Korea’s advanced first-quarter gross domestic product exceeded expectations, supporting additional central bank interest-rate hikes. The People’s Bank of China said it will increase policy support for industry and small businesses while ensuring ample liquidity and promoting financial stability. China’s capital city of Beijing ordered citywide COVID-19 testing as fears of increasing infections and widening social-distancing restrictions grew. Elsewhere, Oil rose 3.21% on the possibility of European Countries banning oil and gas from Russia, while Gold closed 0.31% higher on little news.
To mark my 2525th 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 bryan@tradernoble.com for details
For anyone following my Platinum Service it lost 395 points yesterday and is now ahead by 1822 points for April after closing March with a gain of 5883 points. The Platinum Service made an impressive 5324 points gain in February, after ending January with a gain of 3878 points, more than making up for December’s 932 points loss, 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, after ending March with an impressive gain of 3769 points. 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 2.81% lower at a price of 4175.
The Dow Jones Industrial Average closed 809 points lower for a 2.38% loss at a price of 33,240.
The NASDAQ 100 closed 3.87% lower at a price of 13,009.
The Stoxx Europe 600 Index closed 0.8% lower.
Yesterday, the MSCI Asia Pacific Index fell 0.6%.
Yesterday, the Nikkei closed 0.41% higher at a price of 26,700.
Currencies
The Bloomberg Dollar Spot Index closed 0.7% higher.
The Euro closed 0.7% lower at $1.0643.
The British Pound closed 1.6% lower at 1.2574.
The Japanese Yen rose 0.8%, closing at $127.19.
Bonds
Germany’s 10-year yield closed four basis points lower at 0.81%.
Britain’s 10-year yield closed three basis points lower at 1.85%.
US 10 Year Treasury closed nine basis points lower 2.73%.
Commodities
West Texas Intermediate crude closed 3.21% higher at $101.72 a barrel.
Gold closed 0.31% higher at $1907.10 an ounce.
This morning on the Economic Front we have German GFK Consumer Confidence at 7.00 am. This is followed U.S. MBA Mortgage Applications at 12.00 pm and Wholesale Inventories and the Trade Balance at 1.30 pm. Finally, we have Pending Home Sales at 3.00 pm and a speech from ECB President Lagarde at 5.00 pm.
Cash S&P 500
The key levels that I highlighted yesterday both got broken in the last hour of trading, namely the 13200 level for the NDX and 4210 in the S&P as the NDX traded to new lows on the year after disappointing results from Google. Yesterday we saw drawdowns across the board and this aggressive liquidation was a complete surprise to me, making the next few trading sessions difficult to navigate. I have never seen such a weak April. The markets are extremely oversold with sentiment on the floor. I cannot sell at these levels despite everything from a bullish stance looking scary. The market has now priced in 10 more rate hikes this year which I just cannot see happening. I have said for a long time that the Fed are trapped. However, this negatively, given how oversold the markets are across the board is the type of price action that can still generate a vicious rally out of the blue into month-end on Friday. At the same time the S&P hit an important trend line at 4144 in after hours before rallying to sit at 4178 as I go to press. The last week has been challenging but against that we have had tremendous gains in the market so far this year. I still long the S&P at a price of 4330. I will not add to this trade but I will lower my exit level to 4280 and if this level is triggered I will be back with a new update for my Platinum Members. For new Members who are flat, the S&P has strong support from 4100/4130 where I would look to buy with a 4065 stop. If you do buy at this level I would have a T/P level at 4185.In hindsight, I should have taken my gain on my 4230 long position on Monday and we are all paying for that error this morning.
EUR/USD
No Change. I am still long the Euro from Monday at 1.0740. I will now lower my stop to 1.0595 ahead of Lagarde’s speech this afternoon, while lowering my T/P level to 1.0755. If any of the above levels are hit I will be back with a new update for my Platinum Members.
March Dollar Index
The Dollar rallied a further 0.7% yesterday, hitting my 102.20 sell level. I am still long with the same 103.05 stop. I will now raise my T/P level to 101.85.
Cash DAX
My DAX plan was wrong yesterday as after the DAX traded the whole of my buy range for a 13890 average long position I was stopped out of this trade at 13785 and I am now flat. I will stay flat today as I have enough long exposure at this time and I do not want to be a seller at these low levels
Cash FTSE
The FTSE also traded the whole of my buy range for a now 7340 average long position. I will now lower my T/P level on this position to 7390 while leaving my 7255 stop unchanged.
Dow Rolling Contract
My Dow plan did not work well yesterday as the Dow fell almost 1000 points for the second trading session out of the last three. I bought the Dow at an average rate of 33625 before getting stopped at 33345 and I am still flat. Overnight, the Dow is trying to rally. The Dow has further support below at 33050/32850 where I will be a small buyer with a wider 32595 stop. Frustratingly, the Dow just missed my initial 34200 sell level and given how oversold the market is trading I no longer want to be short at this time.
Cash NASDAQ 100
As mentioned above the NDX broke and closed below the key 13200 support level, hitting a post Google report at 12815 before turning around to trade back above 13000 as I go to press. I bought the market at 13250 and I will now look to exit this second trade on any further move higher to 13180. I continue to nurse this month’s 14327 long position.
June BUND
The Bund saw some nice follow through yesterday, and is now trading 250 points above last Friday’s low. I am still flat. Today, I will raise my buy level to 153.90/154.60 with a higher 153.15 stop.
Gold Rolling Contract
No Change. I am still long at 1907 with the same 1889 stop and 1913 T/P level.
Silver Rolling Contract
No Change. I am still long at 24.30 with the same 23.45 stop. If I am stopped out of this position I will look to buy Silver from 22.50/23.20 with a 21.95 stop. I will leave my 24.61 T/P level on my original position. If I am taken long a second time I will have a T/P level at 23.80.
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