U.S. Equity Markets got slammed on Friday following the banking sector’s massive selloff after Silicon Valley Bank was shut down by regulators following the largest bank failure since 2008. This could point towards a larger issue at hand, as banks who have assets sensitive to interest rates are facing severe liquidity issues due to the Fed’s rate hikes. The Russell 2000 Small Cap Index led Friday’s decline, closing lower by 3%. Non-Farm Payrolls increased by 311,000. However, with more job seekers entering the market, the Unemployment Rate jumped to 3.6%, while wage growth declined which could prompt the Fed to maintain its 25-basis point course of rate hikes as inflation pressures show signs of easing. Meanwhile, investors look ahead to this week’s update on inflation as they look for definitive signs of what the Fed’s policy decision could be in a few weeks. Within the S&P 500 Index, all the 11 sectors finished lower. European Markets closed lower. U.K Monthly Economic Output for January rebounded stronger-than-expected growing 0.3% for the month as the nation continues to fend off expectations for a recession. Bank of England Executive Director of Financial Stability Sarah Breeden said continued rate hikes and Quantitative Tightening increase the risk of financial market shocks. Spanish Retail Sales for January rose 5.5% Y/Y, showing improvement from December and proving that consumers are still spending despite higher prices. In Asia, Japan’s PPI growth for February was weaker than expected, declining compared to January, and easing the case for central bank rate hikes. The Bank of Japan left interest rates unchanged as Governor Haruhiko Kuroda said the economy continues to need support, ahead of his retirement in April. Chinese President Xi Jinping was elected to a third term, cementing his control over the world’s second-largest economy. Chinese high-frequency data suggest restaurant revenues are surging and traffic in major cities is rebounding as consumer activity recovers following the removal of COVID restrictions. Elsewhere, Oil rose 1.10% while a weaker Dollar saw Gold surge 2.04%.
To mark my 2725th 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 made 752 points on Friday and is now ahead by 1339 points for March after finishing February with a gain of 3164 points, after closing January with a gain of 4687 points, while finishing December with a gain of 2054 points. November ended with a gain of 4789 points, while finishing October with a record gain of 9619 points, making 6660 points in September, after closing August with a gain of 2228 points, having made 2660 points in July, following a gain of 3371 points in June. The Service made 3651 points in May, after making 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. 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 1.45% lower at a price of 3861
The Dow Jones Industrial Average closed 345 points lower for a 1.07% loss at a price of 31,909.
The NASDAQ 100 closed 1.30% lower at a price of 11,830.
The Stoxx Europe 600 Index closed 1.54% lower.
Last Friday, the MSCI Asia Pacific fell 1.40%.
Last Friday, the Nikkei closed 1.67% lower at a price of 28,143.
Currencies
The Bloomberg Dollar Spot Index closed 0.6% lower.
The Euro closed 0.5% higher at $1.0642.
The British Pound closed 0.7% higher at 1.2027.
The Japanese Yen rose 1% closing at $134.84.
Bonds
Germany’s 10-year yield closed 15 basis points lower at 2.46%.
Britain’s 10-year yield closed 16 basis points lower at 3.64%.
U.S.10 Year Treasury closed 21 basis points lower at 3.70%.
Commodities
West Texas Intermediate crude closed 1.10% higher at $76.55 a barrel.
Gold closed 2.04% higher at $1863.10 an ounce.
Clocks moved forward by one hour in America over the weekend. As a result all economic data and market openings/closings will happen one hour earlier London time for the next two weeks. There is no economic data of note due today on either side of the Atlantic.
Cash S&P 500
There is no doubt that event risk is never pleasant. The 70% fall in SLV shares forced the authorities to step in and try and save the bank. This is the first bank rescue since 2008 in America. I was not short for this move as the technical indicators that I follow were oversold ahead of Bank Shares falling over 10% on Thursday and Friday. The resulting sell-off was a highly unusual producing two consecutive 95% down days on the internals. There is no doubt but the price movement that we witnessed on Thursday and Friday is rare and bordering on the historic. The 14-Day RSI for the $BKX (Bank Index) at 17 is also an extremely rare event forcing Treasury Secretary Yellen to announce that Financial Regulators met on Friday to announce that they expressed confidence in the banking system’s resilience. This tells me that the Fed are close to intervening and that despite Powell’s stupidity in his Testimony to Congress last week about raising interest rates that there is no chance of this happening given the background. The fall in Bonds and Interest Rates on Friday is telling me that rate cut expectations are increasing by the hour. This scenario creates a big headache for the Fed as they cannot afford a blow up as it will guarantee you a recession. The $BPSPX also closed with an RSI print at 17. History tells us that sizeable lows come from reading in the 15-19 range. I know it is not pretty to watch especially as the 200 Day Moving Average has been broken on the S&P, Dow NYSE and the Wilshire in the past few days. However, the McClellan Oscillator closing at -305 on Friday, means you cannot be short despite what may happen on Sunday night/Monday morning when the markets re-open. The next two weeks are crucial for the next major move as we have CPI this week and the FOMC Meeting next week. Just before the close the S&P made a new low for the week while the Banks Index did not which is a positive divergence. The $NYSI is maximum oversold. All these indicators are telling me that you cannot be short but have to set up a long position. Unless the Fed get involved ahead of Monday’s open forced margin selling may continue Monday afternoon ahead of a more meaningful bottom. I will be an aggressive buyer from 3820/3850 with no stop or T/P level for now. On Friday, my S&P plan worked well. After the S&P hit my second buy level at 3890 I emailed my Platinum Members to exits this portion only at 3915 ahead of the NFP data. I bought the S&P again at 3890 to add to Thursday’s late 3914 long position. This produced an average 3902 buy level. I was lucky with my timing, emailing my Platinum Members to exit the whole position at 3931 and I am still flat. If I am taken long, I will come back with a new update for my Platinum Members.
EUR/USD
Thankfully I raised my T/P level to 1.0665 on my latest 1.0590 long position. This level was hit post the NFP release, and I am now flat. The Euro has support from 105.50/1.0620. I will be a buyer in this area with the same 1.0495 ‘’Closing Stop’’.
March Dollar Index
It took a while but finally the Dollar sold off to my 104.60 T/P level on my latest 105.00 short position and I am now flat. This morning, the Dollar is trading unchanged at 104.50. We have resistance from 105.00/105.70 where I will again be a seller with the same 106.10 ‘’Closing Stop’’.
Cash DAX
I am glad I stayed flat the DAX on Friday as the market got hard. Technically it was a bad week for the DAX as the market made a new one-year high last week before falling to close on the lows. The major support level is from 14950/15050. I know this is a bit away from current pricing but as we have seen with American Index over the last few days it does not take much for the market to fall a few percent. I will be a buyer in this area with a 14875 ‘’Closing Stop’’.
Cash FTSE
Wrong! The FTSE hit my second buy level at 7780 for a 7920 average long position. Subsequently, I was stopped out of this position at 7735 and I am now flat. The FTSE has further support from 7580/7640 where I will be an aggressive buyer with a 7525 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 7705.
Dow Rolling Contract
Plenty of two-way price action in the Dow. Bank shares really affected the Dow which had two rips higher before falling nearly 400 points in 20 minutes. The second move higher enabled me to cover Thursday’s late 32220 long position at 32402 and I am still flat. With the McClellan Oscillator closing at an extremely severe oversold -305 history is telling me to be an aggressive buyer. I am hoping that we will see some margin selling on the U.S. Open. If the Dow moves lower it will enable me to get a Macro long position on board. I have no doubt that the Fed and Treasury met over the weekend to devise a strategy for calming markets. The Dow has support from 31500/31750 where I will be an aggressive buyer with no stop or T/P level for now. If my buy range is triggered, I will come back with an updated email for my Platinum Members.
Cash NASDAQ 100
I am impressed how well the NDX traded on Friday. This should come as no surprise given the 21-basis point fall in 10-Year Treasury Yields. I am still long from Thursday at an average rate of 12030 as the afternoon rebound fell just shy of my 12130 T/P level. I will leave my T/P level unchanged. I will now lower my exit level to a 11795 ‘’Closing Stop’’. If any of the above levels are triggered I will be back with a new update for my Platinum Members.
June BUND
I have had the correct view in Bond Markets but unfortunately given the volatility have not been able to get a long position on board. In my opinion Interest Rates are close to topping in America and indeed the Euro-Zone given the level of stress in the banking system. As I mentioned above Central Banks tend to freak out when Banking Stocks get slammed as we have seen over the past twelve months. The Bund is trading at 133.80 as Yields have now fallen over 30 basis points in the last few days, sitting at 2.45% as I go to press. This is an enormous move. I will now raise my buy level to 132.50/133.20 with a tight 131.95 ‘’Closing Stop’’.
Gold Rolling Contract
Gold surged on Friday, never coming close to my buy range. I will now raise my buy level to 1830/1845 with a higher 1819 ‘’Closing Stop’’.
Silver Rolling Contract
No Change. Friday’s aggressive rally in Gold helped Silver to rally over 3%, and is now back trading above 20.50. I am very bullish on Silver as shown by my purchase for my pension fund last week. I will now raise my add on position to any dip to 19.90 with the same 18.95 ‘’Closing Stop’’ on any long. I will have no T/P level for now. If my 19.90 buy level is filled, I will be back with a new update for my Platinum Members.
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