U.S. Equity Markets got slammed across the board yesterday, led by the 4% losses in both the NASDAQ and Russell Index, as a late sell-off saw the VIX rise 15%, closing at a price of 34.75. Federal Reserve Bank of Minneapolis President Neel Kashkari told CNBC that interest rates will be determined by how well supply chains improved moving forward. Kashkari also noted that interest rates will likely need to rise further – because if inflation remains at its current levels, it will hurt household spending and the domestic economy’s long-term potential. This suggests that while monetary policy was too tight before the pandemic, it’s now too loose to account for present conditions, as the labour market remains constricted… and prices are continuing to trend higher. Still, Kashkari made it clear that he believes prices will eventually correct themselves as demand balances out. But if Chinese lockdowns continue – and the Russian-Ukraine conflict draws out – it could force the central bank to push interest rates to a level that would force economic contraction. Within the S&P 500, 10 of the 11 sectors finished lower. European Markets got hit hard yesterday. Russian President Vladimir Putin believes “doubling down” in Ukraine is the only way to claim victory, according to Central Intelligence Agency Director William Burns. Saudi Arabia lowered oil prices for buyers in Asia for the first time in four months due to demand concerns related to China’s COVID-19 lockdowns. European Central Bank Governing Council member Olli Rehn said it should raise interest rates starting in July to stop expectations for higher prices from becoming entrenched. Global growth concerns festered on fears that rising U.S. employment figures would push interest rates even higher. In Asia, The National Bureau of Statistics of China will release its April inflation figures later this week, with any signs of a deceleration boosting the outlook for government economic support. China’s April exports came in higher than expected, but growth slowed to its lowest level since June 2020 due to COVID-19 lockdowns and their impact on activity. Health officials in Shanghai bolstered quarantine measures to mitigate the spread of COVID-19, while authorities in Beijing ordered some residents to begin working from home. Bank of Japan Minutes from the central bank’s latest policy meeting showed members would not hesitate to boost monetary stimulus if economic growth slows. Elsewhere, Oil fell 6.46% on news that the U.S. released more oil than initially projected from its emergency reserves, while Gold declined 1.51% as the Dollar soared to a 20-year high.
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 was flat yesterday and is still ahead by 135 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 3.2% lower at a price of 3991.
The Dow Jones Industrial Average closed 653 points lower for a 1.99% loss at a price of 32,245.
The NASDAQ 100 closed 3.98% lower at a price of 12,187.
The Stoxx Europe 600 Index closed 1.6% lower.
Yesterday, the MSCI Asia Pacific Index fell 1.1%.
Last Friday, the Nikkei closed 2.53% lower at a price of 26,319.
Currencies
The Bloomberg Dollar Spot Index closed 0.2% higher.
The Euro closed 0.1% higher at $1.0565.
The British Pound closed 0.1% lower at 1.2321.
The Japanese Yen rose 0.3%, closing at $130.23.
Bonds
Germany’s 10-year yield closed five basis points lower at 1.08%.
Britain’s 10-year yield closed five basis points lower at 1.96%.
US 10 Year Treasury closed nine basis points lower at 3.04%.
Commodities
West Texas Intermediate crude closed 6.46% lower at $102.85 a barrel.
Gold closed 1.51% lower at $1855.10 an ounce.
This morning on the Economic Front we have U.K. CPI and PPI at 7.00 am. This is followed by the German and Euro-Zone ZEW Survey, along with Euro-Zone CPI which will all be released at 10.00 am. Finally, we have speeches from Fed Members: Williams, Waller and Mester at 12.40 pm, 6.00 pm and 8.00 pm respectively.
Cash S&P 500
As if things could not get worse, yesterday witnessed one of the most brutal sell-offs since the Global Financial Crisis in 2009 as across the board selling saw Stocks Commodities and Crypto get slammed with everybody getting challenged in a big way including us. Yesterday, had one of the worst feel of the year as the absence of bids saw the S&P loose a massive 132 Handles with the S&P now trading 310 Handles lower from Wednesday’s close. This is the most intense Bear Market since the GFC, even worse than COVID as the other sell-offs over the past 13 years were short-lived. The one bright spot was 10-year Treasuries which hit a high of 3.2% yesterday morning before finally attracting some buying, closing in New York at a yield of 3.04%. We need the 10-Year to rally while at the same time the Dollar also reversed earlier gains to sell-off into the close. A weaker Dollar will help the S&P to rally. We are so oversold now that the right trigger could easily see a 5% rally. We probably need to see tomorrow’s CPI first before this trigger can happen. Last Sunday I went through all the key inflationary charts and they are all well off their highs. I think Inflation has topped but we will not see this in the official data for a couple of months. The lower the S&P goes the quicker we will be in recession and in my opinion the Fed will not have more rate hikes to do given this bearish background. The S&P traded the whole of my buy range for a now 4050 average long position. I have no stop and I will now lower my T/P level to 4080.
EUR/USD
No Change. I am still long at 1.0565 with the same 1.0625 T/P level and 1.0485 stop. If I am stopped out of this position I will be an even more aggressive buyer from 1.0430/1.0480 with a 1.0365 stop. If I am taken long a second time I will have a T/P level at 1.0580.
March Dollar Index
The Dollar made a slight new high yesterday before having a small sell-off into the close. I am still short at 103.30 with the same 104.05 closing stop and 102.90 T/P level.
Cash DAX
The DAX got hit hard again yesterday, with the market now trading 600 points lower from where I was stopped last week. I am still flat. I have no edge in the DAX at this time and I am going to stay flat as I have no interest in pressing the downside given how oversold the DAX is at this time.
Cash FTSE
Please read my comments on the UK Economy and Inflation from yesterday’s Daily Commentary. As the FTSE is not oversold it was no surprise to see the FTSE fall 2.32%, closing at a price of 7216. I am still flat. The FTSE has support from 7060/7130 where I will be an aggressive buyer with a 6995 stop.
Dow Rolling Contract
Although the Dow fell 2% yesterday, it was by far the strongest of the American Indexes that I cover. This move lower saw the whole of my buy range executed for a now 32310 average long position. I am still long with no stop. I will now lower my T/P level to 32590.
Cash NASDAQ 100
No Change. The NDX again led the move lower yesterday. A massive 87% of NASDAQ stocks are now below their respective 200-Day Moving Averages as this market gets more oversold by the day. 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. With the McClellan Oscillator closing at – 222 last night I will now look to add to my long position by being an aggressive buyer from 11750/11950. If I am taken long in this range I will have a T/P level at 12400. If anything changes I will come back with a special update for my Platinum Members.
June BUND
The Bund finally saw some buying yesterday. I am still long at a price of 151.85 with the same 150.95 closing stop. I will now raise my T/P level on this position to 152.65. If any of the above levels are hit I will be back with a new update for my Platinum Members.
Gold Rolling Contract
Gold got hit hard yesterday. I am now long at 1855. I will add to this position at 1840 with a now lower 1825 stop. I will leave my 1872 T/P level unchanged for now.
Silver Rolling Contract
No Change. I am still long at 22.60 from Friday. I will add to this position at 21.70 with a now lower 20.95 stop. Meanwhile, I will leave my 23.30 T/P level unchanged
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