As expected, U.S. Equity Markets surged yesterday following the 50-basis point hike by the Federal Reserve. The NASDAQ 100 led the gains closing higher by 3.41%, helping the VIX to crash 13%, closing at a price of 25.42. The Federal Open Market Committee (“FOMC”) emphasised that domestic employment and economic activity continue to improve. As a result, the U.S. Federal Reserve said it will move forward with a 0.50% interest-rate hike. The central bank also shifted its Federal-Funds target range from 0.25% to 0.50% to 0.75% to 1.00%. Meanwhile, the Fed will also take steps to shrink the $9 trillion balance sheet, with plans to reduce the number of funds it reinvests when bond holdings mature. Earlier in the day, payroll processor Automatic Data Processing (ADP) said private businesses added 247,000 jobs in April, which was below the estimate of 383,000, and March’s upwardly revised 479,000. This should support the Fed’s decision for its present policy path, as the number indicates employment costs are likely to rise, potentially sending inflation higher. Within the S&P 500, all the 11 sectors finished higher. European Markets closed lower. European Commission President Ursula von der Leyen introduced a proposal for the European Union (“EU”) to ban Russian oil over the next six months and refined fuels by the end of 2022. European Central Bank Executive Board member Isabel Schnabel said it must act to tame inflation, with the first interest-rate hike set for as soon as July. Euro-Zone Retail Sales contracted in March at a rate that was worse than expected due to a slowdown in French and German activity. Germany’s export figures for March were weaker than anticipated thanks to a decrease in shipments within Europe and abroad. In Asia, Beijing’s government requested that residents not leave after shutting down 10% of the city’s subway stations to stem COVID-19 infections in the highest-risk districts. Shanghai health officials said the city will only end lockdowns after it has seen community transmission levels decrease, even as cases ease. The Bank of Korea’s Minutes from its latest policy meeting showed the central bank anticipates additional interest-rate hikes to combat inflation. Equity markets in China and Japan were closed for the holidays. Elsewhere, Oil rose 5.38% on news that the EU will ban Russian energy supplies, while Gold rose 0.5% on the weaker Dollar.
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 made 340 points yesterday and is now ahead by 615 points for May having made 762 points in April, following a gain of 5883 points in March. The Platinum Service made an impressive 5324 points 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 2.99% higher at a price of 4300.
The Dow Jones Industrial Average closed 932 points higher for a 2.81% gain at a price of 34,061.
The NASDAQ 100 closed 3.41% higher at a price of 13,535.
The Stoxx Europe 600 Index closed 0.2% higher.
Yesterday, the MSCI Asia Pacific Index rose 0.6%.
Yesterday, the Nikkei closed 0.11% lower at a price of 26,818.
Currencies
The Bloomberg Dollar Spot Index closed 0.6% lower.
The Euro closed 0.7% higher at $1.0608.
The British Pound closed 0.1% higher at 1.2498.
The Japanese Yen rose 0.9%, closing at $129.10.
Bonds
Germany’s 10-year yield closed two basis points lower at 0.95%.
Britain’s 10-year yield closed two basis points higher at 1.97%.
US 10 Year Treasury closed seven basis points lower at 2.92%.
Commodities
West Texas Intermediate crude closed 5.38% higher at $107.55 a barrel.
Gold closed 0.17% higher at $1880.10 an ounce.
This morning on the Economic Front we have German Factory Orders at 7.00 am. This is followed by the Bank of England Rate Decision at 12.00 pm. Finally, we have U.S. Weekly Jobless Claims, Unit Labour Costs and Non-Farm Productivity at 1.30 pm.
Cash S&P 500
The last two weeks have not been easy but I am glad I have stuck to my guns of buying the dip on the basis that the Fed would not allow the stock to crash while at the same time taking any notion of a 75 basis point rate hike out of the equation. Yesterday’s aggressive move higher was the biggest rally day of 2022 while the Dollar finally sold off as speculated over the past week given all the overvalued technical signals. We are now short-term overbought as the S&P closed right at its Weekly 5 EMA. However, most investors are positioned wrongly and is why I expect a vicious rally to ensue just like we saw post the FOMC Meeting in March. This move higher saw my 4263 average long position hit my 4275 revised T/P level with a 4308 high print and I am now flat. The S&P has support from 4240/4270 where I will again be a buyer with a 4219 stop. I still do not want to be short the S&P at this time.
EUR/USD
My view that the Euro would rally based on the DSI readings certainly worked yesterday with the Euro now trading over 100 points higher from where I marked prices 24 hours ago at 1.0625. I am still flat and I will now raise my buy level to 1.0540/1.0590 with a 1.0485 stop.
March Dollar Index
I am still flat the Dollar which fell 0.7% yesterday. I will now lower my sell level to 102.90/103.50 with a wider 104.05 stop.
Cash DAX
The DAX exploded to the upside in the last hour of trading. I am still flat as thankfully I had no sell level in any of the Equity Indexes that I cover. I will now raise my buy level to 14020/14100 with a tight 13945 stop.
Cash FTSE
My FTSE plan worked well with the market selling off to my 7500 buy level before rallying to my 7525 revised T/P level and I am still flat. Today, I will again be a buyer on any dip lower to 7450/7510 with a 7395 stop.
Dow Rolling Contract
Unfortunately, the Dow fell shy of my 32920 buy level by 90 points before rallying over 1000 points into the close. Although the Dow is short-term overbought my own view is that the American Indexes are a buy on dips. It just took one sentence from Fed Char Powell ‘’The Fed is not actively considering a 75-basis point rate hike’’ to initiate this latest vicious rally. The Dow closed right on its 50-Day Moving Average (34070) and a close above here by Friday will be enough for this market to rally further. We have short-term support from 33600/33800 where I will be a buyer with a 33445 stop. Remember both Google and Apple have announced $70bn and $90bn buybacks alone this month respectively. This should help underpin any weakness.
Cash NASDAQ 100
My NDX plan worked well with the market trading lower to my 12925 buy level before rallying 600 points into the close, helping to exit this long position at a price of 13075. I continue to nurse last month’s 14327 long position which I have now carried into May. I will now lower my exit level on this position to 14100 which I am hopeful we will see this month. The NDX has support from 13100/13300 where I will again be a buyer with a 12985 stop. If I am taken long at this level I will have a T/P level at 13450.
June BUND
No Change. I am still long at 153.90 with the same 154.30 T/P level. Thankfully I had no stop in the Bund yesterday as the market hit a low of 152.42 before rallying into the NY Close at 153.57. I will now have a stop on this position at 152.75. If any of the above levels are hit I will be back with a new update for my Platinum Members.
Gold Rolling Contract
Gold never came close to yesterday’s buy level before rallying into the New York close and I am still flat. I will now raise my buy level to 1850/1865 with a higher 1739 stop.
Silver Rolling Contract
My Silver plan worked well with the market trading lower to my 22.25 buy level before rallying to my 22.70 T/P level and I am now flat. I am hopeful that we have now seen a meaningful bottom in Silver this week. We have support from 22.20/22.80 where I will again be a buyer with a 21.65 stop.
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