U.S. Equity Markets closed Friday mixed despite a huge rally in the last hour of trading. Over the past week, the market sell-off moved beyond technology stocks, as several key retailers reported a significant hit to profits due to supply-chain disruptions. This suggests that pandemic growth is decelerating, and inflation fears are now kicking into full gear, with many investors now anticipating a recession amid ongoing market instability. Still, the U.S. Federal Reserve remains insistent that it can tighten monetary policy and ease inflation by cutting down on housing and labour demand – potentially averting a recession through a careful containment of prices. One of the things you learn after observing Wall Street for 25-plus years is that companies are quick to deliver good news and slow to deliver unwelcome news. After all, their stocks tend to go up on the good items and fall on the bad ones. So, when management teams report first-quarter earnings, they’re going to be slow to lower guidance for the full year. In the minds of Corporate America, it is hard to base a trend on what is happening in the first quarter. By the time a company reports, it is only halfway through the second quarter. In other words, in their minds, there is still a lot of the year left for things to turn around and improve. Thus, if things are bad, they can wait. However, when they report second-quarter earnings, the picture has changed. At that point, corporate management is well into its third quarter. Said another way, more than half of the year’s production is done and dusted. At that point, they have a fairly good idea of what the year will look like. But second-quarter earnings reports don’t officially get underway until JPMorgan Chase (JPM) reports on July 14. It ends with Disney (DIS) on August 12. We may have to wait until then for companies to take down their earnings guidance. Within the S&P 500, six of the 11 sectors finished higher. European Markets closed higher. European Central Bank Vice President Luis de Guindos said he anticipates the Asset Purchase Programme to end earlier in the third quarter, clearing the way for a July rate hike. European Central Bank Governing Council Member Olli Rehn suggested it could implement two to three 0.25% rate hikes this year. U.K. Retail Sales unexpectedly expanded in April, driven by a boost in alcohol, candy, and tobacco purchases. German Producer Price Index figures for April were stronger than expected, but the rate of growth slowed compared with March on a month-over-month basis. In Asia, Shanghai’s government said financial institutions should resume working, allowing employees to return in shifts that should not violate mandated thresholds. South Korea’s Producer Price Index figures for April rose versus March, fuelled by energy costs, supporting additional central bank rate hikes. Japan’s Consumer Price Index data for April was stronger than expected, hitting its highest level since 2015 – yet its key core data stayed well below the central bank’s target. The People’s Bank of China announced the benchmark five-year loan Prime Rate was lowered by 0.15%, signalling domestic lenders’ willingness to support economic growth. Elsewhere, Oil rose 0.44% amid a tight fuel market, while Bitcoin declined 4% as cryptocurrency volatility continued.
To mark my 2550th 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 870 points on Friday and is now ahead by 2609 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 0.01% higher at a price of 3901.
The Dow Jones Industrial Average closed 8 points higher for a 0.03% gain at a price of 31,261.
The NASDAQ 100 closed 0.34% lower at a price of 11,835.
The Stoxx Europe 600 Index closed 0.3% higher.
Last Friday, the MSCI Asia Pacific Index rose 1.1%.
Last Friday, the Nikkei closed 1.27% higher at a price of 26,739.
Currencies
The Bloomberg Dollar Spot Index closed 0.2% higher.
The Euro closed 0.2% lower at $1.0557.
The British Pound closed 0.2% higher at 1.2491.
The Japanese Yen fell 0.1%, closing at $127.95.
Bonds
Germany’s 10-year yield closed two basis points lower at 0.95%.
Britain’s 10-year yield closed five basis points higher at 1.89%.
US 10 Year Treasury closed five basis points lower at 2.79%.
Commodities
West Texas Intermediate crude closed 0.44% higher at $112.01 a barrel.
Gold closed 0.16% higher at $1846.10 an ounce.
This morning on the Economic Front we have German IFO Survey at 9.00 am. The other data of note on either side of the Atlantic is U.S. Chicago Fed National Activity Index at 1.30 pm.
Cash S&P 500
An incredible end to one of the most volatile weeks in points terms for the S&P. The S&P broke below 3855 on Friday afternoon after hitting a morning high at 3951, down 20% from its record highs to hit its lowest level since March 2021. The break of 3855 saw an acceleration lower to a price of 3811 before a ferocious rally in the last 30 minutes of trading saw the S&P closed unchanged at 3901. The S&P did close lower for the seventh consecutive week, led by FANG stocks which have now fallen for eight straight weeks, seeing over $2 trillion in Market Cap erased from record highs. Indeed, last week alone $220 billion was lost in these stocks. It only took two Rate hikes for the S&P to register a bear market and we have not even ended QE yet. However, both the Dollar and Bonds had nice reversals last week suggesting to me that the worst may finally be over at Friday’s 3811 low print. Indeed, the Dollar had its biggest Weekly drop since the Presidential Election in November 2020. Helping the rally was the fact that Junk Bonds did not make a new low on Friday despite the aggressive across the board sell-off. I have a sneaking suspicion that Friday’s low at 3811 maybe it for the year. My S&P plan worked well on Friday as after the market traded the whole of my buy range for a 3865 average long position we rallied on the re-open last night, hitting my revised 3905 T/P level as emailed to my Platinum Members and I am now flat. Today, I will again be a buyer on any dip lower to 3865/3895 with no stop. If I am taken long I will have a T/P level at 3938.
EUR/USD
The Euro traded lower to my 1.0535 buy level before rallying overnight to my 1.0585 T/P level and I am now flat. I still believe that the May low of 1.0350 will remain a low of significance given the various Daily Sentiment Index readings over the past few weeks. Today, I will again be a buyer on any dip lower to 1.0490/1.0550 with a 1.0435 stop.
March Dollar Index
The Weekly Reversal in the Dollar suggests that at the very least we have seen a meaningful top in the Dollar. A break and close below 1.0200 this week will confirm this view. I am still flat the Dollar and today I will now lower my sell level to 103.10/103.70 with a 1.0435 stop.
Cash DAX
The DAX never came close to Friday’s buy range and I am still flat. The price action in the DAX is bullish and I certainly would not be short the market at this time. The DAX has support from 13800/13900 and I will raise my buy level to this area with a wider 13695 stop.
Cash FTSE
The FTSE rallied on Friday and I am still flat. I will now raise my buy level to 7290/7350 with a 7235 tight stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
What a day. The Dow rallied before lunch to my 31480 T/P level on my latest 31180 long position with a high of 31590. Subsequently, the Dow fell almost 1000 points before staging a late 600 point rally into an unchanged close. Following the melt up into the end of March, the Dow has now fallen over 13% after closing lower for eight straight weeks for the longest losing streak since May 1923. These are historic times resulting in unbelievable carnage. My own view that Friday’s 30640 low may hold for a sustained period. Today, I will be a buyer from 31000/31250 with no stop. Sentiment is still on the floor as shown by the Fear & Greed Index which closed on Friday at 8 which is still a reading of ‘’Extreme Fear’’
Cash NASDAQ 100
No Change. 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 13800 which I am hopeful we will see this month. Despite how oversold the NDX is trading I will not add to my existing long position. If this changes I will be back with a new update for my Platinum Members.
June BUND
I am still flat as the Bund just fell shy of Friday’s buy range before rallying after the Equity Markets sold off. Today, I will raise my buy level to 152.60/153.40 with a higher 151.95 stop.
Gold Rolling Contract
No Change. I will not chase the price of Gold higher, leaving my1822/1808 buy level unchanged with the same tight 1797 ‘’Closing Stop’’.
Silver Rolling Contract
No Change. Silver has support from 20.70/21.30 where I will continue to be a buyer with the same 19.95 stop.
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